What’s next after Apple Pay for Taiwan’s FinTech industry?

Technology and legal experts talk about future FinTech industry trends in Taiwan

A person using FinTech technology with her smartphone to purchase items online. (Photo courtesy of Knowing)

TAIPEI (Taiwan News)—More than 415,000 credit cards were registered on Apple mobile device e-wallet apps two days after Apple Pay was launched in Taiwan on March 29, 2017, according to statistics compiled by Chinese-language media Knowing.

Eyeing Taiwan’s large smartphone ownership market, third party payment companies including Google Pay, Samsung Pay and the China’s Alipay all intend to enter Taiwan by the end of this year.

Smartphone penetration rates in Taiwan reached 82 percent in 2016, according to Google’s Consumer Barometer report.

Despite the high smartphone ownership in Taiwan, only 25 percent of smartphone users in Taiwan use FinTech so far, a far cry from President Tsai Ing-wen’s aim of raising market penetration to 50 percent by 2020, said Chiu Shu-Ling (邱淑玲), head of Samsung Pay in Taiwan, during the first Hit FinTech forum organized by Knowing media, Thursday.

In the short term, the main aim is to increase mobile payment penetration in Taiwan. Chu recommended helping small and medium sized enterprises to adopt FinTech quickly using credit card magnetic strip reader technologies, instead of requiring them to install pricey contactless NFC readers that only large companies can afford.

Meanwhile, a Tencent representative suggested Taiwan mobile payment companies should consider offering reward incentives to users, such as paying them RMB10 (US$1.45) for every mobile bank transaction, a marketing tactic that was used in China during the initial phase to promote mobile payment, said Fanny Lin (林芳璟), the regional director of Tencent's (騰訊科技) overseas business group.

In fact, FinTech is more common in Africa and China. Last year, China’s mobile payment transactions reached 130 billion, generating a market value of RMB 250 trillion, stated Knowing.

Kuomingtang Legislator William Tseng (曾銘宗) observed these countries' technology leapfrogged and skipped the credit card stage, driven by market demand due to lack of access to ATMs and bank branches.

"Basically, Africa and China’s financial industry had no clothes, but in comparison Taiwan’s financial industry is fully clothed but needs customizing tailoring,” he said.

Mobile payment apps, such as Apple Pay or Samsung Pay are just the beginning of FinTech. In the future intelligent bots will give investment advice to people through mobile phones to help them better manage personal finances, said fellow KMT lawmaker Chiang Wan-an (蔣萬安).

Smart financial bots can meet young consumers or those with low-incomes because traditional bank account managers or financial consultants usually only serve clientele are with savings of more than NT$3 million.

Taipei-based O-bank (王道銀行), formerly known as Taiwan Industrial Bank, will be the domestic bank pioneer to launch personalized financial bot services, while only offering six manned branches nationwide, said Song (宋靖仁), associate general manager of the bank’s personal financial business.

Tseng projected FinTech will gradually develop into a multifunctional platform, and even a blockchain industry, while Song noted financial institutes will try to cram every financial service available into smartphone apps in the future.

Chiang pointed out Facebook has already enabled money transactions between contacts in users' friend lists through text messages in certain international markets, but this is still to be introduced into Taiwan.

Several panelists including founding partner of AppWorks Nice Cheng (程九如), founder of blockchain company Fusion 360 (台灣金融科技) Ko-Yang Wang (王可言) and Shi Hsiao-ping(史筱萍) of Taishin International Bank recommended Taiwan’s financial sector should collaborate with international FinTech companies.

Most speakers at the event noted innovative technologies were often ahead of legal regulations, and pointed out Taiwan’s stringent financial regulations are impeding FinTech developments.

"Taiwan has set an extremely high threshold for the FinTech industry,” said Cheng. “Discussions with third party payment companies can take up to five months, and the government even requires companies to acquire revenue of at least NT$500 million.”

Chiang also pointed out in Taiwan the common practice is for government officials to check regulations that permit companies to try new things, in comparison U.S. government officials usually only check if companies have violated any existing regulations. The KMT lawmaker had worked as a lawyer in Silicon Valley for seven years in the U.S. before returning to Taiwan to launch his political career.