Although the fintech market in Taiwan is relatively small and still at a very early stage of development, there is huge potential for growth considering Taiwan’s large pool of highly educated and tech-orientated workforce, vigorous entrepreneurship spirit and sophisticated ICT technologies and infrastructures, according to a new report.

Taiwan is ranked the 15th in the Global Competitiveness Index 2015-2016, and the 6th in the 2016 Global Entrepreneurship Index. These indicators show Taiwan’s advanced innovation-driven economy, and the vigorous innovative activities from the local SMEs and startups.

Taiwan is currently implementing a regulatory sandbox and weighting up the choices of different regulatory approaches. The country aims to become a regional fintech leader but has to compete against top fintech hubs such as Hong Kong and Singapore.

Nevertheless, Taiwan hosts some notable players tackling areas that include payments and money transfer, alternative financing, insurtech, digital currencies, blockchain technology, robo-advisory and big data analytics.

In the payments area, fintech companies that have obtained proper licensing are Allpay, Pay2go, GASH POINT, PChome and ezPay. In alternative financing, notable firms include Peoplelend, LnB, and WoW88.

The digital currency space is dominated by the likes of DTCO, which provides supply chain tracking and blockchain asset management, MaiCoin, a bitcoin trading platform, and BitoEX, a bitcoin wallet and exchange.

In robo-advisory, Taiwanese companies include Fugle, a digital brokerage platform selected this year to join the Startupbootcamp Fintech Singapore acceleration program, and bituzi, a venture providing financial analysis and algorithms.

Fintech Taiwan Report

The Fintech in Taiwan – Overview of the Market and Regulatory Landscape report, a collaborative work by Fintech Taiwan, Shacom, and Liang and Partners, provides an overview of the state of fintech in Taiwan and proposes several recommendations to foster the ecosystem.

The paper suggests four action plans for Taiwan to reach the position of a regional fintech center. These are in line with regulators’ current initiatives and which address local fintechs’ concerns and needs.

Promoting financial inclusion: Taiwan is still underbanked in rural areas and for certain disadvantaged populations. 160 counties out of the 369 nationwide have no bank branch at all. Students, foreign spouses and blue-collar migrant workers are amongst those that have the most difficulties to obtain funding from the traditional banking system. Promoting financial inclusion to serve rural areas and these populations will be both a challenge and an opportunity for fintechs, banks and regulators.

Encouraging bank/fintech collaboration: Banks and financial institutions in Taiwan are now allowed to own as much as 100% of the shares of a fintech company. This investment relaxation has given banks and fintechs greater motivation to collaborate and enable genuine synergies.

Deepening integration of finance and technology: A true integration is a two-way communication and deep understanding of both the finance and technology sectors. A key to effective two-way communication depends on how financial institutions uptake new technologies and innovative. As of technicians and startup founders, they must understand the essence of finance and the regulatory architecture that governs such activities.

Aligning new rulings with global regulatory standards: Taiwan needs to align its current fintech regulatory reform with global standards as “the ecosystem by its nature is without borders.” By doing so, Taiwan will help local financial institutions and fintechs to expand operations overseas much easily.

Featured image: The Urban Landscape Kaohsiung Metropolitan Areas, via MaxPixel.