The Taiwan Banker NO.97107.01 / By the TABF editorial department
Finance and tech heavyweights gather at TABF's fintech summitFintech Days
Fintech, the use of advanced digital technology in financial services, is becoming increasingly widespread. Consumers are the biggest beneficiaries of the efficiencies created by fintech. In November, the Taiwan Academy of Banking and Finance (TABF) held an event to boost cooperation between different industries involved with fintech. The Taiwan Academy of Banking and Finance is dedicated to helping strengthen Taiwan's financial sector. One way to boost efficiency in the local financial sector is by integrating advanced digital technology into existing platforms. If Taiwan can embrace fintech, there will be manifest benefits for the nation's financial sector, from increased competitiveness to much higher customer satisfaction. With this in mind, TABF held the FinTech Days event last November. Participants at the two-day event included finance and tech executives from both Taiwan and abroad. They discussed how to improve the selection and quality of Taiwan's financial services products with regulatory technology, artificial intelligence, blockchain, virtual reality and big data technologies. Chairman of TABF, Hung Mao-wei: Launch the FinTech Net platform and integrate resourcesHung Mao-wei, chairman of TABF, said at the forum that technology is helping us to lower costs and increase conveniences. Hung noted that among the four topics covered at the forum - regtech (financial regulation tech), blockchain, AI and smart agriculture financing - the latter is not as well known. Yet, smart agriculture financing is an area in which Taiwan has strong potential, he said. Meanwhile, TABF launched the FinTech Net platform at the event, which aims to integrate different talents, technology services and businesses models to support Taiwan's fintech development. Vice Premier Shi Jun-ji: The government will support fintech development in four areasVice Premier Shi Ju-ji emphasized that the government will support fintech development in four different ways: through legislation, government funding, facilitating the participation of the traditional finance sector, and in terms of industrial structure. Further, the fintech regulatory sandbox has passed its initial review, and the government set up the Financial Technology Development Fund in September 2015. Many startups can develop innovative businesses and experiment on this basis, Shi said, adding that banks, securities and insurance firms are all glad to be involved in this development process.Taiwan currently has 38 local banks. Some observers believe that the high number of domestic banks indicates excess supply - a situation of overbanking. But Vice Premier Shi has a different viewpoint. In his view, the the status quo in Taiwan's financial industry is actually in line with so-called monopolistic competition in industrial economics. That is, no single bank can monopolize the market, and there is also some product differentiation between banks (mutual substitution and mutual differentiation). If too few banks control the financial sector, it will not be healthy. On the other hand, if the sector is hyper-competitive, it will be fairly unstable. Yet in Taiwan's financial sector, some banks are highly competitive in certain businesses. However, some businesses may still find a niche for their own banks to diversify into because of their differentiation. Given the unique market conditions in Taiwan's financial sector, there are tremendous opportunities for fintech. Many startups could resell R & D products to financial institutions. Together, startups and banks could develop new businesses. Truth be told, Taiwan has been talking about developing fintech for several years, but we don't yet have anything outstanding to show for it. We have been developing blockchain applications and artificial intelligence-powered wealth management services, but to a certain extent we are simply replicating what has already been done overseas. Taiwan must think deeply about how fintech can benefit consumers and businesses, and focus less on catchy slogans. At the same time, the financial and technology sectors must become better integrated before they can properly harness fintech's benefits. Wellington Koo, chairman of the Financial Supervisory Commission: Create a financial science and technology ecosystem Wellington Koo, chairman of the Financial Supervisory Commission, pointed out that disruptive innovation in the form of digital technology is impacting the traditional financial industry. As a result, a more "intelligent" type of finance is emerging that focuses on customer experience. Ultimately, this trend will help financial services extend its reach, achieve an inclusive financial spirit and enhance the overall competitiveness and commercial value of the financial industry. Koo cited the World Economic Forum's report released in August 2017, which noted competition will intensify in finance as technological development accelerates - even though fintech firms are not yet large enough to form a new financial services ecosystem and consumers are still not used to relying on startups for their banking needs. As financial services becomes more digitized, intelligent and mobile, the FSC aims to play a leading role in introducing innovative thinking to Taiwan's finance sector. Under the framework of the "Financial Technology White Paper Policy," 10 financial science and technology development promotion plans were launched to encourage technological innovation in the local financial industry. Furthermore, the Financial Technology Development Fund set up to cultivate new talent has thus far guided 40 start-up teams to invest in Taiwan's fintech industry. In addition, a dynamic financial science and technology ecosystem needs to be established in order to effectively attract talented people to Taiwan. Britain and Singapore have so far been successful in building fintech ecoystems. After studying the experiences of those two nations, the FSC established a cluster of financial technology innovation parks in Taipei where fintech startups can set up their operations, share resources, and exchange ideas. To ensure the sound development of the fintech industry, the FSC produced a fintech draft act, Financial Technology Innovative Experimentation Act, which was approved by the Executive Yuan. Further, the FSC will work with the Ministry of Science and Technology and research institutions to reduce uncertainties that may occur during the pilot phase of the law.