Foreigners face administrative, language barriers when online banking

K-campus

Published: 31 Jul. 2023, 18:01

Foreigners face administrative, language barriers when online banking

A bank branch in Seoul [YONHAP]

There are miles to go for Korea to provide seamless banking services to expatriates, despite their rising numbers in the country, foreigners say.

The hassle of having to visit bank branches in person to do simple tasks, struggles due to long names, and language barriers are just some of the many problems.

On July 3, the Ministry of Justice launched an ID verification system for financial institutions that can verify one's identity using foreign residence cards. This will allow foreigners to use online banking in Korea more easily, such as opening accounts online or through apps. Previously, most banks only accepted Korean IDs and driver's licenses for online and mobile banking identity verification.

According to the ministry, it will first work with banks to implement the verification system. It will then open the system to non-banking financial companies such as insurance companies in the future.

With the ministry system in its early stages, Hana Bank and internet-only Toss Bank are currently the only banks that allow foreigners to open bank accounts online or through apps. Both use their own verification systems that they developed.

Apart from the two banks, foreigners have to visit bank branches in person to open an account.

Hana Bank is Korea's first to offer the service, allowing foreigners to open an account using its Hana EZ app since October 2021.

A screen shot of the Hana EZ application, which allows foreigners to open bank accounts without having to visit branches. [SCREEN CAPTURE]

The app is available in 16 languages such as English, Chinese, Thai, Vietnamese and Russian.

For identity verification, The users upload a photo of their residence card and passport, and the app automatically stores their information. It adds another security layer by asking users to take a photo of themselves. The photo is used to confirm that the person signing up for the bank is the same as the owner of the registered residence card and passport. Hana Bank's artificial intelligence system takes care of this confirmation process.

Toss Bank also allowed foreigners to open an account on its app starting in May last year.

Toss, the parent of Toss Bank with a 38.4 percent stake, is licensed as a MyData operator, which allows Toss Bank to access personal information such as certificate of domestic residence report and certificate of residence registration upon user consent, allowing foreigners to open accounts online.

The bank later checks if the user's information on the residence card — such as name and residence card number — is the same as the information accessible through MyData.

Toss Bank also takes additional steps to enhance security in its ID verification process, such as asking users to take a photo of themselves or start a video call with its representatives.

But banking remains challenging for foreigners, even if they try the traditional way of visiting bank branches in person.

Long processing time for residence cards

One of the biggest struggles foreigners face is the month-long period they have to live in Korea without a bank account until a physical residence card is issued.

Foreigners must have both their passports and residence cards to open a bank account. Because it takes three to four weeks for the residence card to be physically delivered, many choose to live on cash or travel cards during that period.

Official documents such as certificate of residence registration, issued at the local district office for those who have applied for a residence card but are just waiting for delivery, still cannot replace a residence card.

"I went to my local district office to get the certificate of residence registration and went to KB Kookmin and Woori Bank branches with it, but both didn't accept the certificate and told me that a physical card is needed," one foreigner from Australia said. "I was forced to use my foreign card, and while the card works perfectly fine for most places I go to, there were cases that my card did not work at some kiosks or payment machines."

"But as soon as I got my physical residence card, it was easy to open a bank account, and it only took me 10 to 20 minutes for a bank account to be opened."

Although many have to wait long periods to get their residence card, banks say it is a must to confirm customers' personal information.

"When opening bank accounts, we have to conduct customer due diligence on all our customers, and we need to know their address to do so," a KB Kookmin Bank spokesperson said. "Documents like passports don't have an address on them, so that is why we need the residence card, which allows us to verify the customer's address."

"There could be ways to show official proof of address apart from the residence card, but the process would be very complicated for the customers, and we say that it's best to bring both the residence card and passport."

Problems with long names

Entering their names when opening bank accounts is another challenge many foreigners face.

Most Korean names are three to four letters, while foreigners have names that easily exceed 20.

Jessica Johansson's full name, including her middle name, exceeds 23 characters. The last few letters of her name had to be cut off when she opened an account in 2021 at Hana Bank.

Having names printed differently on her account, ID, passport and other documents is one of the things that give her a hard time in Korea.

"My name is cut off on my card, and I try to avoid having to register my account to many places because I had such a nightmare registering it to different apps and websites," Johansson said. "I'm even considering changing my name to be shorter because of that."

Johansson said there are cases where her banking app would not allow her to enter her full name and proceed with the banking tasks she wants to do.

Making online payments and reservations has been equally difficult for Johansson.

When purchasing a plane ticket from Seoul to Busan, she couldn't enter her full name due to the booking website having limited spaces for names. Arriving at the airport, she had difficulty proving her identity due to the name on the plane ticket, card and ID being all different, and she had to go to customer services to fix her plane ticket name before she got onboard.

Language barriers

Woori Bank's branch in Ansan, Gyeonggi, which is specifically designated for foreigners. [LEE TAE-HEE]

Visiting branches itself is also a problem due to the language barrier.

According to the Korea Federation of Banks, as of June, there are a total of 24 bank branches in Korea designated as branches for foreigners where their tellers speak English or other foreign languages.

The number has been dropping due to banks closing their branches amid digitization. The number was 33 in February last year and 38 in May 2021.

A sign at Woori Bank's branch in Ansan, Gyeonggi, shows the different languages bank tellers can speak [LEE TAE-HEE]

With more and more branches shutting down, some banks have been trying to offer translation services on the line.

Customers visiting KB Kookmin Bank's branches who have difficulty understanding Korean can call the bank's Global Customer Center and communicate with the tellers with the three-way interpretation service.

The bank's interpreters can speak English, Chinese, Japanese, Vietnamese, Russian and Cambodian and will go in between the teller and customer to offer real-time translation for the entire conversation.

"There is going to be continuous demand for money transfers, opening bank accounts and creating savings accounts from foreigners, and banks need to focus on securing a loyal group of customers by offering services in various languages for them to understand easily," Lee Jong-soo, a researcher at Hana Institute of Finance, said. "Language barriers and discrimination are some of the biggest problems foreigners face when trying to do banking."

"There is also demand for more credit loans, and banks need to accumulate big amounts of transaction data from their international customers to establish and refine their credit rating model to fit foreigners."

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]