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Introducing accounts switching in Korea : Key issues and policy implications

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Frame of Image ble to switch accounts online on the website of Korea Financial Telecommunications & Clearing Institute (KFTC). From January 2016, the same service would be available at bank branches. As of end-June, domestic banks held outstanding MMDA balance of 469 trillion won, and some forecast as much as 50% of them could move once the accounts switching is launched. This massive money move might not be such a farfetched scenario given the result of a recent survey, in which 51.2% of the respondents said they either switched their main banks within the past three years or intend to do so. Similarly, a 2012 Ernst&Young, Global Consumer Banking Survey showed that 89% of financial consumers are multi-banking users. Against this background, we examine issues related to impending introduction of accounts switching, and propose policy recommendations.
Introduction
On November 27, 2013, Korea’s Financial Services Commission (FSC) unveiled measures to strengthen competitiveness of the financial sector, identifying three key missions to enhance competition, convergence, and consumer protection. As part of efforts to facilitate competition, it proposed a plan to introduce accounts switching in 2016. As of 2014, the system was available in EU and Australia. The EU
50
Figure Ⅲ.2 Reasons for switching accounts
Better service at new bank
30% 24% 27% 23% 22% 25% 16% 18% 16% 9% 9% 9% 8% 8% 7% 5% 6% 5% 16% 14% 18%
Poor service / errors at old bank New bank more convenient, e.g. branch Lower fees or cha


Full Text
Title Introducing accounts switching in Korea
Similar Titles
Sub Title

Key issues and policy implications

Material Type Articles
Author(English)

Kim, Woojin

Publisher

[Seoul]:Korea Institute of Finance

Date 2015-11
Series Title; No Current Issues
Journal Title; Vol./Issue Korean Economic and Financial Review:
Pages 4
Subject Country South Korea(Asia and Pacific)
United Kingdom(Europe)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Economy < Economic Administration
Holding Korea Institute of Finance