I agree, and it’s probably a little of both, but I don’t think Taiwanese banks are any worse for this than anywhere else. In many ways they’re probably better. US banks allow much more obviously dodgy things on much larger scales all the time.
Seven permits out of 13 applications doesn’t seem too bad to me – I don’t know anything specific about the ones that were rejected but I strongly suspect they weren’t able to meet basic standards for KYC/AML, which is a common issue with crypto in particular.
Of course, we also don’t know how many people gave up before officially applying, which might be a much larger number. But in general the fintech sector here is still tiny, for the obvious chicken-and-egg reasons. I’d expect pretty rapid growth over the next few years.
But the large players in the global maker of fintec aren’t coming. That to me signals that something isn’t working.
I sort of agree. It implies that the effort of operating here isn’t worth the business available, and that’s probably true. But it doesn’t mean Taiwan’s regulatory environment is stricter than other places. Operating in China is much, much more difficult, but the size of the market there justifies doing it anyway.
So for the time being, it’s likely only going to be local startups (for whom its easier anyway, because of language etc).
Lol. So pointless.
Taiwan is the sandbox itself. They have their amazing chop tech and book tech. Why bother with fin tech.
That’s my thoughts.
Its a process designed to fail so the government can say “see we know how to run banks”. If it is as the poster describes.
Otherwise you would have International fintec companies lining up to enter Taiwan.
So what they know if that many Taiwanese people and companies have bank accounts offshore. So plenty of opportunities to tap into the market
Part of it could also be that Taiwan is such a small place that is overbanked. So overseas companies perhaps feel they will enter, only get a small market share, and then the big banks feeling threatened will do their very popular habit of copying them.
A lot of American insurers pulled out of Canada for similar reasons. Lack of scale.
Perhaps, but while Taiwan is definitely overbanked, it’s not exactly overserviced by those banks. I’m having trouble thinking of examples of the local banks muscling out the overseas competition.
Not directly related, some things to know about local banking culture, if you don’t already:
- All Taiwanese banks are secretly run by their compliance departments. I’ve seen projects that C-level executives are pushing as priorities get shut down instantly and permanently by mid-level compliance staff. They have ultimate power.
- Compliance staff are incredibly conservative. This is unsurprising: Nothing bad can happen to them if they say “no”, but all sorts of bad things can happen if they say “yes”. A common mantra is “we’ll only do it if Chinatrust are already doing it”.
- More than once I’ve had compliance staff tell me something is completely impossible, the FSC would never allow it, we can’t even ask them because we might get in trouble for, like, thinking it. Then we go ask the FSC directly and they’re fine with it.
Honestly much of what looks from the outside like regulatory intransigence (e.g. all that physical paperwork) looks to me more like poorly incentivized compliance departments.
The whole thing could be summed up in 3 simple words: lack of imagination.
In 2019, Taiwan launched a regulatory sandbox for novel fintech applications. This led to the amendment in 2021 of the Act Governing Electronic Payment Institutions and the enactment of Regulations Governing Small Amount Remittance Services for Foreign Workers. Migrant workers can now remit money from Taiwan using electronic payments through mobile apps designed specifically for that purpose.
https://topics.amcham.com.tw/2022/08/fintech-brings-migrant-worker-remittance-business-above-ground/
Tsai notes that statistics published by Taiwan’s Business Today magazine show that remittances made through Welldone and EUI currently account for only around 20% of money remitted by foreign workers from Taiwan to their home countries.
Sounds about right. I wonder what the market share is for EEC’s remittance app, which has identical features but mysteriously requires no FSC permit?