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ebXML powers Korean banking/insurance consortium
A Korean bank and 10 insurance companies use ebXML to build an electronic consortium that exploits deregulated financial services marketplace and provides better services to customers.
Industrial Bank of Korea (IBK) unveiled last month its new system based on ebXML for transactions with some 10 insurance companies. The new system helps IBK take advantage of greater deregulation of Korean financial markets allowing banks and insurance companies to cross traditional market boundaries and collaborate more closely.
Benefits to businesses and customers
The bancassurance system, as it is called, enables IBK to expand its financial services to customers, and gives the insurance companies participating with IBK many more retail outlets than the companies had on their own. In Korea banks and insurance companies aim to remove their traditional industry boundaries by the year 2005. As part of this program, the adoption of e-business standards for the Korean financial services industries helps lower the costs of system development and encourages more participation.
The system gives IBK the ability to routinely market insurance services and integrate those services into its offerings for customers. The system allows branch banks to carry out traditional customer-support functions performed by insurance companies, including underwriting, policy issuance, handling of payments, taking case reports and customer management. The IBK system connects the bank and its branches to 10 leading insurance company partners, representing life, fire, and marine lines:
- Samsung Life Insurance Co., Ltd.
- Hungkuk Life Insurance Co., Ltd.
- Tongyanglife Insurance Co., Ltd.
- Korealife Insurance Co., Ltd.
- American International Assurance Korea
- Kyobo Life Insurance Co., Ltd.
- Dongbu Fire & Marine Insurance Co., Ltd.
- Oriental Fire & Marine Insurance Co., Ltd.
- Hyundai Fire & Marine Insurance Co., Ltd.
- Samsung Fire & Marine Insurance Co., Ltd.
ebXML helps connect trading partners
IBK hired InnoDigital, a Korean e-business solutions provider, to develop its system. The InnoDigital solution uses ebXML Message Service (ebMS) version 2.0 as the message protocol connecting IBK and its 10 insurance company trading partners. The system also uses the ebXML Collaboration Protocol Profile and Agreements (CPPA) Specification version 2.0 to identify and configure the business system interfaces for each trading partner.
Each participant in the network has an ebXML message service handler (MSH) that connects to a virtual private network (VPN) service that carries the insurance transactions. In Korea, according to InnoDigital, the National Intelligence Service specifies the encryption algorithms for business interactions used with Secure Socket Layer (SSL) on the Web. InnoDigital says that the system uses VPNs because both ordinary Java and .Net solutions do not yet support these encryption algorithms, requiring extra equipment or software to bring them up to spec, and thus making VPNs more economical.
The IBK system uses collaboration protocol agreements (CPAs) to configure the MSHs at each trading partner. According to Seung-Jae Lee of InnoDigital, IBK prepares the CPAs for the insurance companies, but the CPAs can change if the trading partner finds an error or if the insurance companies make changes in their MSHs.
The system supports two types of transactions: (1) online, synchronous message transactions, between bank tellers servicing customers and the insurance companies -- the ebMS reliable messaging features check for and eliminate duplicate messages that can occur in these live exchanges, and (2) batch, asynchronous messages, where large amounts of data are exchanged daily between IBK and the insurance vendors after business closing.
Testing for interoperability
While IBK uses the InnoDigital system for ebMS support, the insurance vendors are free to use solutions from any vendors, as long as they meet the requirements of ebMS and the VPNs. Each trading partner also had to meet interoperability tests specified by the Interoperability Task Group (ITG) of the ebXML Asia Committee (eAC). The eAC has conducted ebMS interoperability tests and certified software products from several vendors. The tests are divided into two phases, one for asynchronous messaging and error notification, and the other for synchronous messaging that includes acknowledgments and prevention of duplicate message delivery.
IBK began exchanging live transactions with the insurance providers using ebXML on 1 September 2003. The bancassurance project expects to add various features including use of XML digital signatures, ebXML Business Process Specification Schema, core components for for business document definition, and ebXML registry/repository to distribute to trading partners CPPs and CPAs. IBK also intends to expand the project to its Internet-based networks that support its ATM installations and Internet banking services.
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