Technology is shaking up South Korea’s banking-finance industry, with players embracing digital transformation as a core part of their business strategy going forward.
Reflecting this shift, 71 of the 108 (65.7 percent) finance companies here are pursuing various business projects aimed at digital transformation. And this year, these firms have set aside 584.5 billion won ($492.7 million) toward running such projects, an analysis by the Financial Supervisory Service showed Tuesday.
The 108 finance firms consist of 17 banks, 8 credit card firms, 25 insurance companies and 14 securities brokerages.
The rising importance of technology and digitalization in finance is reflected by organizational changes. Right now, 63 of the 108 (58.3 percent) banking-finance companies here have established units specializing in digital operations.
By industry, the banking and card industries have bigger and more concentrated teams focused on digital strategies than insurance or securities firms.
For instance, the average number of “digital specialists” at Korea’s four major commercial banks is 194.5 people, compared to the financial industry average of 56.4 people, the regulator said.
These “technology experts” spanning across artificial intelligence, digital user interface design and big data analytics are are being internally trained, or brought in from the outside.
The FSS found that 64 of the 108 (59.3 percent) local finance firms are either planning to run specialized digital training programs to educate existing employees, or choosing to recruit experts from the outside.
As for the types of technologies being developed, 38 projects were dedicated to AI service adoption and expansion, 37 projects for internal process automation, including robotic process automation, and 26 cases for big data platform development and optimization, according to the FSS.
Looking ahead, the financial regulator said that digitalization increase the related risks related to security, operations and internal control, posing new security and operations-related challenges to the finance industry.
In terms of security, the FSS stressed that the new technologies in use are vulnerable to new types of breaches and unforeseen cyber threats. The diversification of digital channels for financial transactions and data exchange also increases the likelihood of data compromises and consequent damages.
The adoption of new information technology systems, such as those involving increased public cloud usage or vast data management, raises the likelihood of errors and service disruptions as well, the FSS said.
Given this, the financial watchdog plans to take steps to self-enforce IT security governance measure, as well as carry out security audits.
The body also pledged to strengthen its monitoring of large IT systems and the risks from technology outsourcing such as public cloud usage.
By Sohn Ji-young (email@example.com