Financial authorities scramble after Supreme Court scraping ban

Regulators, industry agree on phased transition once alternatives are in place

The Financial Services Commission office at Government Complex Seoul in Jongno-gu, Seoul. [Yonhap]
The Financial Services Commission office at Government Complex Seoul in Jongno-gu, Seoul. [Yonhap]

Financial regulators are working to prevent disruptions to financial services after the Supreme Court announced plans to block automated data scraping. Regulators and the financial industry agreed that while personal data protections should be strengthened, alternative systems must be put in place before any phased transition away from scraping — particularly to avoid confusion in non-face-to-face financial transactions such as mortgage and jeonse loans.

The Financial Services Commission held a "financial sector review meeting on scraping restrictions" Wednesday with the Personal Information Protection Commission, financial industry associations, financial companies and the Financial Supervisory Service to assess the impact that scraping limits imposed by the Supreme Court and administrative agencies could have on financial services.

The meeting was called after the Supreme Court announced it would block scraping of its real estate registry and family relations registration systems starting Aug. 20. The court disclosed the restriction plan last month, citing system overloads caused by repeated automated access and concerns over personal data protection.

The financial industry has warned that halting scraping before adequate alternatives are in place could cause significant disruption to non-face-to-face financial transactions. Scraping is a method by which a financial institution's software, with a customer's consent and authentication, automatically retrieves necessary information by accessing government agency or Supreme Court systems.

Banks currently use scraping to verify family relationships and marital status during mortgage and jeonse loan reviews, as well as for opening accounts for minor children and checking inheritance eligibility. If the existing method is abruptly cut off, customers would have to obtain and submit documents such as family relation certificates themselves, and financial institutions would need to verify them separately — potentially lengthening processing times. Internet-only banks, which have fewer branches, are expected to be hit particularly hard.

Policy finance programs are also expected to be affected. The Korea Housing and Urban Guarantee Corporation and the Korea Housing Finance Corporation use scraping to verify the eligibility of applicants such as first-time homebuyers and newlyweds. If the block takes effect, reviews for housing purchase and jeonse support could face delays.

In response, the Personal Information Protection Commission, together with the FSC and the Ministry of Interior and Safety, has asked the Supreme Court to delay the block, citing insufficient preparation time for the financial sector. The commission expects the Supreme Court to announce a temporary deferral in consideration of public inconvenience.

The scraping restrictions will not apply uniformly across all public-sector systems starting Aug. 20. While the right to data portability takes effect under amendments to the enforcement decree of the Personal Information Protection Act, the commission has said the regime does not constitute an outright ban on scraping. Information-holding institutions and service providers can maintain existing methods for a set period if they agree in advance on the scope of data, access and authentication procedures, and personal data protection measures.

Over the longer term, regulators aim to replace scraping with public MyData or application programming interface systems. Public MyData is a framework under which government agencies electronically provide a user's personal information to financial companies with the user's consent. An API allows institutions to exchange necessary data directly according to agreed-upon technical standards.

However, migrating all the administrative data that the financial sector currently retrieves through scraping to new systems in a short period will not be easy. The industry says a reasonable preparation period is needed, given that system integration between information-holding institutions and financial companies, as well as security framework upgrades, will be required.

Participants at Wednesday's meeting agreed that scraping restrictions should be pursued in stages only after sufficient alternatives are in place, in order to strengthen personal data protection while minimizing gaps in financial services and inconvenience to consumers.

The FSC said it would "work closely with relevant agencies to swiftly develop a reasonable response plan so that the public does not suffer inconvenience or harm from scraping restrictions and financial services can be provided in a stable manner."


rim@heraldcorp.com