Taiwan's FSC mulls establishment of pure digital banks


The Financial Supervisory Commission (FSC) is studying the possibility of allowing the banking sector to open banks that operate exclusively online in a bid to strengthen financial technology in Taiwan, FSC Chairman Wellington Koo (顧立雄) said on Tuesday.

Speaking to the press, Koo said while many banks operating in Taiwan provide clients with online banking services, the country currently bans exclusive digital banks with no physical outlets.

However, in order to improve the competitiveness of the local banking sector, Koo said, the FSC needs to study the feasibility of opening pure digital banks in Taiwan, and has listed this as a priority policy for the commission in 2018.

Koo said the FSC, Taiwan’s top financial regulator, is scheduled to send delegations to Japan and South Korea in February.

Online digital banks have launched services in both countries and the delegations will collect as much information as possible on the new business, Koo added.

Once Taiwan lifts its ban on exclusive digital banks, traditional banks are expected to develop the technology needed to drive the new services, which could accelerate the pace of FinTech development and even promote consolidation of the local banking sector.

Currently, a traditional commercial bank in Taiwan needs minimum paid-in capital of NT$10 billion (US$340 million) to secure a full service license.

Koo said it remains to be seen how much a pure digital bank will need as that would depend on what business the bank wants to undertake.

He said if a pure digital bank only takes deposits, extends loans and conducts fund remittances, the capital requirement will be lower.

In 2015, the FSC had a similar idea to allow the establishment of pure online banks.

However, at that time the local banking sector faced overbanking so the commission dropped the idea.

The FSC said it would reconsider the policy after the consolidation of the local banking sector and is now promising that any such businesses will be subject to strict risk controls.