[MyData's Long Road Ahead] ① Although Starting Late, Korea Is the Only Country with Data Standardization... Great Potential

South Korea Takes First Steps in MyData Service This Year
Limited to Customer Financial Information Such as Deposits, Loans, Insurance, and Cards
Financial Companies and Fintech Firms Remain at the Level of Information Analysis

[Asia Economy Reporters Sim Nayoung and Lee Minwoo] #“Mr. Made’s spending this month is 2 million won, with the most spent on online shopping. The card that perfectly matches his consumption pattern is this one.” (Stage 1: Analysis and Recommendation) → “Mr. Made’s bank time deposit investment yield from last month is currently 1.5% per annum. Switching to ○○ Savings Bank’s time deposit can raise it to 3% per annum.” (Stage 2: Real-time Support) → “Mr. Made’s credit loan maturity date is 3 months away. The current interest rate is about 4% per annum, but considering his credit score has improved compared to two years ago, switching to ○○ Bank’s ○○ loan product can apply an interest rate in the 2.5% range and increase the limit by 20 million won.” (Stage 3: Prediction and Response)

This is the three-stage evolution process of the MyData service. The ultimate goal of this service is to provide one’s data to financial institutions or companies, have it analyzed and processed, and enjoy hyper-personalized services. South Korea, which just took its first steps in MyData services this year, is still stuck at stage 1. It is limited to financial information such as customers’ deposits, loans, insurance, and cards, and financial companies or fintech firms only analyze this information. Compared to European and American MyData companies that have already entered stage 2 and are preparing for stage 3, there is still a long way to go.

Slow Start and High Regulatory Barriers

South Korea started a step behind. Japan has provided an information bank service since 2015, where financial consumers manage what information to share, to what extent, and with which companies. The European Union implemented the General Data Protection Regulation (GDPR) including the right to data portability related to MyData in all member countries in 2018. South Korea laid the groundwork in 2020 with the passage of the Data 3 Act (amendments to the Personal Information Protection Act, the Act on Promotion of Information and Communications Network Utilization and Information Protection, and the Credit Information Act). Thus, it had less time to accumulate service experience than other countries.

The regulatory barriers are also high. On the ground, it is said that the Credit Information Act conflicts with the Banking Act and the Financial Consumer Protection Act, making it virtually impossible for the financial sector to pioneer the MyData business area.

An official in charge of MyData at Bank A said, “We provide MyData services under the Credit Information Act, but expanding into non-financial areas like distribution falls under the Banking Act,” adding, “When a bank engages in businesses other than its core operations, it must report subsidiary business operations, and the hurdles are usually high.” A fintech official B also said, “Recommending financial products to customers is classified as brokerage rather than advertising, so under the Financial Consumer Protection Act, we must register as a financial product brokerage business with the financial authorities and obtain related licenses, making commercialization difficult,” adding, “If specific product recommendations cannot be made, the service completeness inevitably decreases.”

The voices from the field say these barriers must be removed to capture customers’ pain points. The current status of MyData in Korea is vague. The entire service customers can get is something like, “Your current asset status shows an aggressive investment type. You should diversify with safe investment products.” If regulatory issues are resolved, it can evolve to something like, “If you subscribe to pension savings at Bank A and gold investment products at Bank B, your yield can increase by a certain percentage.”

There are also laws that need to be revised. The amendment to the Personal Information Protection Act is the biggest concern for financial authorities and the industry. The core is to expand and introduce the “right to data portability,” which allows individuals to transfer personal information from a specific company or institution to another business operator upon request. A Financial Services Commission official said, “Once this law passes, financial companies will be able to freely merge with other industry sectors and launch new MyData services.”

Korea is the Only One with Standardization... Great Potential

Although the market blossomed late, South Korea’s potential is considered sufficient. Especially, the government-led standardization of the method of exchanging scattered information among individual companies and the mandatory adherence to this method by business operators through a standardized Application Programming Interface (API) is a strength.

Overseas MyData operators collect data by scraping customer information displayed on screens such as homepages. Even if individual companies only change the order of information items, accuracy significantly drops. Since operators directly store and manage authentication information such as IDs and passwords, they are exposed to hacking risks. There are also concerns that operators can access more customer information than necessary.

However, these problems do not exist domestically. This is because only standardized information is exchanged between operators. From the user’s perspective, it is reassuring in terms of security. When personal information leakage incidents occur, responsibility is also clearly defined. Cho Youngseo, Chief Digital Platform Officer (CDPO) at KB Financial Group, said, “Overseas companies are surprised that the government strongly enforces the standardized API and that financial companies cooperate well with the financial authorities’ requests,” adding, “Koreans tend to give consent to provide information more readily than people in other countries, which is an advantage for the standardized API to take root.” The industry expects that if public information such as medical services and tax and pension payment records are also standardized into APIs, the MyData industry will gain much more momentum.

Operators in other sectors beyond finance are also preparing services. Following SK Telecom, KT and LG Uplus obtained preliminary MyData licenses last month, so all three major telecom companies are preparing to enter. The Korea Post also applied for a preliminary MyData license with the Financial Services Commission last month, becoming the first government agency to do so, and plans to start services as early as September. The Ministry of Health and Welfare is building the ‘My Healthway’ platform for medical MyData. The new government plans to fully open public data to the private sector. Jeong Hwansoo, a researcher at KDB Future Strategy Institute, said, “Policies to expand the scope of information provision are necessary for MyData operators to develop innovative content and for the public’s benefits to increase.”