Savings Banks Also Introduce 'Biometric Authentication'... "Strengthening Internal Controls" [1mm Financial Talk]

'Jijeongmaek Authentication' to Be Introduced at Savings Bank Counters
"Strengthening Internal Controls Following Financial Sector Trends"

Amid a series of internal control incidents in the financial sector, the savings bank industry has also decided to adopt vein pattern authentication. Vein pattern authentication is a method based on the fact that the veins in a person's finger have unique vascular patterns.

According to the financial sector on the 3rd, the Korea Federation of Savings Banks recently announced a bid for a project to build an internal control system using vein pattern authentication and is in the process of selecting a contractor. It was confirmed that three bio-solution specialized companies participated in the business briefing held on the 29th.

The Korea Federation of Savings Banks plans to finalize a contract with one bio-solution company within this month and introduce the vein pattern authentication method into the Korea Federation of Savings Banks Integrated Financial Information System (IFIS) around next year. IFIS is a computer system used by 67 savings banks to handle major IT tasks and external financial transactions, currently operating with password and other cryptographic authentication methods. Savings banks using IFIS plan to use both passwords and vein pattern authentication concurrently at branch counters for the time being, with the intention to fully switch to vein pattern authentication in the future.

[Image source=Yonhap News]

The savings bank industry's move to build a vein pattern authentication system is aimed at enhancing security. By applying an authentication technology that uses internal vascular information of the body instead of existing password authentication, financial accidents caused by password leaks or internal sharing can be fundamentally prevented. A representative from the Korea Federation of Savings Banks explained, “We posted the bid announcement to proactively establish internal control measures before major financial accidents occur, following the security trend of bio-authentication methods in the financial sector.”

In fact, six out of ten recent financial accidents were caused by internal employees. According to data received by Kim Sung-joo, a member of the Democratic Party of Korea, from the Financial Supervisory Service, among 451 financial accidents over five years from 2018 to July last year, 264 cases (59%) were caused by internal employees. In terms of financial damage, out of 1.1066 trillion KRW, 864.6 billion KRW (78%) was caused by internal employees. In the savings bank sector, the number of financial accidents caused by internal employees and the amount of damage were recorded as 12 cases and 20.9 billion KRW, respectively.

Accordingly, commercial banks and mutual finance companies have already introduced and advanced vein pattern authentication methods. NH Nonghyup Bank completed the construction of a vein pattern authentication system in December 2020 and switched its entire branch system to vein pattern authentication from August 2022. A Nonghyup Bank official stated, “We established the vein pattern authentication method to respond to the Financial Supervisory Service’s internal control policies for banks and to mitigate the risk of financial accidents.” Credit unions applied vein pattern authentication to integrated login systems in September 2017. A representative from the National Credit Union Federation of Korea said, “We established internal control measures to ensure that financial terminals cannot be operated unless by the employee themselves.”