In a first for the island, Taiwan’s Financial Supervisory Commission has issued virtual banking licences to three consortiums – the latest development in the battle between Asian internet firms and the region’s legacy banks for a stronghold over consumer finances.
According to Reuters, Japanese app operator LINE Group’s LINE Financial Taiwan and Taiwan telecom operator Chungwa Telecom’s Next Commercial Bank were granted licences, as well as Rakuten International Commercial Bank, operated by Japanese e-commerce firm Rakuten Inc and
Taiwan’s IBF Financial Holdings.
Following in the footsteps of other Asian regulators, this move supports non-bank competitors who want to compete with traditional financial services and leverage their user databases to provide digital-first products and services.
While the Commission says it has no plan to issue more licences, this announcement comes soon after Hong Kong issued eight new online-only banking licences to groups such as Alibaba Group Holding Ltd and Standard Chartered Plc.
Singapore, Thailand, Malaysia and Korea are also expected to issue virtual banking licences this year, but if digital banks gain significant market share, Asian banks’ average return on equity could drop to as low as 6.4% by 2023, from 10.1% last year, according to McKinsey.