The Taiwan Banker

FinTech development is an important avenue to increase a country’s national competitiveness. Aside from providing a favorable business environment, the use of technology should be encouraged for innovation. Each member country of the Asia-Pacific Association of Banking Institutes (APABI) shared its experiences to promote mutual progress at its most recent annual executive meeting. Financial training institutes in the Asia-Pacific should train human resources and conduct on-the-job training for banking and financial professionals through cross-border resource integration and joint study. Human capital must be enriched in anticipation of the coming transformation.The first time in Taiwan in 14 yearsSince its first meeting was held in Singapore in 1986, APABI has held its executive meeting every two years, at different member institutions, on a rotating basis. 2004 was the first year it was held in Taipei, sponsored by the Taiwan Academy of Banking and Finance (TABF). This year, 14 years later, from May 9-11, it once again returned to Taiwan, and was once again sponsored by TABF. Representatives of nearly 30 members and special guests, including South Korea, Singapore, Malaysia, Australia, India, Nepal, Bhutan, and Pakistan, were warmly invited to Taiwan. The meeting had three main highlights. The 19 member institutes in attendance voted to allow the Emirates Institute of Banking and Financial Studies (EIBFS) to formally join APABI, becoming its 20th member. The Financial Services Institute of Australasia (FINSIA), which had previously withdrawn, returned this year as an observer, and may become a formal member again. The theme of this conference was “FinTalent Development in the Digital Era.” Since discussion and application of FinTech in Taiwan in recent years, and the regularization of everything from Bank 3.0, Digital Banks, mobile payments, regulatory sandboxes, to blockchain technology, APABI members for over 30 years shared their development situations in the meeting.Taiwanese financial institutions are local investors in the Hong Kong and ASEAN markets to which the APABI members belong. Taiwanese professionals often work in Singapore and Hong Kong. TABF President Hank Huang (黃崇哲) pointed out that Taiwan once played a leading role in the development of financial commodities and credit cards. Each member’s FinTech professional development situation was discussed, clearly exposing a lack of fluency in each other’s issues.Huang said this APABI meeting in Taiwan was a positive effort. From the standpoint of the Taiwan financial industry, on the one hand, Taiwan’s international connections mainly revolve around its own business community at present. This was an opportunity for it to build connections with its international counterparts, particularly in ASEAN countries. Meanwhile, financial training institutions introduced the markets in their respective countries, focusing on particular on forward-looking FinTech issues – sharing first-hand information which can guide state banks going overseas.New international cooperation in FinTechVice Chairman of the Financial Supervisory Commission (FSC) Cheng Cheng-mount (鄭貞茂) also introduced the current state of FinTech in Taiwan, saying that the objective of the FSC is to “set the direction for future development, while still maintaining stability.” Various business priorities – such as FinTech development, implementation of differentiated management, and optimization of corporate governance – oriented towards using Fintech to promote financial development and supervision. In light of the strategic importance of FinTech, in order to provide an optimal environment for its development, and promote its application for financial innovation, the FSC has been providing assistance to related businesses, as well as advisory and consulting services. It has also taken measures to assist FinTech innovation and entrepreneurship, and cultivate human resources.The most noteworthy event in the Taiwan FinTech industry this year was the “FinTech Development and Innovation Experimental Regulation” passed at the end of last year. The internationally acclaimed “regulatory sandbox” will be formally launched, and the FSC has planned to set up physical locations for FinTech development, providing appropriate office space with rent deductions, and setting up a digital sandbox platform and thematic innovation laboratory for FinTech entrepreneurs.The FSC has further encouraged businesses to expand FinTech applications in financial markets and innovation in mobile payments, set up an “Electronic Payment Promotion Working Group,” and promoted a 5-year plan to grow the portion of electronic payments in Taiwan from 26% in 2015 to 52％ in 2020.Cheng emphasized that “the long-term objective of Taiwan’s push for FinTech investment is to take our financial sector overseas,” which the only way for it to thrive. To this end, the FSC has also explored possible targets for cooperation with various countries. In March of this year, it signed a forward-looking Co-operation Agreement with the Polish Financial Supervision Authority (KNF) to promote FinTech regulatory collaboration, creating opportunities for cooperation, and building an international financial market between the two countries.KNF, Poland’s central