Taiwan's banks are rushing to stake a claim to an ever-growing and more sophisticated on-line banking and e-commerce market, government officials and analysts say.
As a measure of the impending boom, investment by banks in the island's four-year-old Internet banking sector will almost double in the coming year despite regulatory and security bottlenecks.
Indeed, Taiwanese banks and foreign banks with branches in Taiwan are accelerating Internet banking investments in order to capture a secure customer base in the business-to-business (B2B) e-commerce market before an anticipated influx of foreign competitors after Taiwan's expected entry into the WTO.
Foreign banks with branch networks in Taiwan, such as Citibank, ABN AMRO, Standard Chartered and Deutsche Bank, have invested heavily in Internet banking and are leveraging large overseas networks to speed up the development of B2B e-commerce operations.
"We are making the best of our 140-year presence on the mainland to attract Taiwanese companies with mainland factories to our international cash management service," Carl Wagner, head of cash management at Standard Chartered, said.
Although many Taiwanese companies sidestep a Chinese ruling against lending by foreign companies by using Chinese subsidiaries set up in Hong Kong, there remained a sizeable market opportunity, Wagner said.
"PRC rules against foreign companies lending to each other mean that there is an important niche open for foreign banks to offer inter-company loans and other cash management services," he said.
Citibank's business-to-business e-commerce head, Jeremy Ou, says local banks are unable to match the firm's soon-to-be-launched B2B service.
"They don't have the global network we have ... and the Taiwanese government forbids Taiwan's banks paying Chinese banks directly such as over the Internet. They are forced to use a lengthy manual procedure which is processed through New York, with the resulting currency exchange fees," Ou said.
Citibank is the only foreign bank possessing a Chinese-language local clearing system and extensive support services and was making all efforts for a speedy launch of planned B2B services that are currently in the pilot stage, Ou said.
"We have a 20-person help-desk here in Taiwan and 30 staff in Singapore dedicated to e-commerce development in Asia and we are also outsourcing. If we don't do it now, we'll regret it later."
Buyers and sellers
E-commerce operations include buyers sites, such as Compaq's recently launched Taiweb, linking the global computer firm with its downstream suppliers of PCs and components, and sellers sites, where smaller producers sell to a large number of buyers.
Internet banking, an important adjunct to e-commerce, is still in its infancy in Taiwan.
As of last October, only 14 banks in Taiwan offered customers the ability to access account balances, transaction accounts and exchange/interest rates over the Internet, with only four offering sophisticated services such as on-line credit card transfers or inter-account transfers.
A recent report by the government's Market Intelligence Center (MIC) showed that red tape and security concerns were the major obstacles to the growth of the island's promising Internet banking sector. However, the MIC report estimated annual Internet investments by Taiwan's 96 domestic and overseas banks will rise from NT$500 million in 1999 to NT$900 million this year and double to NT$1.8 billion in new investments in 2001.
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