A single platform for executing both inquiry and transfer APIs in South Korea.
Open Banking Platform
The API of Open Banking is implemented in the REST (Representational State Transfer) method and is provided in the form of an Internet web service.
Shinhan Bank is one of the oldest and largest banks in Korea. The bank has led technological change in the Korean financial sector with a focus on customer-centric operations. To offer customer-centric services across its global subsidiaries, Shinhan Bank decided to build a central front-end processing system for its Open Banking service.
Woori Bank was among the first group of banks to adopt Open Banking in South Korea.
Used in South Korea; however, it is not mandatory.
Single platform for executing both inquiry and transfer APIs.
Open infrastructure set up for all payment market players (a change from small to mid-sized Fintechs to all the Fintechs and banks).
Designed as an API sharing platform – a single connection to the Open Banking system connects to all participating banks.
Swift and efficient API infrastructure lead to the timely release of services and cost-saving.
Services accessible by all bank customers.
Payment initiation (wire transfer services)
The user authenticates through identity authentication and inquiry/withdrawal consent on the authentication page of the service provider, and the user organization obtains the user’s authentication by obtaining an Access Token for the user.
The user will give the withdrawal consent and the consent to provide financial information to the 3rd party through the user authentication API, and the user must obtain the user’s consent using the account registration verification API every 1 year after the user authentication, apart from the re-issuance of the token.
MFA (multi-factor authentication)
Open Banking in South Korea was unveiled in February 2019. In October, the Open Banking pilot was launched, and by December, Open Banking was fully functional with 17 banks and 33 Fintechs.
Before Open Banking, in 2015 South Korean Financial Services Commission (FSC) announced Fintech Open Platform Initiative, which is regarded as an initial version of Open Banking. It was designed to provide financial services in a standardised way.
The major changes Open Banking has brought are that all firms and banks are now eligible users instead of small and medium-sized Fintechs.
As of September 2020, 22 million customers, or more than half the adult population of South Korea, were using some form of Open Banking. However, the numbers are expected to rise with the forthcoming MyData initiative. MyData goes beyond payment accounts and credit cards to include all manner of savings accounts, loans, insurance and investment data. It’s even poised to extend into sectors like telecommunications, healthcare and energy. It is expected to have a positive impact on consumers and the industry. Consumers will be able to access a wide range of financial services, from payment to money transfer to loans to spending pattern analysis to product comparisons using a single platform. Furthermore, Open Banking is expected to encourage competitive cooperation in the financial sector, tearing down barriers among banks or between banks and Fintechs, which will reshape the financial services landscape and bring more dynamics to the financial ecosystem. Open banking is expected to lower barriers for Fintech firms as it lowers cost burdens and allows easier access to payment networks. Banks and Fintechs are expected to form partnerships and come up with innovative solutions.
South Korean Open Banking Platform is a single platform for executing both inquiry and transfer APIs. It is driven by Financial Services Commission (FSC) and operated by the government body Korea Financial Telecommunications & Clearings Institute (KFTC). While it is centrally operated by the government, it is market-driven with no formal or compulsory Open Banking regime. South Korea follows other countries in debunking the supposed dichotomy between mandated regulation-led approaches and optional market-led approaches, treating them as two ends of a spectrum rather than an either/or choice.
Financial Services Commission (FSC)The decision-making body of Korea Financial Telecommunications and Clearings Institute (KFTC) consists of a general meeting, a board of directors, and 13 committees.
KFTC is a non-profit organization with 10 banks as general members and regional banks, savings banks, and investment firms as associate members and special participants.
The general meeting consists of general members and is the ultimate decision-making body of KFTC. They make decisions on the alteration of the memorandum, approval of business plans, budgets, membership fee structure, and appointment of directors.
The Board of directors consists of 8 directors, who are appointed by the general meeting, the president and the executive director of KFTC. Decisions on regular business are made by the board.
Committees consist of 8 directors, who are appointed by the board of directors and general managers of KFTC. The role of committees is to approve items to be discussed at the general meeting and the board meeting and/or make decisions on delegated items.
More about the member can be found on KFTC’s website.
The Personal Information Protection Act (PIPA).
The Act on the Promotion of the Use of the Information Network and Information Protection.
The Credit Information Use and Protection Act.