"Offering Higher Interest Rates" Banks Compete to Lead Open Banking

Existing benefits replaced with 'Open Banking Benefits'
Competition heats up over Open Banking feature improvements

[Asia Economy Reporters Hyojin Kim and Minyoung Kim] Commercial banks are intensifying efforts to secure Open Banking customers through key loan and deposit interest rate policies. Recently, there have been noticeable cases where banks not only offer preferential interest rates upon Open Banking subscription but also reduce or eliminate existing preferential rate benefits and replace them with benefits tied to Open Banking enrollment.

According to the banking sector on the 16th, Woori Bank lowered the preferential rate conditions on real estate financial products such as My Style Mortgage Loan, Woori Apartment Loan, Woori Real Estate Loan, and Woori Jeonse Loan last month. Accordingly, the preferential interest rate of 0.3% per annum previously offered to salary transfer customers and pension beneficiaries was reduced to 0.2%, and the 0.2% preferential rate for customers with fully non-grace period mortgage loans was lowered to 0.1%, both down by 0.1 percentage points.

Instead, Woori Bank introduced a new Open Banking subscription item that provides a 0.1% preferential interest rate upon enrollment. NH Nonghyup Bank removed the 0.1% preferential interest rate item for mortgage loan applications via internet banking and created a new condition offering a 0.1% preferential rate upon Open Banking registration.

Shinhan Bank offers a 0.5% preferential interest rate when subscribing to the 'Inssa Freedom Savings' product and enrolling in Open Banking. Additionally, when using Open Banking via the mobile application (app) to deposit from another bank account into this product, a preferential interest rate of 1.0 percentage points per transaction is applied.

Hana Bank grants a 0.3% preferential interest rate when registering a withdrawal transfer from another bank account through Open Banking upon subscribing to the 'OneQ Deposit.' Preferential rates also follow Open Banking usage for the 'OneQ Savings.' Customers receive 0.3% preferential interest upon agreeing to use Open Banking and registering a withdrawal account, and 0.5% preferential interest if they make payments into OneQ Savings via withdrawal transfers from other bank accounts through Hana Bank's Open Banking service for more than six months.

Open Banking is a service that allows users to view all their bank accounts and perform withdrawals and transfers through a single bank app. Announced in February last year as part of a financial settlement infrastructure innovation plan aimed at enhancing consumer convenience through digital financial innovation, it was piloted in the banking sector in October of the same year and fully implemented including fintech companies in December.

A representative from a commercial bank explained, "Open Banking dilutes the concept of a main transaction relationship with a specific bank, so banks fear losing customers but also see opportunities to attract new ones, making competition intense."

Open Banking Becomes a Battleground for Customer Acquisition
40.96 Million Cumulative Subscribers in the First Half

Accordingly, banks are also focusing on upgrading Open Banking systems. Woori Bank recently revamped its Open Banking service on the mobile Woori Won Banking app to allow users to view all bank accounts at a glance on the main screen. IBK Industrial Bank also revamped its mobile 'i-ONE Bank' to enable direct access to Open Banking services from the first screen without multiple steps.

Shinhan Bank provides services such as 'My Assets,' an integrated asset management service covering not only banks but all financial sectors, and 'Kkook Transfer,' which allows easy transfers by long-pressing the app icon on the smartphone home screen without launching the app.

NH Nonghyup Bank introduced the 'My Financial Life Comparison' service, which allows users to compare their financial asset levels by age group and region. KB Kookmin Bank strengthened its Open Banking services by adding features like 'Recharge,' which enables quick transfers from other banks' accounts to Kookmin Bank accounts when balances are insufficient or additional funds are needed on deposit or loan transaction screens.

According to the Korea Financial Telecommunications & Clearings Institute, the cumulative number of Open Banking subscribers increased from 16.83 million in January to 40.96 million by the end of June, and the number of accounts rose from 29.69 million to 65.88 million. A financial sector official evaluated, "Open Banking is becoming popular and widespread at a much faster pace than expected."