[New Financial Hegemony War] Fierce Tensions Over Equity Controversy... Chaotic MyData

Conflict Between Financial Sector and Big Tech·Fintech Over Disclosure of Summary Information
Concerns Over 'Half-Baked Innovation' Ahead of January Implementation
Experts "Understand Financial Sector's Concerns... Financial Authorities Must Act"

[Asia Economy Reporters Jin-ho Kim and Ki-ho Sung] A fierce battle of nerves is underway between traditional financial companies and big tech (large information and communication companies) and fintech (finance + technology) companies over the ‘Personal Credit Information Management Business (MyData),’ which is hailed as the future growth engine of the financial sector. The two sides are confronting each other by citing ‘fairness controversies and competitiveness degradation’ over everything from the launch schedule to the scope and content of information provision. With the sudden enforcement scheduled for January next year, conflicts are expected to intensify, raising concerns that it will end up as a ‘half-baked innovation.’

◆Conflict Started Over Transaction Details= The conflict between traditional financial companies and big tech and fintech firms began over whether to disclose ‘transaction details’ (information recording the names of the sender and recipient of financial transactions, memos, etc.) and remains a core issue. Regarding the MyData business, the banking sector has opposed disclosing transaction details, citing concerns over misuse and abuse of personal information. On the other hand, the big tech and fintech industries have argued that users must clearly know what, how, and how much they have spent from their bank accounts to provide proper MyData services.

In response, the financial authorities held a related meeting in July and ultimately decided to provide transaction details. The reason was to resolve consumer inconvenience and enhance business effectiveness. The financial authorities stipulated in the guidelines that transaction details should be provided only for the purpose of consumer self-inquiry and providing analysis services about the consumer, and prohibited external provision.

However, the controversy remains heated. Voices of dissatisfaction about the so-called ‘tilted playing field (unfair competition)’ have erupted from traditional financial companies and others. Financial companies argue that while they must disclose all customer data accumulated over decades, non-financial information held by big tech and fintech companies is not easily accessible, raising issues of ‘reverse discrimination.’ For example, Naver operates the MyData business through its subsidiary Naver Financial, so it does not have to disclose all information. The information provided through Naver Financial is also limited to categories such as ‘clothing’ and ‘food,’ rather than specific consumer purchase items.

A banking sector official pointed out, “From the bank’s perspective, the information provided is core and vast, whereas the information received is limited, so there is inevitably a fairness issue among (MyData) operators.”

Therefore, after the guideline announcement, the banking sector reportedly submitted a letter to the financial authorities recently requesting ‘to ensure fairness.’ They want this to be reflected in the final guidelines announced ahead of the full-scale implementation next year.

◆Ongoing Fairness Controversy, Experts Say “Tilted Playing Field Must Be Resolved”= The fairness controversy can also be found in other issues. The MyData business was originally scheduled to be fully implemented from last month. However, it was postponed to the end of the year due to fintech companies’ insufficient preparation. The fintech industry requested a postponement of the mandatory MyData-related API (Application Programming Interface) system, and the financial authorities accepted this.

However, from the perspective of traditional financial companies, which have devoted considerable time and money, this decision is inevitably unsatisfactory. It is as if their efforts to meet the launch schedule were in vain.

Also, the fact that MyData services are not available at offline bank counters is a major complaint from banks. The banking sector insists that face-to-face services are necessary to prevent the ‘exclusion phenomenon’ of the elderly who are not familiar with digital finance, but big tech and fintech companies oppose this, citing risks such as ‘incomplete sales.’

Experts say the traditional financial companies’ claim of a tilted playing field is a valid point. It is unreasonable to force one side to unilaterally provide information to competitors. Professor Ji-yong Seo of the Department of Business Administration at Sangmyung University said, “For MyData to succeed, both the financial sector and big tech must open their information to each other,” adding, “It is natural for the financial sector to be dissatisfied with big tech companies demanding information without disclosing their own sensitive data.”

He continued, “The financial authorities should find a point of contact that can resolve conflicts and satisfy the needs of both sides,” and criticized, “Because they have not taken a more proactive stance in solving the problem, fairness controversies keep emerging.”