Savings Banks Open Banking Launches Tomorrow... Challenges to Overcome as 'Latecomers' (Comprehensive)

67 Savings Banks Start Open Banking D-1
Banks and Securities Firms Already Securing Customers
IT Talent and Funding Essential for New Business Integration

[Asia Economy Reporter Song Seung-seop] The implementation of open banking services for savings banks is just one day away, but the industry remains lukewarm. This is because it is difficult to attract open banking customers from large financial companies that have already started open banking, and they believe it will not be easy to link with new businesses in the future.

According to the industry on the 28th, from the next day, the Savings Banks Association's application (app) 'SB Toktok Plus' will implement open banking services. As a result, customers of 67 companies using the central association's joint computer network will be able to use open banking. Savings banks using individual computer networks, including SBI Savings Bank, will be able to use the service in May after system transition work is completed.

Open banking is a service that standardizes remittance and payment networks, allowing multiple financial companies' financial tasks to be handled through a single bank or fintech app. By using open banking, savings banks can also transfer and inquire about funds from other financial companies. After a pilot service by 10 banks in October last year, 47 companies including fintech firms started first in December.

Although the implementation of open banking is expected to increase convenience for savings bank customers and establish fintech innovation infrastructure, the industry is generally calm. Special promotions for deposits and savings or large-scale promotions, which usually accompany new services, are expected to be conducted on a small scale or not at all by large companies. Among the companies implementing open banking this time, 16 are participating in special deposit and savings promotions and other events.

This is interpreted as starting at a disadvantage as a latecomer in the industry, resulting in low expectations. A savings bank official explained, "In our case, there will be no separate financial product launches or events," adding, "Since there are not many customers who use savings banks as their main bank, it is not a hot issue in the industry." Another savings bank official also stated, "Even if open banking starts, it is difficult to take customers from existing open banking users in other financial sectors."

The Savings Banks Association originally planned to launch the service on the 29th of last month. However, due to the discovery of some errors during system testing, the launch was delayed by about a month for correction and stabilization work. Compared to other sectors that participated in the open banking pilot project at the end of October 2019 and officially launched the business in December, this is about a year and a half late.

Large Companies Have Already Secured Customers... Can Latecomers Overcome Disadvantages?

Large financial companies such as commercial banks and securities firms have secured customers through active promotions during the early stages of the open banking pilot project. According to the Financial Services Commission, 1.02 million people signed up and opened 1.83 million accounts within a week after the open banking pilot service was launched. After six months, 40.96 million people, about 72% of the domestic economically active population, registered 65.88 million accounts.

Among savings bank officials, there were voices hoping to increase savings bank users through commercial banks' open banking. The expectation was that customers who use commercial banks as their main bank might open savings bank accounts through open banking. Accordingly, when registration of savings banks in other financial companies' open banking became possible in February, large companies held various events.

There are also many challenges to be solved to link with future MyData or MyPayment industries. Although open banking itself is difficult to generate profits, it is widely regarded as having synergy effects when combined with digital innovation. However, this process requires sufficient IT personnel and huge funds. It is necessary to successfully build and maintain an open banking platform that can cooperate externally and have functions to commercialize or accept data.

Currently, large financial companies are scooping up IT talent, causing the value of personnel with digital skills to soar. Last year, commercial banks introduced ICT (Information and Communication Technology) rolling recruitment for the first time in the banking sector. Some have established industry-academia cooperation education programs for in-house talent development. Large savings banks also significantly increased recruitment in IT entry-level and experienced positions in the first half of this year.

However, medium and small savings banks lack the funds to support this. It is known that one savings bank recently experienced setbacks in digital transformation tasks as internet-only banks recruited a large number of IT personnel.

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