The significant progress in Taiwan’s financial services sector can be credited to a combination of complex factors. The emergence of the COVID-19 pandemic played a crucial role in accelerating the widespread adoption of contactless payments. Before the pandemic, the growth of contactless payments had been slow, but the necessity for such transactions during the pandemic led to a rapid and extensive uptake by both consumers and businesses.
Furthermore, the issuance of three virtual bank licenses contributed to significant market disruption. Although Taiwan’s virtual banks currently hold a market share that doesn’t rival traditional banks, their introduction undeniably accelerated the digital transformation within the conventional banking sector.
The transformative changes in Taiwan’s financial services sector prompted local authorities to enact various policies aimed at addressing cybersecurity and money laundering concerns, thereby advancing the digital transformation of local banks. Notably, financial institutions in Taiwan are now mandated by law to implement structured cybersecurity management plans, and there is proactive encouragement from authorities to facilitate cloud migrations.
Despite these commendable outcomes, it’s imperative to acknowledge the 22% of firms that admitted to lacking a formal digital strategy, a proportion higher than the global average of 16%. This presents a notable risk for these companies, potentially placing them at a disadvantage compared to competitors in an ever-more digitally-focused market.
The 2023 Digital Vortex report highlights a notable discrepancy between Taiwan’s financial services sector and other industries. In a broader sample covering all sectors, a significant 44% of companies either lacked awareness of the significance of digital disruption or failed to respond effectively, signaling a lack of preparedness for the impending wave of digital disruption.