SEOUL, Dec. 18 (Xinhua) -- South Korea's financial regulator said Wednesday that it formally launched "open banking" services in a bid to lower transaction fees and enhance convenience for using online banking services.
Under the open banking system, bank customers will be allowed to use any mobile banking application they choose to approach their bank accounts at any local bank and to withdraw and transfer money from their bank accounts.
The pilot service was run from Oct. 30 to Dec. 17, joined by 10 banks. Beginning Wednesday, the open banking will be available for a total of 16 banks and 31 fintech businesses, according to the Financial Services Commission (FSC).
The ceremony to formally kick off open banking services was co-hosted earlier in the day by the FSC and the Korea Financial Telecommunications & Clearings Institute.
FSC Chairman Eun Sung-soo said at the ceremony that open banking became more than simply a payment system and emerged as a key financial infrastructure to bring tectonic shifts in the financial industry.
Emphasizing the importance of openness, efficiency and stability in payment sectors, Eun said the government will establish legal foundations through the revision of the Electronic Financial Transactions Act while expanding the scope and function of the open banking services.
The open banking system would allow fintech firms to approach banks' payment network via the open Application Programming Interface (API) initiatives, leading to lower transaction costs and enhanced convenience for the mobile banking.
The open access to the payment system would lower transaction fees from the current 400 won (0.3 U.S. dollar) to 500 won (0.4 U.S. dollar) per transaction to about 40 won to 50 won for large service providers and 20 won to 30 won for small- and mid-sized providers, according to the FSC.
It will exalt convenience for bank customers who can manage all their accounts in a single application without using separate applications for different banks, the FSC noted.
During the pilot-service period, more than 3.1 million people registered about 7.73 million open banking accounts, or some 2.5 accounts per person.
The FSC said the lowered entry barrier for fintech firms would lead to the development of better services tailored for the needs of consumers at lower costs, noting that banks would be able to diversify their customer base and grow as comprehensive financial service platforms.