February 23, 2024

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Taiwan’s First Virtual Banks Debut Strong

Though the Taiwanese government greenlit the operation of its first three online-only banks in 2019, they faced pandemic-induced delays. Still, when they went live late last year, they’ve enjoyed brisk operations. Today, the first two virtual banks have quickly accumulated a significant customer base while the third is on the way.

Financial Technology (FinTech) via virtual banks are not unique to Taiwan. Across East Asia, digital banks have been gaining traction from financial centres in the region. However, it’s still an uphill battle for virtual banks in the island nation. Taiwan’s oversaturated banking market will likely require that the digital lenders adopt new tactics and technologies to become truly competitive. In short, they will have to use technology to the hilt.

To date, the Taiwan market has 37 retail lenders to serve a population of over 23 million. It is not that demand does not exist for their services, however. Taiwan’s high degree of smartphone penetration, growing preference for contactless transactions, and the generally weak digital offerings of incumbent banks offer the digital lenders an opportunity.

To add to these challenges, Taiwan’s financial industry is fairly conservative. As firms and government regulators stay cautious, innovation in the FinTech industry is achieved in measured steps. Digital banking in Taiwan is in its early state. Strictly speaking, there are no virtual banking start-ups on the island in the traditional sense of the word. Rather, two of Asia’s largest platform companies and Taiwan’s preeminent telecoms provider have teamed up with some of the island’s most established financial institutions to form three consortia licensed to provide banking services.

There are, however, a few caveats. One, digital banks cannot offer these services from physical branches. Two, they cannot conduct business on the same scale as traditional banks. Nonetheless, those issues come also with genuine advantages. Digital banks can make the most of their apps. Against the backdrop of ageing IT bank practices from traditional lenders, virtual banks should attract younger Taiwanese who spend a lot more time online via their smartphones. Indeed, that shows that while Taiwan is overbanked, its FinTech industry is underutilised.

The numbers speak for themselves. One of Taiwan’s virtual banks has accumulated about 600,000 customers since opening in 2021. That is a strong performance in such a short period of time. One key strategy they followed is attracting the right clientele. Over 75% of their users are aged 20 to 40, clearly the most tech-savvy of the population.

The other virtual bank is paving its path differently. It does not boast of as many accounts; instead, it attracts bigger deposits. Though it has only nearly a tenth of the number of the first virtual bank’s users, its deposits are nearly a fourth. So it has a total deposit of NT$5.4 billion compared to the first bank’s NT$20 billion.

Taiwan’s FinTech industry may not be moving as fast as anticipated, but it’s on the right track. An example of its commitment is its recent regulation of cryptocurrencies. The digital infrastructure that Taipei is putting up should encourage everyone to join the country’s digital transformation.

Additionally, Taipei has set up an AI HUB that should put the island nation on the map when it comes to Artificial Intelligence. As reported on OpenGov Asia, Taiwan is set to be a regional AI hub, if not a global one. Add to that picture the chip industry that is prepping itself for the advent of electric cars.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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