Blockchain technology is the key to accelerating growth in electronic payments in Taiwan, an investee of Fubon Financial Holding Co (富邦金控) said last week, while urging the government to fast-track implementation of a regulatory sandbox.
The Financial Supervisory Commission (FSC) has set the goal of increasing the use of electronic payments to 52 percent of total transactions by 2020, while lowering the reliance on hard currency, which currently accounts for 80 percent of all purchases.
The slow adoption of electronic payments in Taiwan is primarily caused by widespread fragmentation in the field populated by a growing number of competing solutions that are not readily compatible, while none have garnered enough users to reach critical mass, blockchain developer AMIS (帳聯網路科技) chief executive officer Alex Liu (劉世偉) said on Thursday.
Photo courtesy of Clavis Communications Consultants Co
“Blockchain is a value-exchange protocol that serves as middleware bridging between different systems and achieves compatibility between different mobile payment platforms and financial systems, making mobile payments as ubiquitous as e-mail,” Liu said, adding that the company is built from Taiwan’s deep talent pool.
The dominant messaging service WeChat (微信) has propelled rapid adoption of mobile payments in China, Liu said, adding that Taiwan could close the gap with blockchain middleware.
Ant Financial Services Group (螞蟻金服), a payment affiliate of Alibaba Group Holding Ltd (阿里巴巴), has announced plans to integrate blockchain, which would enable China — which has already established critical mass in mobile payments — to make a tremendous leap, Liu said.
However, the slow pace of regulatory changes have continued to impede developers, and Taiwan might lose its first-mover advantage in the blockchain space, Liu said, adding that fintech is a technology-heavy, capital-light field in which Taiwan could do very well.
While the FSC last month submitted for legislative review a draft bill for a “regulatory sandbox,” blockchain investors remained concerned about the time frame required for the Legislative Yuan to complete the approval process.
Some investors said the draft bill is lacking in focus, and fintech developers remain hesitant due to fear of plans encountering undeterminable regulatory boundaries.
Others urged the government to make adjustments after the bill’s implementation, saying that it is not feasible to achieve an optimal balance between regulatory compliance and create an environment that fosters innovation on the first attempt.
Liu said that there is a lack of urgency in the government’s higher levels, and that regulatory changes should not be limited to the financial sector, given the boundless potential of blockchain and other new technologies to transform many industries.
Liu also questioned the reasons behind AMIS’s exclusion from talks between the government-run Financial Information Co (財金資訊公司) and domestic banks about adopting blockchain technology, while IBM Corp joined in the closed-door discussions.
Taiwan has arguably not been “punching above its weight” in the global market since the heyday of the PC industry, and has missed out on opportunities in the “Web 1.0” and mobile eras, Liu said.
“That may change as blockchain paves the way for a transformation from an Internet of information to an Internet of value,” Liu said during an address at an event promoting the new Etherium Enterprise Alliance, of which AMIS is a launching member.
The alliance develops Ethereum, an open-source blockchain platform that enables automated “smart” contracts between parties and underpins “ether,” the second-highest valued cryptocurrency after bitcoin.
At the event, Fubon Financial demonstrated its blockchain-based electronic wallet app, and said that the company has a “smart” contract-enabled flight delay insurance product as well as a robot advisory app that are both ready to participate in the regulatory sandbox.
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