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FSC Convenes Business Communication Meeting for Internet-Only Banks

     The Financial Supervisory Commission (FSC) invited Rakuten International Commercial Bank, LINE Bank Taiwan, and NEXT Commercial Bank on January 10, 2023 to discuss the recommendations proposed by the three internet-only banks. FSC Chairperson Tien-Mu Huang led the related Bureaus in in-depth discussions and reached a consensus in several topics including deposit business, loan business, fund distribution business, and online insurance business. The FSC will continue to exercise in the direction of pilot programs or adjustment of regulations.
The FSC allowed the establishment of internet-only banks to encourage financial innovation and deepen financial inclusion. The FSC also remains open-minded to assist internet-only banks in developing businesses based on their nature. The FSC and the banks reached the following consensus on the recommendations of the three internet-only banks in the meeting:
1.    Deposit business:
(1)    Internet-only banks recommended an increase of the limit for transfers to non-designated accounts from digital deposit accounts. The FSC agreed that internet-only banks may propose other risk management and evaluation mechanisms or strengthen customer identity verification, and apply for pilot programs.
(2)    To handle account closing operations derived from deposit inheritance, internet-only banks can develop offline operation methods that are convenient for the public based on risk considerations.
2.    Loan business:
(1)    With regard to the current evaluation method of unsecured loan repayment capability based on monthly income, internet-only banks may propose other mechanisms for evaluating the repayment capability of borrowers with sufficient financial means but are unable to provide proof of monthly income, and apply for loan business pilot programs for the purpose of small consumption.
(2)    Internet-only banks proposed pilot programs for business loans and participation in syndicated loans under specific conditions. As such operations involve adjustments in risk evaluation methods, asset allocation, and replenishment of professional manpower, the internet-only banks are requested to propose specific plans.
3.    Fund distribution business and concurrent securities investment consulting services: The current regulations specify that a fund distributor shall meet the criteria that the net worth per share is not lower than par value. The FSC may consider regulation amendments in separate stages for banks to use their capital adequacy as the financial condition for concurrent securities investment consulting services to help internet-only banks set up wealth management businesses. The FSC has announced the draft amendment of the "Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises" and will also take the above-mentioned issue into consideration.
4.    Online insurance business: Internet-only banks proposed the two following recommendations, and they are requested to provide detailed plans and procedures. The FSC shall continue to evaluate the feasibility and process subsequent amendments:
(1)    Streamline the operating procedures for customers of internet-only banks to join as online insurance members.
(2)    Relax the restrictions for online insurance business for compulsory automobile liability insurance so that the proposer and the insured do not have to be the same individual.
In addition, internet-only banks also expressed their intention to evaluate cooperation with e-commerce platforms to provide consumers with convenient consumer financing services when necessary. The FSC expects that internet-only banks can use their own business models to set up reliable credit review mechanisms and use technologies and innovation to develop digital financial services, provided that risks are controlled and customer credit is not excessively expanded. The FSC will also continue to assist internet-only banks to solve problems encountered due to operating characteristics, and develop business steadily to meet the demand for financial services of different customer groups in different consumption scenarios.
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  • Update: 2023-03-25