financial regulation body, was established in 2006. In early 2017, an inter-ministerial “Special Working Group for Financial Innovation” was set up to coordinate solutions to potential regulatory obstacles in Poland’s domestic FinTech markets. KNF has also implemented an “Innovation Center Plan” to provide necessary assistance through dialogue between regulators and entrepreneurs, taking into account market stability and consumer protection, in addition to financial innovation.Hopefully, APABI member institutions can sign similar agreements with Taiwan, or else introduce possible partners in their own countries. At the meeting, Sanjib Subba, CEO of the Nepal National Banking Institute, pointed out that Nepal has its own political, economic, and social conditions. It just underwent its first federal democratic elections, and anticipates that its economy and banking industry will gradually stabilize and grow.FinTech services in ASEANOne of Nepal’s current difficulties is cybercrime. It suffered around US$ 4 million in losses last year, and its cybercrimes reached US $360 million over the last 10 years. It is clear that Nepal is in the process of promoting FinTech and human resource development, with regulatory technology as one of its major focus points. Subba also mentioned that Nepal is highly interested in learning from the experiences of other countries to modernize its markets; furthermore, its illiteracy rate is high, and its population far from fully banked. Nevertheless, many in the older generation still know how to use mobile phones to dial and send messages, greatly facilitating the development of mobile payments and transfers.Similarly, Nepal’s low-level economy is dominated by small enterprises lacking sufficient funds to buy computers. Most banks cannot expend their online services or online corporate finance quickly, but that allows local business to cooperate with mobile payment providers to develop mobile micro-finance service models. Those interested in exploiting Nepalese markets must however be aware that millennial consumers are also joining the markets. These digital natives fully rely on smart phones as their only communication channel for food, clothing, shelter, and transport. If the banking industry is to develop around consumer finance, such projects must be put into practice now.The situation in Nepal feels unfamiliar for Taiwan. Are all of the markets promoted as part of the government’s “New Southbound Policy” so idiosyncratic? A preliminary study of APABI’s Singapore representative, the Institute of Banking & Finance (IBF), is worthy of reference. According to the IBF’s Deputy CEO Lydia Wee, based on clear market demand, FinTech development in ASEAN countries has not been systematic. IBF has helped develop “Asian standards” for many countries, who can look to Singapore as a model. In 2017, it invested US$ 141 million into FinTech – a growth rate of 68％.FinTech is at the core of Singapore’s development as an Asia-Pacific financial center. Its private and public sectors have now established 52 FinTech labs and incubators. At the same time, ASEAN members must act together. Malaysia, Indonesia, Vietnam, Thailand, and the Philippines have been assigned development issues – including mobile payment, P2P personal online financing, and wealth management – and all have agreed to invest amounts of US$ 10 million and above.The representative from the Bankers’ Institute of the Philippines (BAIPHIL) also mentioned that the Philippine economy had been good in recent years, with GDP growth reaching 7％. Digitization in social development, such as social media development, had contributed to the growth of FinTech. Also, because of demand for micro-remittances from overseas Filipinos, mobile payment usage was high. Some financial service providers have begun to experiment with the use of artificial intelligence (AI).Indonesia has large internal demand, but a low banking rate. Official and private investment in FinTech in 2017 was around US$ 26 million, nearly 4 times that in 2016 – mainly in mobile payment and internet banking, along with microfinance for small enterprises. The Singaporean bank DBS has invested in internet banking in Indonesia. The first step was to obtain newly opened accounts. Ms. Wee believes that Singapore’s financial profession has always led topical discussion, policy formation, and human resource cultivation in ASEAN, and IBF is the dispatch center for ASEAN countries.According to research by the Asian Development Bank (ADB), after the establishment of the ASEAN Economic Community (AEC) in 2015, free capital flow and financial integration have become the major new themes. The period from 2011-2020 is a period of reform. Unlike in past thinking, financial integration within ASEAN using FinTech is an inevitable trend at this stage and in the future.J. N. Misra, CEO of the Indian Institute of Banking and Finance (IIBF), argued that FinTech brings about new ways of thinking. The financial ecosystem and operations management all require adjustment. If integration of payment and settlement systems in the Asia-Pacific region reduces payment fees to zero, then finding new income sources becomes a pain point for the finance industry – and something for which financial training institutions should prepare!