The Financial Supervisory Commission (FSC) might let KGI Bank (凱基銀行) finish its financial technology (fintech) sandbox experiment earlier than planned when it reviews the bank’s report next month, FSC Chairman Wellington Koo (顧立雄) said yesterday.
“We will review the lender’s latest quarterly report in June. If everything is in order, we will allow the bank to finish its experiment and add the experimental service to its regular business,” Koo told reporters on the sidelines of a financial education event in Taipei.
KGI Bank, a subsidiary of China Development Financial Holding Corp (中華開發金控), began the experiment in December last year in cooperation with Chunghwa Telecom Co (中華電信).
The experiment is scheduled to end in November.
In the sandbox, the bank is allowed to provide loans to clients online with the help of mobile identity authentication technology.
According to a quarterly report that the bank submitted in March, the experiment has been progressing smoothly and without any fraud incidents, Koo said, adding that the commission is satisfied with the low default rates for loan applicants with no credit record.
To legitimize the service, which current regulations do not allow, the banking industry needs to change its self-regulation code, which would be faster than amending banking laws, Koo said
In the experiment, KGI established a scoring model based on an applicant’s telecom payment records, which helped the bank select better borrowers.
“Setting up an effective scoring model was the true value in the experiment and so far, only KGI has this expertise,” Koo said.
The bank said it would respect the commission’s decision if it ends the experiment earlier, KGI spokeswoman Janet Sheng (盛嘉珍) told the Taipei Times by telephone.
The bank does not see the experiment as a main profit generator or a way to expand its lending business, as loans for the experiment were capped at NT$200 million (US$6.47 million) — a relatively small amount, Sheng said.
“We wanted to test whether the model was workable and see how high the risk would be. So far, the risk is tolerable, which made the regulator raise the possibility of amending regulations,” she said.
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