2021.10 The Taiwan Banker NO.142 / By Hank Huang (黃崇哲)
Open Banking Will Foster 720-degree FinanceEditor's Note
Fintech has drastically altered finance. If one day, “fortune money” from major Taiwanese temples is automatic transferred to believers’ electronic bank accounts, combined with records of worship on their smart watches, using chanting records as an indicator of credit and piousness, each believer will get financial products with different rates, optimizing both the value of their insurance policy and their physical health. Open banking will bring together faith and finance, and financial services will be better integrated into daily life. In the previous round of opening, following the implementation of the Financial Holding Company Law in 2001, the financial industry was allowed to sell insurance, securities, credit cards and other financial products through the same marketing channels, breaking through the division of businesses under the structure of financial holding companies. Cross-marketing has improved the efficiency of financial holding subsidiaries. In this service system, the financial holding companies use big data analysis to discover consumers’ financial potential and pain points, giving full play to data synergy, and creating a 360-degree service orientation. Nowadays, with the development of networking technology and the Internet of Things, financial institutions can further expand into other sectors through open banking, expanding their 360-degree customer orientation to create an entire outer service circle, creating "720-degree finance." This open banking trend is derived from the experiences of the UK and EU. Taiwan’s Financial Supervisory Commission (FSC) is also vigorously encouraging banks to seek cooperation with third-party service providers, and to open their data in three stages: product, customer, and transaction information. The purpose is to return ownership of financial data to consumers, allowing them to enjoy the inner circle of financial holdings and outer circle of peripheral services, tailor-made for each consumer, through open APIs. Challenges remain before this vision can become a reality. Information security, asymmetry in the use of information, and financial exploitation are policy challenges. The Financial Fast Identity Online (F-FIDO) alliance promoted by the FSC, for example, may be activated this year. Consumers will no longer need to carry their physical cards or memorize a bunch of account passwords to use bound devices and biometrics to verify their identity. Instead, they will be able to use financial services across banks, improving their convenience and security. However, concerns about information security issues, as well as the boundaries of human rights claims regarding personal privacy, require further discussion and technical investment. It is because of the development of fintech that we can imagine 720-degree financial services. After the implementation of the financial control law, we saw private financial institutions, driven by insurance and securities, gradually surpassing other institutions. For this new growth engine, banks should use an open mind to accelerate partnerships with third-party service providers in order to more closely embrace cross-border and cross-domain business opportunities. 720-degree finance could even play a key role in determining the asset rankings of financial institutions 20 years from now. The market awaits exploration and development.