Some Savings Banks Show Errors in 'Pre-Maintenance of Depositor Information' Checks (Comprehensive)

Reviewing the Status of Savings Bank Depositor Information Pre-Maintenance
5 out of 11 Systems Show an Average Error Rate of 5.4%

[Asia Economy Reporter Song Seung-seop] It has been revealed that some savings banks have lax management of their depositor information pre-maintenance systems. There are calls for establishing a legal basis as there are no enforceable measures regarding the obligation to pre-maintain depositor information.

According to the document titled “Special Inspection of Depositor Information Pre-Maintenance System and Integrated Summary Information System (IRIS) Self-Inspection Results Report” prepared by the Korea Deposit Insurance Corporation on the 16th, among 11 savings banks using individual networks, an average error rate of 5.4% was detected in 5 of them.

The depositor information pre-maintenance system enables the Korea Deposit Insurance Corporation to promptly pay deposit insurance within 7 days, instead of the minimum 4 months or more previously required during business suspension. It was established starting with savings banks in 2016 and later expanded to banks and others.

This inspection was conducted to verify whether the relevant information was properly managed in savings banks amid financial market instability caused by the prolonged COVID-19 pandemic. The Korea Deposit Insurance Corporation explained that the purpose was to organize insurance payment operations and proactively respond to crisis situations.

Using a checklist, the consistency of submitted data was verified after obtaining standardized depositor information from 67 savings banks using the Central Association’s shared network and 12 savings banks using individual networks. One company using an individual network was excluded due to system upgrades. In May, seven basic data types including customer information, deposit and loan accounts, and collateral guarantees were obtained and underwent a six-month verification process.

Average Error Rate of 5.4% Found in 5 Savings Banks

The inspection results showed no abnormalities in savings banks jointly using the Savings Banks Association’s network and six savings banks using individual networks, but errors were found in the remaining five banks.

In the case of Company A, it was found that the agreed interest rate was applied instead of the rate set by the Korea Deposit Insurance Corporation when paying deposit insurance. Errors also occurred in calculation methods such as simple and compound interest by product. Company B entered the income tax rate (14%) instead of the local income tax rate (1.4%), and Company C had inconsistencies or missing necessary information among the seven standard forms, making verification impossible.

The Korea Deposit Insurance Corporation cited the absence of system maintenance and managers as the cause of these issues. Despite changes in IT systems and the launch of new products altering the business environment, the lack of dedicated personnel means there is a possibility of recurring errors during the depositor information extraction process.

A Korea Deposit Insurance Corporation official explained, “The scale of deposit products, number of branches, and number of employees were found to have little correlation with the error rate,” adding, “Savings banks with lower understanding and cooperation levels of the person in charge generally showed higher error rates.” The official also stated, “To maintain business continuity, we will recommend the preparation of handover manuals to prepare for personnel changes or vacancies.”

The problem is that despite repeated poor management of the depositor protection system centered on some savings banks every year, there are no adequate means to induce corrective actions. Currently, the Korea Deposit Insurance Corporation conducts inspections by obtaining cooperation from deposit-taking institutions including savings banks. A corporation official lamented, “Since there are no legal enforcement measures, it is difficult to demand error corrections from savings banks even if they do not cooperate with inspections.”

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