Fintech in Taiwan: an Overview

Fintech in Taiwan: an Overview

by March 30, 2017
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Fintech has become a hotly debated topic in Taiwan. To boost the development of financial innovation, regulators and government agencies have committed significant resources to establish dedicated organizations and funding schemes, as well as foster collaboration between market participants.

Government push

In September 2015, Taiwan’s Financial Supervisory Commission (FSC) officially announced the establishment of its Fintech Office, a platform responsible for the planning and promotion of fintech developments.

The office particularly focuses on researching and exploring topics that include digitalization of the financial environment, mobile payment, third party payment, Internet financing (peer-to-peer lending), online investment, and the Internet-of-Things, among others.

A whitepaper released in 2016 by the FSC detailed the authority’s strategy for fintech development. Notably, the paper noted a number of objectives for the years to come. These include:

  • Double the ratio of e-payment within five years from the present ratio of 26% via public promotion and private sector participation;
  • Promote blockchain technology and the establishment of a special task force in the Bankers’ Association for research on applications of the technology;
  • Support finance innovation efforts of startups through the Financial Technology Development Fund and provide coaching;
  • Create a word-class incubation center for fintech innovations;
  • Allow financial institutions to invest in 100% shares of fintech companies through reinvestment
  • Encourage the use of tokenization technology for virtual and physical cards;
  • Raise the percentage of e-orders to 70% and promote e-service of securities firms and robo-advisors;
  • Encourage insurtech development;
  • Develop physical and virtual branches of financial institutions to achieve the diversification of service providers and multiple access points of their services, as well as improve the existing facilities of financial institutions;
  • Create an integrated, secure online ID verification mechanism.

Last year, the Taiwanese government launched FintechBase, an initiative aimed to assist the Fintech Development Foundation with investments in startups as well as courses and international accelerator resources and services.

The Fintech Development Foundation, an accelerator established by the FSC in 2016, raised NT$200 million (US$6.4 million) from banks, brokerages, insurance associations and other financial institutions in its first fundraising effort. Part of the fund will be used to invest a maximum of NT$2 million (US$64,000) in 20 companies per year over the course of three years.

Taiwanese fintech startups

The favorable environment that the Taiwanese government has helped install has enabled the emergence of notable fintech companies in the country. These include Fugle, a digital brokerage platform for self-directed investors, as well as Tixguru, a quant platform and artificial intelligence robo-advisor, and CherryPay, an international peer-to-peer money transfer matching platform. All three have been selected to join this year’s Startupbootcamp Fintech accelerator program in Singapore.

Available fintech solutions in Taiwan include OnePaid, an online payment system focused only on the Taiwanese market part of the Gangu Tech firm, Webackers, a crowdfunding platform owned by game developer and publisher Gamania, as well as Gash Point, a payment company part of the Gamania group.

The domestic industry is being represented by the Taiwan Fintech Consortium, a cross-industry initiative launched by KPMG in collaboration with the Taiwan Academy of Banking and Finance. Taiwan Fintech Consortium aims to act as a platform that facilitates collaboration between market participants and stakeholders in the fintech ecosystem.

Weaknesses

Despite support from the government and initiatives from the private sector, over-regulation, lack of investment and a talent shortage are believed to be the key challenges to the growth of fintech in Taiwan.

“The most common difficulties for Taiwan’s financial sector’s transformation (to fintech) are threefold: first, capital, the second is talent, and finally the concept,” said Julian Lin, Senior Director of Delta Electronics’ Research Centre in Taiwan, as quoted by Business Next.

Chia Chi Ku, CEO and co-founder of artificial intelligence advisory firm Kuchi, took his startup to Singapore where he argues the environment and financial sector are more accommodating.

Ku told Business Next:

“I talked to Taiwanese banks. The first thing they asked was, ‘Is this permitted (by law)?’ The FSC stressed in January that they will not permit AI financial advising services, so as a result the mindset of the whole finance industry is even more restricted.

“(The companies) in Singapore aren’t afraid to do R&D on AI financial analysis. We aren’t burdened or restricted.”

 

Featured image: Taipei, Taiwan, via Pixabay.

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