Financial Supervisory Commission Chairman William Tseng (曾銘宗) yesterday warned of possible disruptions and risks as the nation heads toward greater digitization of financial services, but said the government was committed to the move.
While the government is open to introducing new practices — such as Web-based banks, person-to-person lending and increased use of mobile devices as payment channels — it is concerned about the potential impacts of the changes on the industry, Tseng said on the sidelines of a Taipei forum.
The digitization of financial services, commonly referred to as Bank 3.0, is the transition away from the dependence on physical bank branches to online and mobile channels. Experts say the shift brings both opportunities and threats to the banking sector.
Traditional financial institutions, for instance, are facing immense challenges as lending takes place between individuals on a peer-to-peer (P2P) basis, Tseng said.
P2P lending allows for the democratization of personal finance, but the commission is concerned about its possible risks, he said.
Such financing has exponentially expanded the number of participants in such schemes, and the public must be aware of the risks of conducting transactions with strangers instead of with people they know, Tseng said.
The commission has been promoting Bank 3.0 since late last year by deregulating online banking, mobile payment and third party payments, but numerous disputes since then have left it cautious about whether and when sweeping changes can be put into effect, he said.
The emergence of online banks may jeopardize the livelihood of the 160,000 employees of conventional bank branches, Tseng said.
“There is still an abundance of conventional banks in Taiwan,” he said.
Nevertheless, the government and the banking sector remain committed to facing the challenges of Bank 3.0, Tseng said.
The commission will accelerate legal amendments and push for appropriate deregulatory measures, while financial companies have been advised to step up information technology investments and prepare their employees to take on new roles, he said.
Chris Skinner, a blogger and independent commentator who was the forum’s keynote speaker, said in his speech that P2P lending and payments schemes make the most difference in developing economies such as African countries, where access to financial services are limited.
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