[Hwon-Young Kwon's Data Innovation] To Succeed in the 'MyData' Policy

Clear Identification of Participants is Paramount
South Korea's Financial Companies Subject to Strict Regulations
Useless Without Technical Implementation
Must Ensure Safety Without Risk of Leakage

More Important Than the System is Sufficient Communication
Participants Must Find the Best Consensus
Leading a Data Service Powerhouse

In the 2020s, Koreans are experiencing financial innovation daily right in their hands. All financial services can be integrated through mobile phone apps, and account management and asset management services are continuously evolving. Banks are consolidating branches and counters, reducing staff, and swiftly transitioning to online and data-centric finance. The financial sector is where fierce data battles are taking place.

BankSalad and Toss cannot be overlooked as services that ignited financial innovation in Korea. Toss developed a service that allows transfers without joint certificates, security cards, or one-time passwords (OTP), while BankSalad started with credit card recommendation services and gained attention as a comprehensive service that integrates all financial assets from all financial companies and recommends customized products.

While these innovative fintech (finance + technology) companies targeted financial consumers through mobile apps, large financial companies invested huge amounts to develop and launch their own apps but were always a step behind or slow to respond. This is because adapting to guerrilla warfare leading innovation in the new era is not easy. They missed the simple principle of thinking from the customer's perspective and collecting and processing all data accordingly. Operating within boundaries and surrounding themselves with high regulatory barriers as protective shields made them vulnerable to the guerrilla warfare of financial innovation.

The innovations of BankSalad and Toss have ultimately led to innovation in the financial sector. Now, all financial institutions are adopting account integration services. If they do not transform into financial consumer data platform companies, they cannot survive this battle. This is because the environment has become one where consumers can switch service platforms with just a touch of their finger. Regulations related to inconvenient certificates for customers have also lost their place. Furthermore, internet-only banks have emerged, accelerating innovation even more. With the advancement of data technology and the era of 24/7 connectivity, a true digital era where customers are the owners has opened.

The idea of processing data centered on the customer is old, but practically implementing it is not easy. This change appeared coincidentally. In 2016, the UK regulatory authority established policies to prevent monopolistic abuses by large banks and support financial consumers and small businesses by ordering nine major banks to share and transfer customer data. Startups that secured data according to the technical standards set by the regulator began competing to develop innovative services. This was the start of the UK regulatory sandbox. The core of this policy is that customer data is automatically transferred from large banks to new operators according to the customer's wishes. This is not just done verbally but linked through systems to implement services by creating standards.

If Korea's BankSalad receives data from card companies, banks, insurance companies, securities firms, as well as telecom and retail companies in documents or files with different formats each time, unnecessary costs and time are spent converting this data into usable forms, ultimately forcing the abandonment of innovative services. The 'MyData' system is precisely about creating concrete technical and service standards that allow data to be used for customers according to their wishes in the data era and making it work in the market.

The data industry is destined to develop while guaranteeing the rights of personal information subjects. The MyData system is attracting attention as a solution to realize the rights of personal information subjects while achieving innovation in the data industry. In a situation where conflicts between data utilization and personal information protection are not easily resolved, the main task of the Korean version of the MyData policy is to create many concrete success cases through the participation of information subjects, i.e., customers.

Based on the 'Comprehensive MyData Development Policy' announced by the 4th Industrial Revolution Committee last June, the government is promoting MyData projects in finance, healthcare, telecommunications, and the public sector. What needs to be done for the MyData policy to succeed? The most important point is to clearly define the participants. Looking at the UK case, nine major banks were designated as obligated providers, and innovative service development companies were specified to exercise the 'data transmission request right,' i.e., MyData rights, from customers. Korea's financial services are in a similar environment, targeting strictly regulated financial companies. The standardized data processing environment also contributes to making it easier to implement the MyData policy.

The second is technical implementation. The abstract meaning of rights is not a sufficient condition for MyData success. Even if there are legal rights to view, correct, copy, or request transmission, if the provider does not have the technical environment or provides data in a difficult-to-use form, that data becomes useless. Third is safety. Information subjects can exercise their rights only if there are sufficient preparations against security risks or leakage accidents when their data, which has so far been with trustworthy large companies, is transferred to new innovative companies. The government must keep these points in mind when promoting policies.

Fortunately, the four sectors currently presented by the government all have providers that are national institutions or operators strictly controlled as public interest or licensed businesses. Going forward, it remains to clearly define the requirements for permitted innovative operators by sector and establish appropriate technical standards for each sector. More important than the system is sufficient communication among participants. Ultimately, the parties pushing and pulling over customer data know the best compromise points. We hope that by carefully considering the public's support and concerns about BankSalad and Toss, the MyData policy will lead Korea to become a customer-centered data service powerhouse.