Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday announced that three Web-only bank licenses would be granted to teams led by Chunghwa Telecom Co (中華電信), Line Financial Taiwan Corp (台灣連線金融科技) and Rakuten Inc.
The announcement surprised many, as the regulator had originally planned to only approve two licenses.
“We intended to select the best two teams, but during the review process we found that it was difficult to deny any of the three competing teams, as they all have their own advantages, operating models and target clients,” Koo said.
Photo: Kao Shih-ching, Taipei Times
Line Bank (連線商業銀行), Line Financial’s planned virtual bank, would focus on Line’s own user base, while Next Bank (將來銀行), led by Chunghwa Telecom, would concentrate on the telecom’s customers who are favored less by traditional banks and small companies, Koo said.
The third bank planned by Japan-based Rakuten Inc and its partner, IBF Financial Holdings Co Ltd (國票金控), would target people aged 35 to 55, Rakuten’s own customers and those who rely on smartphones or are interested in “Japanese-style financing,” he added.
The three teams would bring distinct innovations to the banking industry, with Line offering prescheduled transfers, Next Bank providing services driven by artificial intelligence to remind clients of payments, and Rakuten enabling its clients to open a dual-currency account and easily withdraw yen using a Taiwanese card, Koo said.
The nine-person review panel determined that all three teams would offer more convenience to consumers, satisfy unmet needs and improve financial technology, Koo said.
“The three teams’ scores were pretty similar and were favored by different panel members, which was one of the reasons we thought we should issue three licenses,” he said.
The three virtual banks are expected to begin operations in eight to 20 months, and to turn a profit in three years to five years, Koo said.
The commission would ban the virtual banks from setting unreasonably low fees, which would disrupt the market order, he said.
The commission said that it had planned to issue only two licenses to reduce competition in the already crowded market, but believes there is room for one more virtual bank in Taiwan after Australia and New Zealand Banking Group Ltd (ANZ) in April consolidated its local operations after completing the sale of its retail business to DBS Bank Ltd in 2017.
The number of banks in Taiwan had fallen from 39 in 2015 to 37 in 2016 and further to 36 this year after ANZ’s move, Koo said, adding that the number would recover to 39 after the three virtual banks start operations.
Considering that other nations have been granting more licenses to Web-only banks, which have a smaller market share, it should be acceptable to approve three licenses, he said.
Web-only banks do not have conventional branches. While Taiwan does not yet have any, they are available in Japan, South Korea, Hong Kong and Singapore.
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