South Korea has started a pilot-testing program for open banking, according to a release. The company started testing on Wednesday (Oct. 30).
The South Korean government said it was going to run the pilot phase and assess the system and its performance, as well as make adjustments as necessary. The system will be released to FinTech firms by Dec. 18.
At first, 10 banks will participate in open banking, and then it will be open to others. The idea for the initiative was launched on Feb. 25, and the system allows FinTech firms access to bank payment systems across South Korea, through AP13 initiatives.
Some of the key features of open banking are lower transaction fees and more convenience for the user. Also, bank customers can now have the option of using any banking app to take care of all their accounts, eliminating the need to have separate apps for separate accounts.
FinTech firms that want to participate in the program will have to undergo a security check. The program will also have a 24-hour fraud detection system to shut down transactions deemed suspicious or fraudulent.
“The government expects that open banking will boost innovation and competitiveness in the financial sectors by introducing a comprehensive financial service platform, allowing fintech businesses to adopt open banking, and improving user experience for consumers,” according to the release. “The lowered entry barrier for fintech firms will lead to the provision and development of better services tailored to the needs of consumers at lower costs. Banks will be able to diversity and widen their customer base, and grow as comprehensive financial service platforms.”
The idea is that the ability to choose between different financial services will improve the experience for customers, and give them a better sense of control over their own information.
The government of South Korea plans to eventually expand the open banking program to include ancillary financial businesses, like mutual finance, the postal service and savings banks.