KB, Shinhan, Kakao rushing for 'digital accredited certificate systems'

A website showing the traditional accredited certificate system is seen in this photo. The mandatory use of the public certificate of authentication will cease to have legal effect on Dec. 10. Yonhap

By Lee Min-hyung

Commercial lenders here are rushing to develop their own banking authentication certificates to take the lead in the emerging market.

The government has for more than two decades controlled the market, with a single public accredited certificate system for the local online banking industry.

It was only until recently that commercial players started developing their own platforms. Starting from Dec. 10, however, the move is expected to gain steam, as the government is set to abolish the mandatory use of the public accredited certificate of authentication. The system was introduced in 1999 in line with the internet boom.

But it was cited as one of the most outdated regulations in the financial industry due to its complex usage. The years-long controversy over the system ended in May when the National Assembly passed a revision to the Digital Signature Act.

The rapid rise of biometric identification systems with higher security also boosted the discussion on the abolishment of the existing public system. Local lenders are moving to adopt fingerprint, face or iris scan recognition systems for users to access their banking apps. A four-digit password system is also widely in use.

Among the local commercial banks, Kakao Bank was the first mover in the industry. The number of subscribers to the internet-only lender's own certificate system has topped 12.54 million as of the end of June 2020. This is the most among the nation's commercial lenders.

The bank started its own authentication certificate service in July 2017 when the company launched.

The lender's certificate system features its highly secure e-signature tools, allowing one authenticated mobile device to access the firm's banking platforms.

“Individual users for the conventional public accredited certificate service have to store their identification information on their smartphones, PCs or USB devices, so this runs the risk of being lost and illegally accessed,” an official from Kakao Bank said. “On top of that, they have to renew their certificate each year through a very complicated process.”

But users do not have to carry around such storage devices by using Kakao Bank's certificate system, and it runs much lower risk of being leaked to any third party because financial companies are the key authorities to manage their identification information, according to the official.

KB Kookmin Bank is the runner-up in the commercial authentication certificate market. The nation's second-largest lender by market capitalization has operated its own mobile authentication service from July 2019. The number of its subscribers has since surpassed 4 million.

The bank did not share specific blueprints for its plans to expand the service, citing its infancy.

“Among the traditional commercial banks, we hold the largest number of subscribers,” a spokesman for the lender said. “We are going to expand the platform with a view to making it one of the best certificates to replace the current public system.”

The lender has been one of the leading digital-driven lenders, with KB Kookmin Bank CEO Hur Yin placing a top management priority in achieving digital transformation since he took office in November 2017.

Under his leadership, the bank tapped into the market for the first time among the conventional lenders here ― excluding emerging players such as Kakao Bank.

Users can easily issue their mobile certificate in less than 1 minute with their smartphone. They do not have to visit any sales offices and can finish the subscription with their mobile phone number and an identification card, according to the lender.

The state-run lenders are also on track to embrace the new trend in the local banking security market. Last year, Industrial Bank of Korea (IBK) launched its own mobile authentication certificate, and saw more than 97 percent of users for its mobile banking app, i-ONE Bank, using the certificate, according to IBK.

Shinhan Bank is also seeking to expand its foothold in the market. The lender, however, said it would accelerate its drive toward the market after the government reveals any specific guidelines possibly at the end of this year.

“The market is promising enough, but we remain cautious over making rapid inroads into the area due to its infancy,” an official from the lender said. “After the government unveils specific plans over how to control the market, we will tap deeper into the territory.”

Compatibility issue

Other top-tier banks ― such as Woori Bank and Hana Bank ― remain less aggressive in joining the market, as customers will face difficulties in using the service due to its currently weak compatibility.

“We do not have any plans to launch our own authentication certificate,” a spokesman at Woori Bank said. “Even if we start such a service, its usage will be limited among our financial affiliates. For now, chances are customers will find it uncomfortable to use the service due to the weak compatibility.”

For instance, KB's mobile authentication certificate does not allow users to access e-government service websites.