"Major Post Offices Nationwide to Offer Bank Loan Products Starting Next Year"

Financial Services Commission Designates New Innovative Financial Services
Major Post Offices Nationwide to Offer Bank Loan Products, Enhancing Consumer Accessibility

In the first half of next year, loan products from the four major banks (KB Kookmin, Shinhan, Woori, and Hana) will be sold at approximately 20 main post offices nationwide.

Major Post Offices Nationwide to Offer Bank Loan Products, Enhancing Consumer Accessibility

The Financial Services Commission announced on December 21 that at its regular meeting on December 17, it newly designated several services as innovative financial services: "Bank agency services through the delegation of banking operations" (14 cases) involving Kookmin Bank and 12 other financial institutions and the Korea Post, and "Interest rate reduction request proxy services using MyData" (19 cases) involving Kookmin Bank and 18 other companies.

Recently, concerns have been raised about reduced financial accessibility for the elderly and other digitally vulnerable groups due to a decrease in the number of physical bank branches. In response, the Financial Services Commission has been promoting the introduction of bank agency services to improve consumer access to financial services. Until the formal introduction through an amendment to the Banking Act, the commission has designated the four major banks, Korea Post, and nine savings banks (Dongyang, Moa, Central, Oseong, SBI, Incheon, JT Chinae, Jinju, and Hanseong) as innovative financial service providers for a pilot program.

Previously, the delegation of essential banking operations such as deposit and loan product contracts and terminations to third parties was restricted. However, with the designation of these new innovative financial services, banks can now delegate such operations to post offices and savings banks (as trustees), allowing consumers to access banking services at trustee institutions even in areas without bank branches. However, trustee institutions will not handle all banking operations; rather, they will perform customer-facing tasks such as consultations, receiving transaction applications, and contract execution on behalf of the banks.

The Financial Services Commission expects that this service will not only increase the number of channels through which consumers can access banking services face-to-face but also enhance convenience by allowing them to compare a variety of financial products in person. If a trustee institution partners with two or more banks, consumers will be able to compare interest rates and other terms for various deposit or loan products in one place and select the product most advantageous to them.

The commission has also established supplementary measures to ensure consumer protection, such as making it clear in contracts that legal liability for damages to consumers fundamentally rests with the delegating bank. In addition, it emphasized that banks will be restricted from closing nearby branches for the purpose of operating bank agency services, to prevent these services from being used as a means to close bank branches.

Based on these innovative financial service designations, the Financial Services Commission is working with the four major banks, Korea Post, the Korea Financial Telecommunications & Clearings Institute, and other relevant institutions to prepare for the pilot operation of bank agency services. The goal is to begin selling the four major banks' loan products (such as personal credit loans and policy loans for low-income individuals) at approximately 20 main post offices nationwide in the first half of next year.

Interest Rate Reduction Request Proxy Service Using MyData to Be Launched

The Financial Services Commission also announced the implementation of an interest rate reduction request proxy service using MyData (personal credit information management business).

To enhance the effectiveness of the interest rate reduction request right, the commission has continuously implemented various institutional measures such as proactive notifications to borrowers who may be eligible for interest rate reductions (semiannually) and disclosure of acceptance rates (semiannually). However, since last year, the number of requests, acceptance rates, and the amount of interest reduced have all been on a downward trend.

The main reason for this decline has been identified as the fact that many borrowers, due to being busy with their livelihoods, are unaware of the existence of the interest rate reduction request right or how to apply for it, and thus do not utilize it.

Going forward, personal MyData service providers (AI Agents) will be able to exercise the interest rate reduction request right on behalf of borrowers for their personal loans. If a busy borrower consents to proxy application just once, the MyData service provider will automatically submit an interest rate reduction request whenever it determines that the borrower may be eligible, without requiring further action from the borrower. If the request is denied, the provider will identify the reasons and inform the borrower of the necessary steps to gain approval.

This service will be launched for personal loans at 13 banks starting in the first quarter of next year. Depending on operational results in the banking sector, the commission will consider expanding the service in stages to savings banks, credit card companies, and other secondary financial institutions after further consultation.

A Financial Services Commission official stated, "With the designation of this service, we expect to ease the interest burden on financial consumers and create an opportunity to expand inclusive finance using technologies such as artificial intelligence (AI) and data."