SEOUL: This month, the Korean government will launch a platform for financial institutions that will allow them to build services that automatically populate financial information for new customers, according to Korea Joongang Daily. It looks like the platform will essentially serve as database of consumer financial information that is accessible via API. The platform will be managed by Korea Financial Telecommunications and Clearing Institute and Koscom Corporation and counts 16 banks and 25 brokerage firms as partners. Earlier this week, the UK’s Competition and Markets Authority (CMA) released a report announcing that it would require banks to participate in a similar open banking initiative.
Eliminating friction is one of the keys to fintech adoption. Consumers may know what frustrates them about their current financial services experience, but they don’t necessarily invest time in seeking out alternatives. A formidable barrier to trying out new services is having to find and enter financial information. Once that barrier is removed, it will be much easier to switch providers, forcing financial services companies to innovate in order to stay competitive. In addition, providing fintechs with access to the platform will allow them to devote more time and resources to developing great products, rather than developing data partnerships with legacy institutions.
Like other countries around world, Korea is racing to attract capital to build a fintech ecosystem. Korea’s economy has suffered recently due to a drop in tourism and falling exports. The government is taking number of actions to recover, including loosening regulations in the financial services industry to encourage the growth of fintechs, according to Yonhap News. In particular, nonbanks can now facilitate money transfers, helping to draw foreign money transfer firms into the country. Korea also plans to lift restrictive policies to allow internet-only banking.
