One of BNK Financial Group's key tasks for the future, integrating the IT systems of Busan Bank and Kyongnam Bank, has been at a standstill for years. BNK is wasting nearly 100 billion won every year by operating the two banks' IT systems separately. It pledged to push ahead with integration to resolve this, but internally some say it is "virtually impossible to carry out due to legal issues and local public opinion."
On the 22nd, according to reporting by ChosunBiz, the integration of the Busan–Kyongnam Bank IT systems that BNK Financial Group Chairman Bin Dae-in had pledged to pursue has effectively come to a halt.
Earlier, when BS Financial, then the holding company of Busan Bank, acquired Kyongnam Bank in 2014, the BNK group was launched. For more than 10 years since, the two banks have operated their IT systems separately despite effectively being under one roof. The additional money spent to run two systems is around 100 billion won annually. A BNK official said, "About 70 billion to 80 billion won is IT investment expense for system construction, and around 20 billion to 30 billion won is for stable operations."
For that reason, integrating the Busan–Kyongnam Bank IT systems has been a long-cherished project for the BNK group. Former BNK group Chairman Kim Ji-wan also pledged to push for IT integration when taking office in 2017 but made little headway. Right after first taking office in Apr. 2023, Bin said, "To reduce duplicate investments and improve efficiency, we will review integration of the Busan–Kyongnam Bank IT systems." Then, in Feb. last year, Busan Bank and Kyongnam Bank succeeded in unifying their IT operating platforms to the same system.
A year has passed since, but there has been virtually no substantive progress in combining the two systems into one. An industry source familiar with the matter said, "Everyone knows it is institutionally unfeasible. When IT integration comes up, the mood internally is, 'Here we go again.'"
Different banks must clear legal hurdles to combine IT systems. Under Article 32 of the Credit Information Use and Protection Act, a financial company cannot provide personal credit information to a third party without the customer's consent. Busan Bank and Kyongnam Bank both belong to BNK Financial Group, but legally they are third parties to each other.
An industry source said, "If the systems are merged into one and databases (DB) are shared, there is a high likelihood of violating several provisions of the credit information law because information of customers who did not consent could be exposed to the other bank." An official at the Financial Services Commission said, "We cannot change the law just for BNK."
Local customers who use Kyongnam Bank may also oppose the IT integration. An industry source said, "When BS Financial acquired Kyongnam Bank in the past, the backlash was very intense. Some local residents see the IT integration as 'Busan Bank laying the groundwork to absorb and merge Kyongnam Bank.'" The source added, "If IT integration is pushed strongly, local residents could turn their backs, so caution is inevitable."
In 2013, the business community in the Kyongnam–Ulsan region, local governments, and civil society launched a 1 million-signature campaign to block Kyongnam Bank from being acquired by BS Financial. At the time, bodies such as the Gyeongnam Provincial Council and city councils also said, "If BS Financial acquires Kyongnam Bank, we will terminate our treasury contracts."