[Exclusive] Was There a Will to Activate Financial Data? Neglected 'Data Exchange'... Annual Transactions Only '15 Million Won'

'Financial Security Institute's Data Exchange Faces Indifference in Its Fifth Year'
Last Year’s Data Transaction Volume at Only 15 Million KRW... Just Three Deals Made
Industry in Urgent Need of New Data Business Left Disheartened

The financial data business, which was launched with great fanfare as a new growth engine in the financial sector, is now facing a survival crisis. The Financial Data Exchange under the Financial Security Institute, established as a market where high-quality data products can be bought and sold, has struggled to gain attention even in its fifth year, with annual transaction amounts barely reaching 10 million KRW. It is being criticized for maintaining only a nominal presence, essentially in a state of 'business suspension.'

According to data submitted by the Financial Security Institute under the Financial Services Commission to the office of Park Sang-hyuk, a member of the Democratic Party of Korea, on the 13th, the amount of paid data traded on the Financial Data Exchange last year was only 14.98 million KRW. There were only three paid data transactions. This is the first time the paid transaction performance of the Financial Data Exchange, now in its fifth year, has been disclosed.

The paid data transaction amount has been declining over the past three years (2022?2024). In 2022, the first year after the pilot service period ended, the transaction amount was about 89.2 million KRW. Within a year, the transaction amount sharply dropped to one-fifth (17.89 million KRW), and last year it decreased by about 3 million KRW, breaking below 15 million KRW. During the pilot service period in 2020 and 2021, transaction performance (including direct contracts between companies matched through the exchange) was recorded at 889.22 million KRW and 216.10 million KRW, respectively.

The Financial Security Institute has attempted follow-up measures such as enhancing the service and improving user convenience to revitalize the declining transactions, but has failed to increase the transaction volume. In February last year, the Financial Security Institute expanded the service by diversifying product types, introducing electronic contracts, implementing paid memberships, and strengthening promotional and community functions. Around the same time, they also established a 'Data Hub' to enable participants in data transactions to send and receive data safely and conveniently.

The Financial Security Institute, a non-profit organization under the Financial Services Commission, launched the Financial Data Exchange in May 2020 in line with the financial authorities' policy to activate the data distribution market. The total cost incurred for building and operating the exchange service to date amounts to 3.34 billion KRW.

An insider familiar with the Financial Data Exchange situation said, "In 2022, the Financial Security Institute was able to achieve nearly 100 million KRW in transactions because it participated in the Ministry of Science and ICT's 'Data Voucher' project," adding, "After ceasing participation in that project, the transaction amount appears to have fallen to the 10 million KRW level." The Data Voucher project is a government initiative that supports small and medium-sized enterprises and small business owners with costs for purchasing and processing data.

Financial Security Institute Financial Data Exchange Website

With no visible results over several years, companies that had designated the data business as a 'future growth engine' are disheartened. A representative from a seller on the Financial Data Exchange said, "Currently, the data business is not profitable," and added, "I don't know when we will see profits here (in the data business), but since there are not many alternatives, we plan to continue the data business for now."

In particular, the card industry is at a critical time to secure profitability in new businesses, including financial data products. Due to expected consumer downturns following emergency measures and impeachment aftermath, as well as reductions in credit card merchant fees, card companies are projected to lose 300 billion KRW in net profit annually starting this year. Although they are defending profitability by increasing card loan volumes, the implementation of the third stage of the Stress Debt Service Ratio (DSR) in July, in line with debt management policies, may make it even more difficult to expand loan assets.

Although financial authorities and the card industry have been brainstorming profitable businesses utilizing financial data, the situation remains unfavorable. At the 'Card Company CEO Meeting' held on the 17th of last month, Kim Byung-hwan, Chairman of the Financial Services Commission, mentioned the development direction of the card industry, stating, "We have made institutional support efforts to activate big data-based services in the card industry," but there were criticisms that this is disconnected from reality. A financial sector insider explained, "From the financial industry perspective, the data business is indeed a promising field, but every time the government changes, the interests of the relevant ministries and inter-ministerial cooperation systems change, causing the momentum to be lost. It is also true that the atmosphere for proactively investing first is disappearing."

The financial data business is expected to be one of the key projects for Park Sang-won, the new head of the Financial Security Institute who took office on the 2nd. As Park, known as a 'planning expert,' has overseen small and medium finance sectors at the Financial Supervisory Service, it is anticipated that he will also take an interest in the data market, including the Financial Data Exchange.

A representative from the Financial Security Institute said, "The Financial Data Exchange is still in its early stages, forming a data distribution market by providing a one-stop process from data product search to analysis, contract, payment, and delivery," and added, "Since contracts through the exchange are not mandatory, including direct contracts between companies, transaction performance could increase."