From the latter half of this year, financial institutions will only be able to ask for customers' resident registration numbers at the initial, application stage.
After that, people will not be asked to provide their registration numbers but instead be asked to verify their identity through other, safer means.
The registration numbers have been at the center of a recent series of high-level personal information security breaches, and toughening their use is a key part of a package unveiled by the government on Monday to fight widespread leaks of personal data.
Financial institutions will also not be allowed to keep collected information for more than five years after the final transaction.
"Apart from the information that's absolutely necessary, all other data that the financial institution either has or has provided to a third party will be destroyed. The police and the prosecution will jointly and indefinitely crack down on breaches."
The government has also tightened the penalty system.
If a company is found to have used illegally obtained personal information to make profits, it will be fined three percent of the total sales made through using the data.
Also, a fine up to five billion won, or roughly 4.7 million U.S. dollar will be levied on firms that leak customer information.
Officials reaffirmed that customers will only have to give just their basic information, such as their registration number and date of birth, for receiving financial services.
People will also be given the option to retract on an agreement to provide personal data and also block telemarketing calls from financial institutions.
"But industry experts are already questioning whether these measures will be effective saying most of them have either been practiced or are merely a reiteration of similar policies from the past.
Laah Hyun-kyung, Arirang News."