108 institutions join MyData rate-cut service

Consumers only need to give consent once for a MyData provider to request a lower interest rate from a financial institution. The number of institutions participating in the MyData-based rate-cut request service rose from 70 to 108 in about six months. The service has expanded beyond banks to savings banks, card issuers, capital firms and insurers.

MyData is a service that combines and uses various types of financial information. Under this system, consumers give consent once, after which a MyData provider uses changes in their credit status to request a lower interest rate from a financial institution. This reduces the burden on borrowers who previously had to identify changes in their income, assets or credit rating themselves and submit an application after taking out a loan.

The current participants are 18 MyData providers and 90 financial institutions. They include Naver Pay, Kakao Pay, Toss, Finda and Bank Salad. The financial institutions encompass not only commercial and internet-only banks but also savings banks, insurers, card issuers and capital firms. With the exception of 12 savings banks, savings-bank customers can use the service through the integrated IT system operated by the Korea Federation of Savings Banks.

Consumers are also exercising this right more often. Applications for the right to request lower interest rates exceeded 10 million by the end of July, a seven- to eightfold increase from the previous year. Suhyup Bank, the National Federation of Fisheries Cooperatives, SBI Savings Bank and KB Capital are scheduled to launch the service this month, while Jeju Bank and RCI Financial Services Korea plan to open the service in the second half of this year.

Who will see a difference? Borrowers who previously struggled to identify changes in their credit status and therefore never applied will find it easier to exercise their rights. Users of second-tier financial institutions, where interest rates are relatively high, may particularly benefit, as even a small reduction can ease their interest burden. By making requests to financial institutions on the basis of financial information, MyData providers simplify the process consumers must follow to exercise their rights. ETNews quoted a financial-sector official as saying that the service could lower consumers' interest payments while also benefiting financial institutions' customer management.