Concerns about the fast-spreading novel coronavirus are fueling growing demand for “untact banking,” but foreign residents in South Korea still cannot subscribe to online banking services, due to the lack of a verification system.

Untact banking refers to online or mobile banking services without physical contact between bank staff and customers. 

Online-only banks, which have been in Korea since 2015, allow a totally contactless service, but regulatory issues meant that they could not open up to foreign customers.

Late last year, the Financial Services Commission set new guidelines to allow foreign residents’ identification cards as a legal document for approval. Although they went into effect on Jan. 1, the FSC and the Korea Immigration Service still has not built an online authentication system to check IDs for banking, officials told The Korea Herald.

“The FSC has been working on building a system in coordination with the Ministry of Justice and other institutions after the announcement, but it has not been decided when it can be implemented,” an FSC official said.

A Korean citizen needs a resident registration card, or a driver’s license, to open a bank account online. 

A digital copy of the ID is sent to related government ministries to check its authenticity.

But foreign residents have different ID cards, issued by the immigration office under the Justice Ministry, and banks do not accept these as sufficient to open an online bank account, though it should be possible according to the guidelines. 

“I tried to open a savings account on Kakao Bank with my identification card, but the bank’s mobile app didn’t approve,” said Amanda Field, 27, a foreign resident from Canada. “I also tried K Bank, but ended up getting a message saying a foreigner cannot open an account.” 

Online-only banks in Korea, Kakao Bank and K bank are aware of growing foreign demand for their services, but they are blaming authorities.

“We can’t operate banking services for foreigners since the computerized system for checking foreign residents’ identification card is yet to be implemented by the FSC and other related ministries,” said a Kakao Bank representatitve.  

Kakao Bank, an online-only banking unit under Korea’s largest mobile messenger Kakao, is reviewing processes like adopting automatic translation before starting untact banking services for foreign customers. But in the absence of the identification system it cannot roll out the service, he added.

It has been nearly five years since both Kakao Bank and K bank launched services, under South Korea’s ambitious drive to nurture the fintech market. The number of KakaoBank subscribers came to nearly 11 million last month, increased by some 8 percent from September last year when the figure surpassed 10 million for the first time. 

There are around 2 million foreign nationals residing in Korea.

By Choi Jae-hee (cjh@heraldcorp.com)