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Foreign residents left out of digital-oriented banking service


gettyimagesbank
gettyimagesbank

By Lee Kyung-min

Foreign residents are being left out of enhanced digital services, indicating Korea's much-touted digitization drive has yet to fully include a demographic which has been increasing in size and relevance in the country over the past few years.

"I'm having a hard time understanding why expats should go to a bank in person to open an account, when Koreans can do it through the simple click of a button on a mobile app," said a woman from overseas in her 20s who declined to be identified. She teaches English at a private cram school here.

This is an experience shared by many foreign nationals living in Korea. It occurs due to the lack of a real-time identification verification system, an integrated system among government ministries and agencies put in place for Koreans to help speed up administrative processes that involve financial transactions or the handling of personal data.

The Financial Services Commission (FSC) revised a related rule in late 2019 to allow foreigners to open a bank account online using an alien registration card, the Korean equivalent of a resident registration card.

But full implementation of the rule is unlikely to occur any time soon because necessary follow-up measures are not being carried out. Related ministries have yet to reach an agreement on the details of how to verify the identity of foreign residents online.

"Koreans can have their identity verified by a real-time verification service managed by the Ministry of Interior and Safety among others, but that process does not extend to foreign nationals," an official from a local bank said.

"Unless the process is updated to include foreign customers ― such as allowing a passport as a valid form of identification ― in-person visits will be needed for them to open a bank account," he said.

Meanwhile, calls for greater consumer services for foreign residents are coming amid an increase in loan applications, mostly from young people in their 20s and 30s seeking credit (non-secured) loans averaging 60 million won ($55,000).

According to a report by the Korea Credit Information Services (KCIS), the number of foreign borrowers living in Korea was 99,787 and they had a combined outstanding balance of 5.97 trillion won as of June 2020.

The number of foreign borrowers grew 26 percent on average between 2016 and 2019, with the annual growth rate of their loan balances averaging 9.6 percent.

This is much higher than the 1.6 percent growth in the number of total borrowers and 5.3 percent growth in their loan balance.

The foreign loan market has grown and is expected to grow further, the report said, due to the expansion of tailored financial services for foreign residents amid local lenders' collective efforts to identify new customer bases, as illustrated by the expansion of services provided in multiple languages.



gettyimagesbank
gettyimagesbank

By Lee Kyung-min

Foreign residents are being left out of enhanced digital services, indicating Korea's much-touted digitization drive has yet to fully include a demographic which has been increasing in size and relevance in the country over the past few years.

"I'm having a hard time understanding why expats should go to a bank in person to open an account, when Koreans can do it through the simple click of a button on a mobile app," said a woman from overseas in her 20s who declined to be identified. She teaches English at a private cram school here.

This is an experience shared by many foreign nationals living in Korea. It occurs due to the lack of a real-time identification verification system, an integrated system among government ministries and agencies put in place for Koreans to help speed up administrative processes that involve financial transactions or the handling of personal data.

The Financial Services Commission (FSC) revised a related rule in late 2019 to allow foreigners to open a bank account online using an alien registration card, the Korean equivalent of a resident registration card.

But full implementation of the rule is unlikely to occur any time soon because necessary follow-up measures are not being carried out. Related ministries have yet to reach an agreement on the details of how to verify the identity of foreign residents online.

"Koreans can have their identity verified by a real-time verification service managed by the Ministry of Interior and Safety among others, but that process does not extend to foreign nationals," an official from a local bank said.

"Unless the process is updated to include foreign customers ― such as allowing a passport as a valid form of identification ― in-person visits will be needed for them to open a bank account," he said.

Meanwhile, calls for greater consumer services for foreign residents are coming amid an increase in loan applications, mostly from young people in their 20s and 30s seeking credit (non-secured) loans averaging 60 million won ($55,000).

According to a report by the Korea Credit Information Services (KCIS), the number of foreign borrowers living in Korea was 99,787 and they had a combined outstanding balance of 5.97 trillion won as of June 2020.

The number of foreign borrowers grew 26 percent on average between 2016 and 2019, with the annual growth rate of their loan balances averaging 9.6 percent.

This is much higher than the 1.6 percent growth in the number of total borrowers and 5.3 percent growth in their loan balance.

The foreign loan market has grown and is expected to grow further, the report said, due to the expansion of tailored financial services for foreign residents amid local lenders' collective efforts to identify new customer bases, as illustrated by the expansion of services provided in multiple languages.


Lee Kyung-min lkm@koreatimes.co.kr


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