Taiwan FinTech Market

Financial service providers have been adopting technology to deliver innovative services to consumers and increasing investment in IT assets. In 2019, Taiwan financial industry spent over $700 million on FinTech R&D and solutions in the areas of AI, AML, biometrics, blockchain, cloud services, cybersecurity, data analytics, payment, identity management, regtech, and robo-advisor.

Data Analytics
Taiwan banks are required to protect sensitive personal information contained in their records. As a result, they increasingly cultivate in-house analytics teams as an alternative to purchasing data analytics solutions from major software vendors. Due to its unique characteristics, Chinese is considered the hardest language on which to conduct Natural Language Processing, giving local data analytics companies a competitive edge in handling data recorded in Chinese. However, data analytics companies can still provide a range of other services, including network activity, intelligent automated customer service, real-time marketing, customer segmentation, and cross-industry marketing solutions.

RegTech
In 2017, Taiwan Executive Yuan established the Anti-Money Laundering Office, aimed at strengthening money laundering prevention before the third evaluation round of the Asia Pacific Group on Money Laundering (APG). In August 2019, Taiwan was promoted to APG’s “regular follow-up” category, which is the most favorable category. Successful money laundering prevention depends upon industry-wide cooperation with regulatory reporting systems and use of proper RegTech solutions, including risk analysis tools, abnormal activity monitoring, and due diligence tasks through various data sources, like social media, and trade surveillance. Providers of such technologies will continue to enjoy a strong market in Taiwan as the FinTech industry expands.

Cybersecurity
Established in 2017, the Financial Information Sharing and Analysis Center (F-ISAC) serves as an effective framework for integrating banks, securities, futures, and insurance companies into a joint defense system. With 358 members, F-ISAC is responsible for reducing systematic cybersecurity vulnerabilities and for setting in place a coordinated response protocol to cyberattacks on the Taiwan financial system by encouraging the development of intra-industry best-practices including cybersecurity information sharing, intelligence analysis, cyberattack reporting, incident simulation, and incident assistance.

Blockchain
The Taiwan authorities consider blockchain a cornerstone of the FinTech industry, and banks are discussing partnerships with U.S. companies. In June 2019, the National Development Council formed the Taiwan Blockchain Alliance to increase policy coordination and implement a blockchain proof of concept. Local financial institutions also participate in international blockchain alliances such as R3, EEA, Quorum and Hyperledger. Taiwan banks are currently more focused on the information flow function of blockchains than on currency flow. Many banks are cooperating with local vendors and university research labs for R&D to explore possible blockchain applications. We expect that financial institutions will continue investing in blockchain in the long-term.

Wealth Management
Five Taiwan private commercial banks have expressed interest in collaborating with U.S. wealth management service providers that offer Robo Advisor solutions. The Taiwan market currently lacks a mobile application to obtain credible financial information for major investments or transaction decisions. Some financial institutions are building their own solutions, seeking providers of investment algorithms as either complementary products to existing offerings or slimmed down products for less-established clients.

Payment
Taiwan’s information technology infrastructure is extremely well-developed. With 90% 4G penetration and 80% mobile penetration, Taiwan is a strong market for e-commerce, online entertainment, mobile payment, and other technology-driven services. According to FSC Banking Bureau, electronic payment users exceeded eight million people in April 2020. Technologies that support transaction security such as user authentication, data protection, and fraud prevention, should find good opportunities in Taiwan. However, foreign payment service providers, especially those providing solutions for cross-border transaction, will face intense competition with local banks and regulatory obstacles when entering the market.

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