Banks' Platforms Highly Dependent on Outsourcing... Are MyData Services All the Same?

Reliance on Outsourcing for Building Smart Banking Apps and MyData Services

Fintech company Finger's smart finance reference in the banking sector

[Asia Economy Reporter Park Sun-mi] Despite fierce competition in digital finance, banks largely rely on outsourcing for building smart banking applications (apps) and MyData services. Given the nature of the banking sector, which lacks in-house IT development capabilities, dependence on fintech companies with technical expertise is inevitable. However, since a few fintech companies dominate the market, it has become difficult to expect significant differences between banks’ MyData service platforms, following the trend seen with smart banking apps.

According to the financial sector on the 24th, major domestic banks are in the process of selecting service providers or conducting audits after selection to build MyData service platforms, which are still in the early stages of market entry. KB Kookmin Bank announced a request for proposals to build a MyData service platform aiming to launch the service before August, and plans to select a service provider by receiving applications until the 2nd of next month.

Applicant companies must submit proposals that include the necessary hardware and software for platform construction, development work details and construction plans, differentiated requirements and opening plans compared to competitors, quality management plans, and measures for fault response, recovery, and security. The bank then selects the service provider through evaluation. Separately, KB Kookmin Bank is also accepting proposals until today for selecting an external advisory firm to build the ‘Number One Corporate Finance Platform.’

The situation is similar for other banks. Industrial Bank of Korea, preparing to apply for a preliminary license for the MyData business next month, is currently building a MyData service called ‘Personal Financial Management (PFM) Service’ with a target opening in August. This service is also handled by a fintech company providing a financial platform under an Original Equipment Manufacturer (OEM) model.

Industrial Bank of Korea plans to select an auditor to oversee the fintech company responsible for service construction by the 8th of next month. The problem lies in the OEM service construction model concentrated among a few fintech companies, which raises the possibility that MyData services across banks will unfold similarly to smart banking apps.

Currently, most smart banking apps in the domestic banking sector have been developed by the fintech company ‘Finger.’ A Finger representative explained, "You can say that we developed most of the banks’ smart banking apps," adding, "We create apps based on banks’ requirements, but recently, with the introduction of the MyData business, the market scope has expanded."

A bank official said, "The reason why there hasn’t been much differentiation in smart finance between banks is that the IT system formats are similar and the banking sector’s business items are fixed, leaving little room for differentiation," adding, "Even though MyData platforms may initially be implemented in different formats, since the system development companies are limited, there is a possibility that they will become similar through comparison and improvement among banks."

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