Financial Supervisory Commission Chairman Wellington Koo (顧立雄) yesterday said that he expects the nation’s three Web-only banks to have less than 1 percent market share when they start operations, but that they would provide innovative services.
His forecast was based on the development of South Korea’s two Internet-based banks, K Bank and Kakao Bank.
The two banks only accounted for 0.96 percent of all assets in South Korea as of the end of March, Koo said during a question-and-answer session at a meeting of the legislature’s Finance Committee in Taipei.
Photo: Wang Meng-lun, Taipei Times
The two banks, operated by KT Corp and Kakao Corp, both began their operations in 2017, Koo said.
The two banks accounted for 1.24 percent of total deposits, while they managed to secure just 0.93 percent of the lending market, he added.
As Taiwan would have three Web-only banks, they might gain a slightly bigger market share than their South Korean counterparts, but it would be difficult for them to win a bigger share of the market due to their lack of physical branches, Koo said.
However, low market share would not necessarily lead to the failure of the three, Koo said, adding that they are expected to deploy technology to offer better services and create customer loyalty.
“We will not encourage them to compete with traditional banks on prices, such as lower lending rates, because with paid-in capital of just NT$10 billion they will not win,” Koo said.
Like their counterparts in Japan and South Korea, the trio would have advantages in the payments business, as mobile payments have been popular with younger customers, he said.
The Web-only banks are Next Bank (將來銀行) led by Chunghwa Telecom Co (中華電信); Line Bank (連線商業銀行) led by Line Financial Taiwan Corp (台灣連線金融科技); and Rakuten International Commercial Bank Co (樂天國際商銀) led by Japan-based Rakuten Inc and IBF Financial Holdings Co Ltd (國票金控).
They received their licenses at the end of July and have announced that they plan to begin operations in the first quarter of next year.
Mega Financial Holding Co (兆豐金控) chairman Michael Chang (張兆順) at the same meeting said that Web-only banks would not compete with the conventional banks inside the first five years as they would be targeting different customers and would also need to comply with stricter rules on information safety, but the emergence of the banks would likely trigger improvement in the services of traditional banks.
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