Bank account portability to go into full swing next week

The government will make it easier for people to shift their accounts from one bank to another starting next week, which is expected to improve overall competitiveness of the financial sector, the financial regulator said Friday.

The third phase of the so-called bank account portability system, which is set to start next Friday, should improve convenience for customers and stoke healthy competition among banks which have been struggling with their dwindling earnings, according to the Financial Services Commission.

The measure, first introduced in July last year, is designed to automatically transfer all automatic withdrawal services of a customer that is linked to his or her existing bank account to a new one when they opt to switch their main bank.

(Yonhap)

Currently, only a limited transfer service is permitted, with customers required to go through an often vexing and cumbersome process via the website of the Korea Financial Telecommunications and Clearings Institute.

"With the latest update, customers will be able to apply for the service at each bank branch and website, so elderly people or others who have little knowledge or access to the Internet will be able to easily use the service," a Financial Services Commission official said.

"As automatic withdrawal via bank accounts will also expand into almost all sectors starting June, more people will be able to enjoy more wide-ranging services," he added.

As of September last year, the total amount of the balance of bank accounts eligible for the shifting service came to 24.28 billion won ($19.67 million), accounting for 21.6 percent of all deposits.

The expanded system is likely to intensify competition among local institutions who will have to lure more customers at a time when they will introduce the brand new tax-exempt Individual Savings Account.

From the single ISA account, users can manage a wide range of financial products such as funds and stock investment accounts, with the government to offer tax exemptions of up to 2 million won on profits. (Yonhap)