Five major bank executives will appear as witnesses at the National Assembly's audit for the first time in four years. Following a series of recent hacking incidents and data breaches in the banking sector, issues such as security investments, vulnerability management, and executive accountability are expected to be scrutinized. Questions regarding support for low-income finance, consumer protection, and the governance of financial holding companies are also anticipated.
According to the financial sector on October 18, Lee Hwan-joo of KB Kookmin Bank, Jeong Sang-hyeok of Shinhan Bank, Lee Ho-seong of Hana Bank, Jeong Jin-wan of Woori Bank, and Kang Tae-young of NH Nonghyup Bank are scheduled to testify as general witnesses at the National Assembly's Financial Supervisory Service audit on October 19. This marks the first time in four years that the five bank heads will appear together as witnesses, with their last appearance on October 11, 2022, focusing on embezzlement and internal control issues.
This year's audit is expected to center on the recent AI-based hacking incidents and data breaches in the banking sector, including the circumstances surrounding these events, the response processes, and the overall information security systems. There will be particular interest in how vulnerabilities are managed and the responsibilities of executives in overseeing these issues.
According to Park Sang-hyeok, a member of the Democratic Party, among the 4,770 vulnerabilities identified in simulated hacking tests conducted by 20 banks from 2022 to August of this year, 109 remained unaddressed as of August. The reasons for the delays in addressing these vulnerabilities, measures to prevent recurrence, and plans to strengthen information security investments and management systems are expected to be key discussion points.
In preparation for the audit, banks have reportedly sought legal advice from major law firms to review anticipated questions and responses. They are organizing the circumstances surrounding the incidents and subsequent actions while reviewing their information security systems and measures to prevent recurrence.
Given the presence of the five bank executives, inquiries are likely to extend beyond hacking to include policy finance, inclusive finance, and consumer protection in the sale of financial products.
Regarding policy finance, the performance of banks in supporting low-income finance and plans to expand supply are expected to be major topics of inquiry. The Bridge Loan program, which supports low-income finance users in settling into the banking sector, has seen poor performance among major commercial banks and may be scrutinized. According to data submitted by the Financial Supervisory Service to Democratic Party member Park Min-kyu, the total amount of new Bridge Loans issued by banks from January to August this year was 14.11 billion won, with the four major banks—KB Kookmin, Shinhan, Woori, and Hana—issuing only 1.3 billion won, accounting for just 0.9% of the total.
Consumer protection issues may also arise regarding the sale of exchange-traded funds (ETFs), particularly whether explanations about upfront fees were sufficient. Additionally, the management of total household loan limits and whether this has caused difficulties for genuine borrowers will be examined.
Questions regarding the governance of financial holding companies and the accountability of executives are also expected. Some bank executives serve on the boards of financial holding companies or as non-executive directors, which may broaden inquiries into decision-making at the holding company level and the responsibilities of management. Notably, all five bank executives are approaching the end of their terms this year, raising the possibility of discussions about reappointments and personnel matters.
A source from the Financial Services Commission stated, "Responses regarding hacking have already been addressed to some extent in previous audits, and we are also preparing questions related to policy finance," adding, "Given that banks have emphasized support for low-income finance, we plan to inquire about actual support performance and future expansion plans."
* This article has been translated by AI.
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