Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday stood firm on the financial regulator’s requirements for Web-only banks during a public hearing with industry representatives and experts.
Koo said that Web-only banks must be more than 50 percent owned by financial institutions to ensure that the new ventures are able to comply with the stringent regulations of the banking industry, as the commission prepares to accept applications for two licenses to set up Web-only banks.
The industry must innovate responsibly, Koo said at the hearing in Taipei, responding to appeals to allow non-financial businesses such as e-commerce operators and telecoms to take a majority stake in Web-only banks.
He also specified that one of the financial-sector partners should be a bank or a financial holding company with at least a 25 percent stake.
“The banking industry is not a suitable option for purely financial investments,” Koo said, adding that it would not be ideal if ownership of Web-only banks is spread among several conventional banks each holding a small stake and having limited involvement in management and strategic decisionmaking.
“Frankly, I would be concerned about a lack of guidance from financial-sector partners in meeting money laundering, data security and consumer protection standards,” Koo said.
Non-financial companies have appealed for the commission to lower the stake financial-sector partners must have in Web-only banks to 30 percent.
If ownership is dominated by financial-sector firms, Web-only banks would not be able to innovate and thrive, as the firms could poach ideas from the Web-only bank for their own digital channels, representatives of non-financial-sector companies said.
Other concerns included the possibility of discord between competing financial-sector partners.
Koo said that while Web-only banks in Japan can be majority-owned by non-financial-sector firms, they are only allowed to offer a narrower range of services, unlike in Taiwan, where digital lenders are allowed to offer a full array of services.
He also emphasized that deregulation to allow Web-only banks is aimed at fostering innovation and applicants must demonstrate their ability to create a new wholly digital business model that does not rely on physical branches.
It would defeat the purpose of Web-only banks if they open up a nationwide network of “customer service centers,” Koo said.
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