South Korea’s top financial policymaking body rolled out plans Monday to lower regulatory barriers for local financial firms to capitalize on databases accumulated in the public sector to improve their products, while also strengthening ways for consumers to take control of their own personal information shared by different financial services firms.
The Financial Services Commission said such measures in the long run would be key to achieving “financial inclusion.”
In a meeting with heads of associations of banks, insurance firms, investment firms and card firms, FSC Chairman Choi Jong-ku said the measures would tackle a lethargy in the global race for the use of big data in financial sector.
“The level of regulation on private information protection was already assessed to be at the highest level in 2013, and (the regulation) was toughened yet again in 2014 in the wake of information leaks by credit card firms,” Choi said. “Such strengthening of the regulatory barrier has significantly undermined the use of big data in private sectors.”
“It’s imperative to make a radical change in policy direction in order to salvage the balance between personal information security and financial firms’ active use of data,” added the nation’s top financial policymaker.
Under the measures, security-enhanced sample databases from state-led agencies like the Korea Credit Information Services or the Korea Insurance Development Institute will be made accessible to financial firms, financial technology startups and research institutions, starting in the second half of 2018 through law revisions.
The policymaker expected a random sample, as large as 2 percent of the information pool, could be used to develop new financial products, analyze markets and conduct academic research.
In addition, the FSC pledged to establish a big data brokerage platform on a separate agency, the Financial Security Institute, by the first half of 2019, so that “de-identified data” sets could be traded.
These could be realized through the FSC-led revisions by the first half of this year, so that financial firms are encouraged to use data with enhanced privacy through de-identification techniques, including encryption.
The move by the FSC is expected to tackle regulatory roadblocks when it comes to financial firms’ use of databases, following massive information leaks in 2014 from local credit card firms that affected over 100 million credit cards and accounts.
The set of plans, mainly through revisions of the Credit Information Use and Protection Act, also included ways to nurture more credit bureau business entities, as well as strengthen the existing players.
The revision will enable credit card firms to implement target marketing schemes and offer other related customer services based on their own accumulated sets of data.
In the meantime, the FSC vowed to promise financial customers the right to data portability through a revision by the first half of this year.
If the revision takes place, consumers could keep track of financial firms’ usage of private information and choose to refuse the use of personal data for their own purposes.
Prior to the meeting, Choi in a closed-door briefing Friday stressed a need for financial sector’s role in spearheading the nation’s “data-driven economy” and achieving “financial inclusion,” by becoming a “big data test-bed.”
“The regulatory barriers in making use of big data analysis have hampered the diversification of financial products tailored to an individual, while those with thin files were sidelined from the current system,” Choi said Friday,
By Son Ji-hyoung