The Financial Supervisory Commission (FSC) would not tolerate a protracted price war by the three Web-only banks to undercut the competition, as it would disrupt the market, FSC Chairman Thomas Huang (黃天牧) said yesterday.
That was the message he gave Chien Ming-jen (簡明仁), chairman of Rakuten International Commercial Bank Co (樂天國際商銀), the first among the three to obtain an operating license, at a private meeting on Wednesday, Huang told reporters on the sidelines of an event in Taipei.
The other two — Next Bank (將來銀行) and Line Bank (連線商業銀行) — have not submitted their applications for a license, but they are expected to file the documents next month at the earliest, the commission’s data showed.
Photo: Wu Chi-lun, Taipei Times
It is expected that Web-only banks would offer higher interest rates for deposits, lower interest rates on lending, better rewards rates or other discounts than those offered by traditional banks, in a bid to attract customers, as they have no physical branches to meet clients, Huang said.
“It is tolerable for the virtual banks to offer better rewards or prices shortly after they begin operating, but we would not allow them to make it a long-term strategy,” Huang said.
The commission hopes that the digital banks would offer innovative services or products instead of setting unreasonably low prices to attract customers to ensure solid and sustainable development, Huang said.
“It would be meaningless if they expand their business by initiating a price war,” he said.
Huang also told Rakuten about risks in information security, liquidity, risk management, compliance and corporate reputation to maintain market discipline, he added.
Rakuten International Commercial Bank, which is 51 percent owned by Japanese e-commerce company Rakuten Inc and 49 percent by IBF Financial Holdings Co (國票金控), received its operating license on Tuesday.
As virtual banks are barred from installing automatic teller machines (ATM), Rakuten plans to cooperate with traditional banks so its clients can use their ATMs for withdrawals, the commission said.
Rakuten Bank plans to offer deposits, fund transfers, small loans and debit card services in the initial phase and gradually expand into mortgages and corporate loans, Chien told reporters at a meeting in Taipei last month.
The bank aims to sign up 500,000 digital savings accounts next year, focusing on clients within the Rakuten ecosystem, such as those visiting its e-commerce site, Chien said.
After obtaining an operating license, the bank still needs to connect its information-flow and fund-flow systems with the central bank, the Central Deposit Insurance Corp (中央存保) and other agencies, he said.
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