Securities firms brace for MyData business

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By Anna J. Park

Korea's financial industry is heading towards greater innovation based on various applications of big data from clients. With the implementation this month of revisions to three data-related laws ― the Personal Information Protection Act, the Information, Communications Network Act and the Protection of Credit Information Act ― financial firms now have more leeway in their use of customers' information to create and improve financial services.

One of the imminent game changes in the industry is the government-led "MyData" business plan. Originally conceived in 2018, the program was part of the a long-term plan to help the nation's data industry by stimulating healthy competition between financial firms in the development of innovative financial products based on AI and big data.

Under the MyData business plan, financial institutions are obliged to provide customers' personal information to a third party approved by the government as a MyData business operator, which compiles customers' information and allows access to it with a convenient application programming interface (API). Customers can enjoy a streamlined service which allows them to browse all of their financial information at one easy glance using the mobile app or the website of a MyData business operator.

What is also different from the so-called "open banking" service already in place in Korea is that while it is similar to a MyData business in that it allows customers to have a look at their entire account information in financial institutions, MyData expands the realm of practical use of personal financial data, such as recommendations of financial products based on the data. Thus, the MyData business goes beyond just an account aggregation service to many other forms such as a sophisticated analysis of consumption patterns.

So far, a total of 64 companies had submitted their applications earlier this month to be selected as MyData business operators. The Financial Supervisory Service plans to evaluate about 40 applications in the first batch starting early next month; the 40 are those that are already involved in providing open banking services or are big data-driven techfin companies. After completing the firms' assessment, the remaining applications will be evaluated. The final results are slated to be released early next year.

Securities firms' war over MyData business
About 17 of the 64 companies that applied for the MyData operator approval are brokerage houses, including major firms such as NH Investment & Securities, Shinhan Financial Investment, Samsung Securities, KB Securities, Mirae Asset Daewoo and Korea Investment & Securities.

Each company has been preparing for the MyData business model for some time. While most big securities firms such as Mirae Asset Daewoo created a special taskforce to develop business strategies in the area, Shinhan and Hana Financial Investment approached the state-led business plan with the full support of their parent groups. Shinhan went through business consulting to advance and solidify its service plan, and Hana cooperated with the financial group's data strategy team that had been created earlier exclusively for the development of an AI data analysis platform.

NH Investment & Securities joined hands with Seoul National University's graduate school of data science to develop core asset management technologies at the end of last month, aiming to have particular strength in this field. The brokerage house also signed an MOU with fintech marketing firm Rich Planet early last year to jointly develop the service.

Hanwha Investment & Securities launched Data Analytics Lab ― a company affiliate solely focusing on data analysis ― in the summer of 2018, aiming to dominate the market.

Smaller brokerage firms, Kiwoom, Daishin, and Hi Investment, have also been preparing to work on the MyData project. Kiwoom Securities signed an MOU in late 2018 with fintech firm Rainist, which operates Bank Salad ― one of the most popular asset management mobile apps in Korea ― as part of plans to bolster capacity in the data business.

Big tech giants Naver Financial and Kakao Pay have also joined the data war, as both companies submitted applications for the government-led business plan.

Yet, each of these securities firms' specific and detailed services remain a secret. As unique differentiation could be the key to success of the MyData business model, they are hiding key strategies from the media. Public relations officials of the firms declined to comment on specific business plans, saying that such information was not even shared inside the company.

"Details of the plan will be made public, only if the firm is publicly designated as a MyData business operator," officials from some securities firms told The Korea Times, adding that only employees related to the strategic data team know the specifics so far.

Market analysts expect the MyData business will accelerate the financial industry's change towards digital-based platforms.

"The clock of financial firms that will be MyData operators and IT-based digital platform techfin firms will go faster and faster," said Cho Yong-sun, an analyst at SK Securities. "Financial customers' inclinations are already leaning towards flexibility from rigidity."

Other market watchers pointed out that the MyData business will, eventurally, enhance customers' benefits through fairer competition.

"MyData business will help expand customers' financial options, with the increased use of big data," Kwon Min-kyeong, a research fellow at Korea Capital Market Institute, told The Korea Times.

"Previously, big major financial institutions had access to customers' financial information, which bolstered their clout and influence in the market, because they could use the information in marketing strategies. However, the MyData business model will create an environment where smaller-sized companies can join the competition on a fairer, level playing field, which will lower prices and enhance customer services," Kwon added.