Recent incidents of hacking and personal data breaches in the financial sector have heightened concerns about consumer protection capabilities among financial institutions. This is particularly critical for internet-only banks, where all transactions are conducted online, making it essential to establish robust security and compensation systems to ensure consumers can use financial services with confidence. As a result, proactive consumer protection that identifies and mitigates risks before incidents occur is gaining attention.
K Bank is enhancing its fraud prevention system by leveraging artificial intelligence (AI) and machine learning technologies. The bank is actively addressing issues such as the unjust freezing of legitimate customer accounts and compensating victims of identity theft.
Tak Yoon-sung, head of consumer protection at K Bank, emphasized in a recent interview with Aju Economy that while adhering to laws and regulations may seem the safest approach for banks, it does not necessarily serve the best interests of customers. He stated, "Rather than avoiding responsibility, we must first consider whether we are genuinely helping our customers."
Below is a Q&A with Tak.
- With recent hacking incidents in the financial sector increasing consumer anxiety, what principle does K Bank prioritize in consumer protection?
"The most important aspect of consumer protection is ultimately the company's philosophy. I believe that the level of consumer protection varies depending on whether a financial institution prioritizes performance or customer protection. K Bank has a clear direction: to evolve from merely addressing issues after they arise to proactively identifying and preventing potential inconveniences and damages for customers. Since all transactions at internet banks occur through apps, it can be challenging for customers to seek help when problems arise. Therefore, it is insufficient to respond only after customers report issues or experience losses. The bank must be able to detect and resolve problems proactively."
- How is K Bank's emphasis on proactive consumer protection being implemented in actual fraud prevention?
"Previously, the focus was on freezing accounts after victims reported financial fraud. Now, we concentrate on analyzing transaction data to identify accounts that are likely to be used for criminal activities in advance.
There are certain patterns associated with accounts or transactions used in financial fraud. We have established a system that uses machine learning to detect suspicious transactions and trace past fraudulent activities to identify accounts that may be exploited for crime. As a result of enhancing this monitoring, the number of financial fraud incidents decreased from 1,376 in December of last year to 710 in June of this year. The rate of identifying suspicious accounts has also improved, rising from 13% last year to 54% this year, indicating enhanced accuracy in selecting accounts at risk of being used for fraud."
- What achievements has K Bank made in consumer protection through AI?
"K Bank utilizes AI not just as a tool for operational efficiency but as a core infrastructure to enhance the quality and accuracy of consumer protection. We have already established a support system that combines AI with a knowledge management system (KMS) to better understand customer inquiries during consultations and quickly find the necessary information. This aims to reduce reliance on individual consultants' experiences and provide more consistent responses to customers.
We are also applying advanced AI agents to our complaint handling processes, with plans to complete an AI complaint response system covering 12 areas by November. This system will assist staff in finding necessary evidence and similar cases, moving away from the traditional method of manually searching through laws, regulations, and past complaints. In our fraud response efforts, we are integrating AI rule models and procedures to enhance both speed and accuracy in decision-making. Combining the speed of AI with human expertise is K Bank's goal in consumer protection."
- As fraud prevention measures increase, legitimate customers may face transaction restrictions. What are the countermeasures?
"One of the most challenging aspects of fraud prevention is balancing security with customer convenience. Broadly blocking suspicious transactions can help prevent crime but may inconvenience legitimate customers.
Therefore, we must enhance the accuracy of detecting unusual transactions while ensuring that incorrectly blocked transactions are quickly released. A prime example is the use of 'selfie' facial recognition. Even if a transaction is flagged as suspicious, customers can quickly resume the transaction by verifying their identity through facial recognition, which takes about 5 to 10 seconds. The key is to use technology to reduce false positives and, when they occur, to make it easy for customers to resolve the issue. It is not desirable to impose complex verification procedures on all customers solely for the sake of security."
- What is K Bank's most important upcoming initiative in consumer protection?
"As a tech-leading company, we plan to actively utilize advanced technologies for fraud detection and victim compensation. However, more important than technology is the bank's attitude and principles regarding consumer protection. While banks are businesses, they also serve as crucial financial infrastructure that supports society. This entails a public responsibility to protect customer assets and maintain financial order. Consumer protection is not just about effectively managing incidents after they occur; the ultimate goal is to prevent customers from suffering losses and to create an environment where they can use financial services with peace of mind."
* This article has been translated by AI.
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