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(Yonhap Interview) S. Korea's credit service chief vows to safeguard financial data

All News 11:21 January 25, 2016

By Lee Joon-seung

SEOUL, Jan. 25 (Yonhap) -- The head of South Korea's newly formed public credit information service said Monday that utmost importance and energy will be focused on safeguarding the country's financial data that is critical for long-term market growth and economic well-being.

In an interview with Yonhap News Agency, Min Sung-kee made clear that the primary responsibility of the Korea Credit Information Service is to safely protect the country's credit and financial information, and to provide timely and accurate data that can strengthen the competitiveness of the local market.

The service that officially launched on Jan. 1 was set up jointly by the Korean Federation of Banks (KFB), the Korea Financial Investment Association, the Korea Life Insurance Association, the Korea Insurance Development Institute, the General Insurance Association of Korea, and the Credit Finance Association of Korea in the wake of the 2014 personal data leak scandal. The leak of some 100 million financial transaction records shook the financial market to its core, and highlighted the need for watertight control over vital data.

The non-profit service created by a formal legislative act is the first of its kind in the world to control and manage information related to banking, stocks, insurance, savings banks, money lending and credit finance. In the past such information was kept separately by each business sector which sometimes made it easier to steal data.

The credit bureau official made clear that while there may be numerous benefits to having all financial-related information generated in the country under one roof, if there is a breach it can spell disaster in terms of market confidence and for the country's financial sector in general.

"There are multiple layers of security in place to prevent credit data theft and misuse with all employees being drilled from the outset to be fully aware of security breaches that can compromise the entire system," the 58-year-old former KFB senior executive said. "If there is even a single breach, all transaction records will be compromised."

The official pledged to invest heavily on security in the future to stay one step ahead of those that may be trying to break into the unified system.

Reflecting this, the head made a point of visiting the service's central computing and information center in Anyang 23 kilometers south of Seoul after he was officially appointed to his present post.

Min said that because the service handles all credit and financial sector information, he expects a rise in overall efficiency in the regulation and use of financial data in the country.

On concerns that the service may become something akin to the all-watching "Big Brother" from George Orwell's novel Nineteen Eighty-Four, the director made clear that such fears were unfounded and based on inadequate information.

"The credit bureau keeps track of loans, arrears, insurance policies taken out by people and the settlement of account records, but it does not have access to data on personal savings, income earnings and records on credit card use," he pointed out.

The public service agency chief, in addition, said the service will move to gather and compile so-called Big Data that can be used to help local startup companies. The Big Data on the credit situation of a company and what type of technology a company possesses can be used to facilitate the flow of funds and financial transactions down the line.

He added that by the end of the year, infrastructure to better calculate a debt service ratio (DSR) will be created.

A DSR is a guideline that can be used for loan reviews that takes into account credit based borrowing, credit card loans, and installment plans on vehicles that can precisely gauge the ability of a person to finance his or her debt in a timely manner. Such a system can be used to help policymakers keep tabs on household loans that have shot up sharply in recent years.

Such developments have raised alarm bells, especially since the country may be compelled to raise interest rates in the future from the current record low levels.

At present, with no such information available, lenders have an incomplete picture of an individual's debt service capabilities that can inadvertently lead to problems.

"DSR is a very complicated process that has to take into consideration repayment deadlines on outstanding loans and such data as interest rate payments and repayment schedules not only from banks, but also from various financial institutions like the National Credit Union Federation of Korea and the Korean Federation of Community Credit Cooperatives," Min said.

The official, meanwhile, said that with personnel from six organizations forming the new agency, it is of critical importance that they merge smoothly into a single organization as soon as possible.

This merge is key to the improved productivity and efficiency of the organization as a whole, he emphasized.


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