South Korea’s financial regulator said on Wednesday that it had formally launched “open banking” services in a bid to lower transaction fees and enhance convenience for using online banking services.
Under the open banking system, bank customers will be allowed to use any mobile banking application they choose to approach their bank accounts at any local bank and to withdraw and transfer money from their bank accounts.
According to Eun Sung-soo, Chairman of the Financial Services Commission (FSC), the pilot service was run by ten banks from Oct. 30 to Dec. 17.
Eun said that the banking services would be available for a total of 16 banks and 31 fintech businesses.
He noted that open banking had become more than simply a payment system and had emerged as a key financial infrastructure to bring tectonic shifts in the financial industry.
He, however, emphasised the importance of openness, efficiency, and stability in payment sectors, saying that the government would establish legal foundations through the revision of the Electronic Financial Transactions Act.
However, the open banking system will allow fintech firms to approach banks’ payment network through the open Application Programming Interface (API) initiatives, leading to lower transaction costs and enhanced convenience for mobile banking.
According to the FSC, the open access to the payment system will lower transaction fees from the current 400 won (or 0.3 U.S. dollar) to 500 won (or 0.4 U.S. dollar) per transaction.
Meanwhile, FSC will exalt convenience for bank customers who can manage all their accounts in a single application without using separate applications for different banks.
However, during the pilot-service period, more than 3.1 million people registered about 7.73 million open banking accounts or some 2.5 accounts per person.
The FSC added that the lowered entry barrier for fintech firms would lead to the development of better services tailored for the needs of consumers at lower costs.
It also noted that banks would be able to diversify their customer base and grow as comprehensive financial service platforms.
