Market Intelligence
Taiwan Finance

Taiwan FinTech Regulatory Development

Taiwan has begun relaxing financial and technology regulations in order to support industry creativity. President Tsai Ying-Wen encouraged this at the November 2019 FinTech Taipei Conference and Trade Show, in which she stated her goal to transform Taiwan into Asia’s center for enterprise capital management and high-end asset management. Taiwan’s FinTech market is expected to grow rapidly. Key factors supporting this growth are Taiwan’s well-established information technology infrastructure, sound financial system, strong commitment to innovation development, and solid cybersecurity systems.

Strong regulation has resulted in a very stable and robust financial system. The ratio of non-performing loans in Taiwan is only 0.25%. As access to financial services grows, 94% of adults in Taiwan have a bank account, easily surpassing the global average of 69%. The high concentration of financial services in Taiwan’s cities has led to high levels of convenience, demonstrated by the ratios of 1 ATM per 710 people, 2 credit cards per person, and the highest insurance coverage in the world.

The Taiwan Financial Supervisory Commission (FSC) has established “responsible innovation, neutral technology, and consumer protection” as its guiding principles for managing the FinTech industry and as its basis for approving and regulating new FinTech applications.

FinTech Regulatory Sandbox

In order to support FinTech development, the Legislative Yuan passed the Financial Technology Development and Innovative Experimentation Act on December 29, 2017, which created a regulatory sandbox permitting companies to experiment with new technologies without receiving the normal approvals. The experimentation period is one year, and applicants may apply for a one-time extension of six months. However, for experiments involving business practices that would require an amendment to an existing regulation, the overall experimentation period may be further extended – but total time in the sandbox cannot exceed three years.

Internet-Only Bank Establishment

On July 30th, 2019, the FSC announced its approval of three consortia led by LINE Corp., Chunghwa Telecom, and Rakuten Bank to set up internet-only banks. The FSC expects that its policy will drive innovation, increase competition and growth for industry participants, lead to new market development, and enhance financial inclusion. We expect these banks to begin commercial operations by the end of 2020.

Open Banking Initiative

In November 2018, the FSC assigned the Bankers Association and Financial Information Service Company (FISC) to plan and develop an Open Banking program including regulations and technical standards. FISC plans to publish the specification of APIs in three phases. Phase I, which included APIs for non-transaction data inquiry and standards for cybersecurity, was published at the end of 2019. Phase II will be published in Q3 2020. It will include 18 APIs for customer information inquiries and low-risk service applications, such as account inquiries or credit card service configurations. Phase III will include financial transaction related services. The purpose of the open banking initiative is to facilitate financial institution collaboration with third party service providers (TSP) to provide more innovative services to Taiwan customers.

Cloud Computing Adoption

In September 2019, the FSC announced the “Amendment to the Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Financial Institution Operation,” which is the first time the FSC has created guidelines for financial institutions for the adoption of cloud computing services. This will primarily provide opportunities for large technology companies to provide cloud-based services.

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