[The Long Road for MyData]⑦ Killer Content Is Essential to Lead the Market

[Asia Economy Reporters Song Hwajeong and Lee Minwoo] MyData is rapidly settling in, but since it has only been around for four months, there are still many areas that need improvement. These include the lack of killer content, the crucial need for enhanced security, and the increasingly fierce competition between banks and big tech companies.

◆ Similar Content, Growth Constraints

Currently, 45 companies operate MyData services, but most consist of basic asset management features such as asset inquiry and financial product recommendations, as well as schedule notifications.

Office worker A, who has always been interested in fintech, signed up for MyData services as soon as they launched. Having used asset management apps before MyData, A was disappointed to find little difference between MyData and the apps previously used. A had expected to manage health checkup data or tax payment records at a glance, but MyData services have not yet advanced to that stage. What disappointed him most was that after trying several MyData services, hoping they would differ, they all turned out to be similar. Unable to find content that captivated him, A decided to simply use the MyData service of his main bank.

It is pointed out that the domestic MyData business mainly focuses on collecting and analyzing financial information and recommending customized products, lacking real-time customer response and financial behavior prediction like global banks. Saerom Lee, Senior Researcher at Woori Financial Research Institute, said, "Global banks provide services such as subscription cancellation, after-service, future expenditure alerts, and location-based credit card benefit notifications directly through apps, but domestic MyData is lacking in these areas."

Jung-ho Seo, Deputy Director of the Korea Institute of Finance, said, "If MyData expands into industries such as retail, telecommunications, and healthcare, data utilization will increase explosively. In this situation, the financial market landscape will change significantly depending on whether MyData providers can timely discover customer demands and offer differentiated customized solutions compared to the past." He added, "Data scale and artificial intelligence (AI) utilization capabilities will be the core competitiveness of MyData providers. To achieve this, financial companies and MyData providers must drastically strengthen customer-centric approaches."

There is also an opinion that investment is essential to gain a competitive edge. Senior Researcher Lee explained, "Domestic banks need to build systems that discover detailed financial needs, provide real-time services, and predict future financial behavior to operate diverse hyper-personalized banking services like global banks. Securing and internalizing advanced digital financial technologies such as AI and data science is essential, especially investing intensively in technologies related to financial behavior prediction."

◆ Accurate Information Provision and Security Are Essential

Since MyData handles massive amounts of personal information, security is paramount. According to the Financial Supervisory Service, at the end of last year, a financial company experienced an error in the MyData system during the transition of an asset management application to a MyData service, resulting in the asset information of 101 subscribers being exposed to other subscribers.

Researcher Ryu Changwon of Hana Financial Research Institute pointed out, "If inaccurate information appears or necessary information is not received due to insufficient information sharing between sectors, the basic utility of consumers being able to check their information at a glance is greatly reduced. For MyData services to settle, providing accurate information and alleviating security concerns are urgent tasks." He warned that if security incidents such as personal information leaks occur before the MyData business flourishes, it could face significant difficulties in progressing properly.

◆ Information Tug-of-War Between Financial Companies and Big Tech

Information sharing issues between commercial banks and fintech companies also remain a challenge. Since the MyData business is primarily promoted in the financial sector, financial companies must provide big tech MyData providers with extensive personal credit information related to financial transactions. However, big tech companies have not provided consumer data such as order details to financial companies, arguing that such data is not personal credit information. Although some data sharing was agreed upon through industry discussions, the data was grouped by categories such as home appliances/electronics, books/stationery, and fashion/clothing, which was criticized as meaningless information that is difficult to use for 'hyper-personalization' in the MyData era. An executive from a commercial bank lamented, "We provide detailed personal credit information containing financial activities to big tech companies like Naver and Kakao, but they do not provide detailed consumer information and only give vague industry-based data, which is clearly unfair."

Meanwhile, the fintech industry argues that the 'tilted playing field' logic is a framework misused to justify stricter fintech regulations. Professor Kim Daejong of Sejong University’s Department of Business Administration recently stated at a forum hosted by the Korea Fintech Industry Association, "The fintech regulatory arbitrage theory has no substance, and ignoring functional differences in regulatory arbitrage theory is an error. The principle of 'same function, same regulation' should evolve into a fair competition logic between fintech and traditional financial sectors."

Within the industry, voices are growing for the passage of amendments to the Electronic Financial Transactions Act (EFTA) to innovate digital finance overall, including MyData. The EFTA amendment, which includes allowing comprehensive payment service providers and introducing payment instruction transmission services (MyPayment), is a long-standing wish of the fintech industry. Since last year, the Financial Services Commission has been pushing for the amendment’s passage, but progress has stalled due to disagreements between fintech and financial companies. In particular, the introduction of MyPayment would eliminate the complex bank intermediation process and enable direct fund transfers between customer accounts, which financial companies, especially banks, are most wary of.