The Taiwan Banker

In his masterpiece “Money Changes Everything: How Finance Made Civilization Possible,” Yale professor of finance William Goetzmann wrote that financial contracts have existed for 5,000 years, from the development of writing systems to modern times. Finance promoted the industrial revolution and enabled joint-stock companies, quantified risk, created financial markets, and even led to mechanisms such as social security, sovereign funds, and personal deposit accounts. It can be said to be a core part of human society. At the same time, it also creates problems like indebtedness, market bubbles, crises and crashes, exploitation and inequality. Just like technology, finance comes from innovations that increase efficiency; whether it is used for good or evil is the responsibility of the banker. Finance creates civilization, bankers change society However, being a “bank” is not the same as being a “model banker.” British historian Niall Ferguson once wrote, “Bankers are not necessarily famous, but they are very important to the world.” From this perspective, beyond just common characteristics such as honesty and integrity, “model bankers” are defined by their contribution to society over the course of their careers. When most people talk about bankers, they think of empire-builders such as the Rothschilds, JP Morgan, David Rockefeller, and Goldman Sachs’ Marcus Goldman. These are excellent bankers who did earn good returns for their shareholders, yes, but they are not necessarily model bankers. The true value of a model banker lies in adhering to one’s duty to provide professional financial services to clients, shareholders and boards. Through the influence of the industry, they serve stakeholders and benefit the general public, balancing self-interest and public welfare, spreading the benefits of financial services to the public, and promoting social stability and progress. Behind-the-scenes heroes For example, Haym Salomon was born in Poland, and played a major role providing financing for the colonies during the American Revolutionary War starting in 1781. During the final and most critical Battle of Yorktown, President Washington was at the end of his line and could not pay his military salary; a mutiny was approaching. Solomon raised funds by selling bills of exchange, becoming a key player in the eventual victory. As another example, A.P. Giannini is known as the “American banker” and “inventor of modern banking innovation.” He originally worked in wholesale agricultural products, but felt dissatisfied with the typical banking practice of that era, serving only wealthy customers. In 1904, he founded the Bank of Italy in San Francisco, which is today’s Bank of America. Later, Giannini also pioneered the holding company structure and established the earliest modern multinational corporations. After the San Francisco earthquake in 1906, he immediately set up a temporary bank to collect deposits and issue loans, becoming the main private actor helping San Francisco rebuild. Paul A. Volcker, the two-time chairman of the Federal Reserve, and James Wolfensohn, the two-time World Bank president, are legendary 20th century figures who integrated financial power at a higher level and survived crises. During his tenure as the chairman of the Fed, Volcker boldly raised interest rates and tamed the inflation dragon; during Obama's tenure, he advocated for the “Volcker rule” to stabilize the global financial system and restore the world’s confidence in the central bank. When Wolfensohn was at the World Bank, he successfully promoted the Heavily Indebted Poor Countries (HIPC) program, providing debt relief for the 32 poorest countries, giving them the opportunity to reduce debt and get rid of poverty, and becoming the “banker to the world’s poor.” Tan Him, Kwang Pu Chen, model bankers in Taiwan Coming back to Taiwan, one cannot forget the generation of the Taiwanese financial pioneer Tan Him and the banker Kwang Pu Chen. Tan was born in Dajia District, Taichung in 1893. After graduating from Columbia University in the United States, he returned to Taiwan and used modern business knowledge to build Taiwan’s financial industry. Although the Government-General’s Office strictly controlled the economy, Tan still founded Taiwan’s first modern financial institution, Dadong Trust Co., Ltd. Considering the Japanese colonial context, most of Taiwan’s early financial sector was funded by the Japanese, or jointly operated by them and Taiwanese landlords and businesspeople. Tan’s development of the local financial industry marks an extraordinary page in the modern history of Taiwanese finance. Born in 1881, Chen established the Shanghai Commercial & Savings Bank in 1915. With a history now of over 100 years, Shanghai Bank started from a small operation with just 100,000 yuan in capital. The new bank was connected to money shops (qianzhuang), and Chen pioneered 1 yuan account opening savings deposits, the single teller system, and micro-loans. These innovations laid the foundation for modernization of financial institutions, and helped close their distance with the public. Ordinary people at the time had to rely on special relationships with bank branch managers to meet with them. Chen’s insight was that ordinary customers are the foundation of a bank. Therefore, he set forth three pioneering concepts of financial services at the outset, which are still the criteria to verify qualified bankers in modern times: helping society, assisting client development, and expanding international finance. Trust is the foundation of banking, no matter the iteration Today’s young people may think that in the Bank 4.0 era, physical banks will no longer be needed. More and more fintech companies are using their cost advantages to provide bank-like services and even capture deposit, lending, and payment business from banks. Will it be necessary for bankers to exist if AI and big data replace human intelligence? The late E. Gerald Corrigan, former Chair of the Federal Reserve Bank of New York, wrote in “Are Banks Special?” that banks are indeed special. They provide transaction accounts, as well as liquidity for other financial institutions and non-financial businesses, and serve as the hub of the central bank’s monetary transmission process. All of these capabilities are built on trust. Because they are less regulated, non-banks naturally have wider room for innovation, and the rise of digital assets has caused the existing financial industry to risk being bypassed or replaced. However, recent controversies and scandals in emerging finance have once again shown that even if the word “bank” is one day no longer used, trust is an eternal value in the financial industry. Future model bankers may not come from banks, but they will still have the same blood in their veins. In addition to honesty, integrity, sustainability, and social responsibility, model bankers of the future will also need an ability to keep pace with the times, including digital transformation. A model banker with digital capabilities will not only generate income, but more importantly, maximize the social value of banks through the power of data.