SEOUL, Apr. 15 (Korea Bizwire) — Banks in South Korea will fully open their payment network to fintech firms in December, officials said Monday, in a fresh effort to encourage development of new payment services and greater competition in the financial sector.
Currently, only banks can access the payment network, but even banks are allowed to process only transactions for accounts held with them. Although banks jointly launched a technology protocol in 2016 for an open banking system, only a small number of fintech firms can use the system, paying relatively high fees to do so.
If banks fully open their payment system to fintech firms, it will allow customers to use a single application to access their accounts at different banks and make payments.
Choi Seok-min, a senior official at the Korea Financial Telecommunications & Clearings Institute, said banks will complete a computer network for the open banking system by October.
After a trial period, fintech firms will be able to fully access the opening banking system in December, according to Choi.
Fees charged to fintech firms for using the network will be lowered to one-tenth of the current level to ensure fair competition, Choi said.
South Korea’s financial authorities have pledged to promote the fintech industry since the National Assembly passed bills last September on a “regulatory sandbox,” in which fintech firms are allowed to experiment under amicable regulations.
The Korean government is also counting on fintech to reinvigorate its financial industry, which has been struggling with slow growth and thin margins.