The first experiment in the nation’s “regulatory sandbox” is to begin on Dec. 5, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said yesterday.
KGI Bank (凱基銀行) and Chunghwa Telecom Co (中華電信) are collaborating on the experiment, whose loan and credit lines are to be limited to NT$200 million (US$6.49 million), Koo said at the opening ceremony of FinTechSpace in Taipei.
The commission gave the green light to the experiment earlier yesterday, Koo said, adding that 4,000 people are to take part.
Through the experiment, KGI Bank is to gain access to new customers, including people without any bank accounts or records, Department of Planning Director-General Lin Chih-chi (林志吉) said.
Unrestricted by banking regulations, participants can receive personal loans and credit cards online as long as they are older than 20, Lin said.
To promote financial technology innovation, the Legislative Yuan on Dec. 29 last year passed the Act on Financial Technology Innovations and Experiments (金融科技創新實驗條例), which was promulgated at the end of April.
KGI and Chunghwa Telecom on Aug. 28 applied to conduct an experiment, the only application out of three that was submitted by a financial institution.
The experiment is to combine big data analysis with telecom mobile identity authentication technology that has never been used in Taiwan, the commission said.
The participants’ future payment records are to be used in the scoring model, Koo said.
“A person who pays telecom fees on time will have a higher credit performance,” he said, adding that the bank would establish a scoring model to set a pricing strategy for microcredit.
To make the scoring more accurate, the experiment would verify that the person who wishes to borrow is the person who pays the fee, mainly by checking the IP address of the borrower’s mobile phone, Lin said.
The maximum amount allowed to be loaned for the experiment is NT$200 million, but the project would be halted once the amount reaches NT$160 million, at which point a panel led by the commission would determine if it should continue, Koo said.
The experiment would need to stop if there are four cases of imposter fraud, he said, adding that the experiment is to last one year, but the bank is required to give a preliminary report halfway through.
The experiment in sandbox regulations is based on Articles 4 and 8 of the Operating Standards for the Safe Control of Electronic Banking Operations of Financial Institutions (金融機構辦理電子銀行業務安全控管作業基準), and if it presents good results, the commission would consider adjusting regulations, Koo said.
Personal information would be protected, as Chunghwa Telecom is required not to provide customers’ payment records to KGI without their permission, while KGI Bank is to follow several criteria when selecting customers, such as having their mobile phone number for more than six months, the commission said.
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