The Taiwan Banker

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Editor in Chief, The Taiwan Banker
Hank Huang (黃崇哲)
“Bank 4.0” will Give Financial Services a New Look 2018.12 The Taiwan Banker NO.108

Think for a moment – by 2030, what will the difference be between a convenience store ATM and a bank service counter?


In the transition from Bank 2.0 to 3.0, the financial services originally performed by bank tellers became automated, step by step. Simply put, Bank 2.0 unlocks restrictions on certain functions like wire transfer and ATM withdrawals; with Bank 3.0, a web infrastructure fully replaces physical banks. Financial service consumers no longer need to even go to banks, but can rather meet their needs for payment, deposits, and even loans through smartphones and websites.


Based on this development pace, think again: with IT having replaced the original services of physical branches in Bank 3.0, what will Bank 4.0 look like? As Taiwan develops Web-only banking, and enables more than 28 million domestic mobile ID identification codes, mobile devices such as phones will become vehicles for all financial services, providing a comprehensive user experience.


Brett King, best-selling author of Bank 3.0, keenly predicted in Bank 4.0 that the integration of technologies like AI, Internet of Things (IoT) and blockchain into financial services will create a brand new customer experience, giving these technology companies the opportunity to replace the value proposition of financial institutions, even allowing consumers to fully abandon traditional banks. Such observations echo those of Bill Gates more than 20 years ago in 1994. Seeing Africans using mobile phones for finance, he declared that “Banking is necessary, banks are not.”


Therefore, in the era of Bank 4.0, technologies like AI and big data algorithms will not just replicate existing Bank 3.0 functions for consumers, such as deposits, stock purchases, and wealth management – they’ll also make smart financial planning recommendations.


Suppose Zhang, intending to buy an Xbox, asks about his bank credit card limit. A smart AI system may respond: “Zhang, you’ve already spent too much this month. I recommend you don’t buy this Xbox right now. If you ignore my advice and buy it anyway, you might not be able to afford that New Year’s trip…” With this sort of smart helper, if our traditional consumer finance divisions stick with credit card and mutual fund sales, doing nothing more than increasing mobile billing and transfers, they will be flattened in the next wave of competition. As digital cameras took off, the traditional high-quality film cameras industry lost its entire foundation in a flash, just like the photo shops we remember.


The popularization of the internet and phones with 3D identification have given a completely new face to financial behavior. The technological foundations for these trends have already been set, and consumers are getting ready. Are Taiwan’s financial industry and financial regulators ready?