Taiwan Cooperative Financial Holding Co (合庫金庫), which is at the top of the nation’s banking industry in terms of the number of branches it controls, prefers to keep them all open despite the increasing popularity of Internet banking, chairman Jason Liao (廖燦昌) said yesterday.
The decision demonstrates Liao’s ambition to direct the state-run financial conglomerate in a stable and conservative fashion.
Some branches of the company’s main source of income, Taiwan Cooperative Bank (合庫銀行), might not generate profits given the nation’s overcrowded and fragmented banking market.
The bank owns nearly 300 branches overseas and in Taiwan.
Taiwan Cooperative Financial shut down several branches to save costs under the stewardship of former chairman Leon Shen (沈臨龍) as an increasing number of clients are choosing to do their banking online.
This global trend is driving major lenders to cut the number of banks in towns and cities.
“I don’t see the need for downsizing as local banks can continue to provide customers with services irreplaceable by technology,” Liao told reporters on the sidelines of a banking forum in Taipei.
COEXISTENCE POSSIBLE
In the same way that traditional grocery stores are able to coexist with modern convenience stores in less populated areas, local banks can seek organic growth even if technology shakes up the industry, he said.
There is room for individual branches to strengthen operations and earnings if they can stay in the black, as many clients still rely on local banks for payment, financing and wealth management, Liao said.
Cross-selling efficiency enhancement is a more urgent and critical task for the bank-focused group, he said.
Taiwan Cooperative Financial also owns a life insurance unit, a securities house and an asset management firm, among other subsidiaries.
The conglomerate understands the rising importance of Internet banking and the group is set to engage in emerging opportunities, he said.
However, third-party payment services might not gain dominance in the domestic market anytime soon given the convenience of the traditional banking network, he said.
“Third-party payments are the most popular method in Kenya due to the lack of a traditional banking system in the African country. In Taiwan, people have quick, easy access to automatic teller machines and other banking facilities,” he said.
Taiwan Cooperative Bank is not eager to establish subsidiaries in China although it is qualified to file an application as it owns two profitable branches there, Liao said.
NOT COMPETITIVE
While a subsidiary can engage in retail banking, Liao said he did not think Taiwanese banks could compete with local Chinese lenders.
A subsidiary would also require a higher capital base which is beyond Taiwan Cooperative Bank’s current capabilities, Liao said.
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