TAIPEI (Taiwan News) — To get the easy bit out of the way, FinTech is quite simply a combination of the words "financial" and "technology."

It is technology-enabled financial innovation that is changing the way financial institutions provide — and consumers and businesses use — multiple financial services. FinTech has a cousin called RegTech (regulation and technology) but for the moment we will stick with FinTech, as it is certainly a buzz word these days in Taiwan and globally.

Late October 2022 saw a large turnout for FinTech Taipei at the World Trade Center in Taipei City. The Financial Services Supervisory Commission (FSC) was the event's advisor, while the organizers were the Taiwan Academy of Banking and Finance (TABF) and the Taiwan Financial Services Roundtable.

I attended this event and while there was certainly a buzz and the expected crowds, I did wonder afterward whether a lot of the FinTech I saw on display was really a display of cutting edge technology or, simply a showcase of new payment systems. Don’t get me wrong, payment systems qualify as FinTech, but I want more, and I think Taiwan deserves and can deliver more.

FinTech should be fundamentally changing the way financial services firms operate by making them more efficient and able to provide a better quality of service to their customers. Also, by being more transparent with their regulators.

For FinTech to prosper you need world-class talent, locally based expertise, a forward-thinking approach to regulation, access to capital, and proximity to an innovative financial services sector. We certainly have local world-class talent and expertise.

We also know that FinTech has the clear support of Taiwan's government, the FSC and related industry associations in Taiwan. Less clear to me is whether we have an innovative financial services sector.

What is real story?

In terms of Taiwan’s history with FinTech, it is arguable that it was not until at least 2014 that Taiwan started to understand the positive impact of FinTech’s continuing technological development in the global financial sector and resulting changes to the financial value chain.

In 2014, FSC came up with the concept of FinTech 3.0. It recognized five changes that were needed in the Taiwan financial sector:

Digital technology as the core competency in the sector

• Bank branches devolving to more of a support orientation


• The internet becoming the main marketing strategy


• Social media and real-time online transactions make customers more dominant


• Finance merging with e-commerce

I think that most of these changes have occurred to one degree or another but perhaps not quite as envisaged in 2014.

In late 2015, the FSC then went on to propose further measures for the continued development of FinTech, with plans to promote the support of FinTech start-ups and to help other related industries. These proposals saw the FSC also establish a FinTech office that directly reports to the FSC and by the first quarter of 2016 we saw the release of the FinTech Development Strategy White Paper.

This set out Taiwan’s vision and strategy to promote innovative FinTech services. The “vision” included five facets of Taiwan’s financial services that would benefit from FinTech:

• Payments


• Insurance


• Financing


• Fundraising


• Investment Management


• Market Supply

Again, I think to one degree or another, the proposals in the white paper remain relevant yet did not provide the tipping point for a vibrant FinTech market in Taiwan.

The next step along Taiwan’s journey saw the development in 2018 of a Regulatory Sandbox for startups and financial institutions by offering a platform through which startups and financial institutions can experiment freely without threatening the wider financial system. But to be frank, the number of institutions that have taken advantage of the Sandbox remains low, perhaps because of internal hurdles within the Sandbox.

As of June 2022, only 15 applications had been received from institutions seeking to take advantage of the Sandbox. Of that number, nine have been approved by the FSC and five have been completed.

The FSC also implemented a Business Trial mechanism solely for financial institutions in 2019 to provide a dedicated testing environment for financial institutions and as of May 2022 there have been 47 applications received and 36 cases approved (better numbers than from the Sandbox).

To its credit, the FSC also created the FinTechSpace (the first FinTech focused co-working space in Taiwan). The intention is to provide a tech-based environment for stimulating and accelerating the latest FinTech innovation.

FinTechSpace aims to gather the whole Taiwan FinTech ecosystem together and open the window for Taiwan’s FinTech industry to attract talent from campuses and tech startups from around the world.

Right time and place

FinTechSpace remains active and offers an array of programs for domestic and foreign participants, but I think Taiwan needs to be more proactive in promoting these programs. I will discuss FinTechSpace in greater detail in future articles.

We’ve also seen the FSC approving internet-only banks that have quickly accumulated customers and are likely to continue to do so, but their success is certainly challenged by Taiwan’s oversaturated banking market. Put simply, even in 2023, Taiwan is overbanked and burdened with aging legacy information technology systems.

I have no doubt that the FSC sees FinTech as integral to modernizing Taiwan’s financial markets and in future articles we’ll also examine a few ways I think Taiwan’s financial markets may achieve these aims.

Taiwan’s information technology infrastructure is extremely well-developed, although as noted above, the infrastructure is aging. Taiwan is a strong market for e-commerce, online entertainment, mobile payment, and other technology-driven services, but it remains mainly a domestic market and foreign payment service providers, especially those providing solutions for cross-border transactions, face intense competition with local banks and regulatory obstacles when entering the market.

There is appetite, development and improvement occurring in Taiwan’s FinTech environment, albeit slowly even in the face of the Taiwan government and the FSC maintaining a consistent message of the importance of FinTech in Taiwan.

The Taiwan government is clear that FinTech must be at the heart of the important Green Finance Action Plan 2.0 and the 2050 Net-Zero Pathway initiatives.

Despite the indicators of growth and the support of the government and the regulator, I believe it would be wrong to assume that Taiwan’s FinTech market is set for clear sailing. The FinTech market certainly made rapid progress in 2021, but the major obstacle to further development is still strict regulation of the financial industry.

Another practical obstacle is user habits. Consumers in Taiwan have long been used to making payment by credit cards and collecting the items they have ordered online at “convenience stores.”

While COVID-19 saw both financial service providers and consumers trying to reduce physical banking activities, this has not provided adequate impetus to the Taiwan Fintech market.

Also, if e-payments, often simply backed by credit card applications, represent the largest FinTech product in the Taiwan market, I believe FinTech still has a long way to go.

I applaud all the achievements to date, but I know Taiwan deserves and can do better.