South Korea’s KB Kookmin Card Co. will introduce a blockchain-based personal authentication system for its bank service users from next month, becoming the first Korean financial institution that would adopt such a simplified, but more secure mobile payment verification system in Korea.

According to financial industry sources on Sunday, KB Kookmin Card in partnership with Bitcoin exchange service startup Coinplug Inc. will release a blockchain-based personal authentication service for mobile financial transaction in mid-November. It will be the first of its kind in Korea, the company claims.

A blockchain technology is a public ledger of digital currencies where all participants have access to data blocks, or information, on financial transactions, rather than having a centralized ledger managed by a reputable intermediary such as a central bank. It is considered as one of the most advanced fintech or financial technology system and provides high security in online transaction.

KB Kookmin Card’s blockchain-based verification technology will first be implemented in its mobile credit card app, simplifying the current system that requires additional personal authentication steps for logging in, registering a new credit card, for making mobile payment of 300,000 won ($264.08) or above, the company said.

Market observers predict other banks and financial companies will soon follow suit of KB Kookmin Card and the blockchain-based personal authentication system will quickly replace the conventional financial transaction process in Korea that has posed an inconvenience, requiring online or mobile payment service users to have a verification certificate issued and renewed every year. The current, complicated verification process has been blamed for shunning away foreigners living in Korea and elders from the rapidly growing mobile or online market places in Korea that is boasted as one of the world’s most wired countries.

KB Kookmin Card’s new blockchain-based system will allow its mobile credit card user to have a personal authentication certificate issued just one-time and enter a six-digit pass code, shorter than the current 10-digit code.

The credit card firm also expects the new system will lower its administrative expenses in issuing personal authentication certificates and managing customer data through an intermediate company since the blockchain network involves all users sharing transaction data, requiring no third-party institution for verification. Also, it is considered hacking-proof because it is difficult to forge transaction data.

Currently, Korea’s major commercial lenders including Shinhan Bank, KEB Hana Bank and KB Kookmin Bank are taking part in the R3 CEV project, a global consortium of financial institutions in research and development of blockchain usage in the financial system in a move to prepare to implement the blockchain-based new verification system.

By Chung Ji-sung

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