[Internet Banks 5 Years④] MyData, the Battleground for Financial Companies and Fintech... Who Will Be the Winner?

Already Surpassed 10 Million Service Subscribers
Internet Banks Have Not Entered Yet
Launched Services Still Face 'Differentiation' Challenges
Information Imbalance with Big Tech Also a Problem

[Asia Economy reporters Minwoo Lee and Baeri Boo] Since the full-scale implementation of the MyData (personal credit information management) business earlier this year, the personal financial management (PFM) market, which has already been active overseas, is expected to grow rapidly in South Korea as well. Not only commercial banks but also insurance, card, securities, and fintech (finance + technology) companies are all jumping in, and internet-only banks are expected to face increasing challenges in differentiating themselves.

The key lies in how outstanding the services launched using MyData are, but so far, no particularly remarkable companies have stood out. The ‘personalized asset management’ market could mitigate the ‘interest income concentration’ phenomenon, which is pointed out as a weakness of Korean banks, and generate additional revenue through fee income. The company that secures this market could dominate the future financial market landscape.

According to the financial industry and authorities on the 25th, there are currently 55 businesses that have received full MyData licenses. MyData is a service that integrates personal financial information scattered across various companies. It represents a shift from a corporate- or financial institution-centered data utilization ecosystem to a personal-centered one. Since the end of last year, some operators have launched pilot services, intensifying competition across industries. According to data submitted by the Financial Services Commission to Assemblyman Jae-gyo Bae of the Justice Party, as of the 12th of last month, 10.84 million people (including duplicate subscribers) had already signed up for MyData services. By sector, fintech, information technology (IT), and credit bureau (CB) sectors accounted for 3.98 million users, followed by card (3.27 million), banks, savings banks, and mutual finance (3.15 million), and financial investment (440,000).

Revolutionizing Asset Management with MyData

Going forward, the trend toward ‘hyper-personalization’ in asset management through MyData is expected to become more pronounced. Based on big data, services will provide information necessary for users’ purchasing decisions or analyze behavioral patterns to strengthen marketing. Given the steady increase in household assets, there is a growing expectation that the personalized asset management market will grow substantially through MyData services. Hana Bank’s Digital Asset Management Center recently published the ‘2022 Korea Digital Asset Management Report,’ stating, "Although automated asset management services have recently advanced, personalized asset management services have not yet developed," and predicted, "PFM will differentiate itself by providing asset management services that are (non-face-to-face) to as many customers as possible, at low cost, and tailored to individual customer characteristics."

However, the industry consensus is that domestic MyData services have yet to show differentiated points. Currently, the MyData services provided by banks mainly display assets held at each bank or securities firm at once, analyze consumption status through credit card details, and recommend various financial products. A banking industry official said, "Domestic financial companies’ MyData services do not seem much different from existing fintech apps like Bank Salad, which provide expenditure management and asset status."

Internet-only banks are also cautious about launching services prematurely for similar reasons. Only KakaoBank applied for a preliminary license from financial authorities at the end of September, while K Bank and Toss Bank are not considering obtaining MyData licenses. This is interpreted as a decision to strengthen their core banking areas such as deposits and loans. Even KakaoBank, which applied for the license, has stated it will not rush. A KakaoBank official said, "Obtaining the license and launching the service are not urgent," adding, "We are analyzing existing MyData services and considering ways to differentiate ourselves."

Information Imbalance Between Financial Companies and Big Tech ‘Problem’

Meanwhile, the information imbalance between financial companies and big tech firms is also cited as a challenge to be resolved. For the domestic MyData market to grow, it must secure non-financial data to provide diverse services, but the reality is otherwise. Companies like Naver Financial and Kakao Pay receive all financial data from the financial sector, but conversely, big tech companies are not obligated to provide users’ non-financial data to banks and card companies. Overseas, MyData services collect non-financial information such as social network service (SNS) activities, medical, health, and music data to offer various services, but domestic MyData services face limitations that make it difficult to show differentiated services among financial companies.

For example, the UK-based personal data store (PDS) operator Digi.me collects not only financial data but also SNS activities such as Facebook and Instagram, as well as medical and health data, to offer various services. Digi.me’s partner companies analyze individual financial status based on this information and develop services such as product recommendations, health management information, and optimal commuting route information to present to customers.

Experts predict that the MyData market will change depending on the government’s role. There are calls for the government to step in to resolve information imbalance issues and to revise related regulations such as the capital requirement of over 500 million won and major shareholder suitability conditions set as licensing conditions. For instance, Insurtech (insurance + technology) company Bomap has obtained MyData permission and completed service functionality reviews and security vulnerability checks, but the inconsistent data standards provided by insurance companies have indefinitely delayed the service launch.

Professor Jiyong Seo of the Department of Business Administration at Sangmyung University advised, "A legal basis should be established to allow big tech companies’ non-credit data to be shared with financial companies," adding, "Lowering entry barriers for the MyData business and thoroughly supervising user protection such as security will activate the business."