• Current digital banks run by commercial banks struggle to gain scale and new entries this year will face a market tightly held by commercial banks
• More than 90% of mobile phone users own a smartphone and more than 55% of those have made a mobile payment transaction in 2019
• Despite rapid digitisation among commercial banks, cost efficiencies and profitability lag behind leading regional peers

Commercial banks hold a tight grip on retail banking assets and deposits on the island where new financial services players are a few, compared to other peer markets such as Korea, Hong Kong or Singapore. This leaves the banks’ digital innovation with limited options but to innovate digitally from inside the organisation rather than to make non-linear leaps ahead by cooperating with other ecosystem players.

While deregulation is opening the doors to new digital offerings and paving the way for fintech development in Taiwan, the country has lagged behind. Compared to the rest of Asia, there are currently less than 60 fintech players operating in Taiwan, in contrast to around 350 in South Korea and 1,060 in Singapore, and none of them has made a dent yet in this market. The only exception is Line Pay, the payments arm of Japan-based social messaging app LINE. It is the leading payments platform with more than 6.2 million monthly active payment users in a country which caters to a working population of 17.2 million, defined as those between 15 and 64 years old.

There are a couple of digital banks operating in this market but are add-ons of commercial banks or operate with a commercial bank DNA such as Richart by Taishin, O-Bank and Koko. Richart has the largest user base and offers more comprehensive services, including lower minimum investment amounts for savings and wealth products. But all are struggling to gain scale compared to the digital base of commercial bank.

A new wave of full-scale digital banks pla...

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