Banking, Seeking a Way Out Through 'Data Innovation'?…Possibility of Owning MyData Subsidiaries

Financial Services Commission Revises Bank Supervision Regulations
Allows MyData Business via Subsidiaries
Likely to Actively Pursue 'Data Expansion'

[Asia Economy Reporter Kim Hyo-jin] As financial authorities allow banks to hold subsidiaries of personal credit information management businesses, also known as MyData companies, signs are emerging that the banking sector's steps toward 'data financial innovation' will accelerate.

With the rapid changes in the business environment due to the deterioration of interest income structures and the expansion of financial businesses by big tech (large information and communication companies), there is a growing view that the vested interests held by banks will fade even more once unlimited competition begins through the activation of data platforms.

Consequently, there is speculation that banks may seek new opportunities by actively acquiring promising MyData companies to partially capture the market.

According to financial authorities and the banking sector on the 23rd, the Financial Services Commission approved an amendment to the Banking Supervision Regulations at its regular meeting the day before, allowing banks to hold financial sector MyData companies as subsidiaries. Accordingly, banks will be able to operate the MyData business through subsidiaries starting next month.

Once MyData is launched, consumers will receive services specialized for them such as information management, asset management, and credit management from MyData companies. In this regard, MyData is called a 'financial secretary' or 'pocket finance.' It also means that the initiative in financial consumption shifts from financial companies to consumers.

Several banks have already expressed their intention to directly participate in the MyData business to financial authorities. With this amendment to the supervision regulations, the channels for banks to engage in the MyData business have significantly expanded.

A representative from a commercial bank preparing for the MyData business said, "We need the industry to mature to some extent before making concrete decisions," but added, "If MyData becomes mainstream as some in the financial authorities and financial sector predict, there will be significant changes in the financial landscape, and strategies must be aligned accordingly."

Another commercial bank official explained, "The plan to expand the MyData business by holding subsidiaries is already on the management agenda as a mid- to long-term review task," adding, "Since specific procedures such as regulatory adjustments are underway, we will take a closer look at the market situation."

The Korea Institute of Finance pointed out in its '2020 Bank Industry Outlook and Challenges' report that "If the MyData industry is promoted only centered on fintech, banks may lose the initiative in securing customer contact points as they cannot provide comprehensive asset management services."

Lee Dae-gi, a research fellow at the Korea Institute of Finance, advised, "Efforts are needed to turn fintech companies from competitors into collaborators by attracting them into the bank business value chain or converting them into subsidiaries through mergers and acquisitions (M&A)."

A financial sector official said, "It seems important how many companies meet the banks' standards."

This content was produced with the assistance of AI translation services.