Impact of the pandemic on Taiwan’s financial industry | HCLTech

Impact of the pandemic on Taiwan’s financial industry

Impact of the pandemic on Taiwan’s financial industry
September 14, 2022

The beginning

The outbreak of Covid-19 in the first quarter of 2020 shook the global economy. The banking industry in Taiwan once again faced serious challenges similar to the ‘Financial Tsunami’ of 2008. The only difference was that the Covid-19 pandemic was not caused by certain financial activities or failure of governance, yet the impact it had on the global economy was worse than the financial crisis of 2008.

While Taiwan had controlled the pandemic better than other parts of the world by using stringent social distancing restrictions, quarantine measures and tight border control, it was not the time to breathe a sigh of relief. When Covid-19 broke out in May 2021, many vulnerabilities in business practices were exposed. For example, several local banks struggled to offer remote banking services due to their legacy systems and infrastructure. Such business opportunities and challenges under the Covid-19 outbreak fueled digital transformation in financial services.
The quarterly GDP of 2021 outperformed the 2020 quarterly GDP and the financial growth increased by 2.76%.

With increasing needs and decreasing interest rates, financial services and supply chains will come up with the hybrid service model, in which banks, suppliers and enterprises will form a new alliance.

An insight into the operational efficiency of local banks

The following table illustrates the significant decline in the business growth of the banks due to the pandemic:

Area Comparison to the year 2020
Overall income 4.5%
Interest 16.3%
Handling fee 1.5%
Offshore Banking Units(OBU) business 19.2%
Domestic Banking Units(DBU) business 5.1%
Overall profit 13.3%

The only bright side of 2021 was that the digital account opening rate was up by 91%. While the total number of accounts was around 3.38 million in 2020, the number increased to 6.46 million in 2021. With 3 upcoming digital banks, the number is expected to reach 9.0 million in 2022.

2022 banking industry outlook

2022 is a crucial year from the Financial Services industry’s point of view. Following are some of the factors that will shape this business space in Taiwan.

  • Growth of investment in financial technology
    Compared to 2021, investments in financial technology are expected to reach a new high of 0.7 billion (USD) in 2022. These investments will be made in Non-Fungible Tokens (NFT), Blockchain and digitalization efforts of the core business.
  • Expansion of digital ecosystem
    Some large financial institutions are already building and operating their digital ecosystem. With the introduction of more such digital banks, these ecosystems will become the next big thing.
  • Cybersecurity and data governance
    Financial Supervisory Commission (FSC) released the financial cybersecurity technology roadmap in 2020. The same year FinTech Security Act was also enforced. These regulations were created with an open mind to strengthen the foundation of cybersecurity and data governance. The impact of these announcements can be seen now, as going forward more banks will be paying attention to having strong cybersecurity and data governance processes.
  • Permissive environment and ESG (Environmental, Social, and Governance)
    With the signing of Equator Principle(EP) by most consumer banks in Taiwan back in 2020 and 2021, more Offshore business units (OBU) are expected to come up. Not to mention the FSC announcement which allowed the setting up of OBU business in China in the beginning of 2022.
  • Financial supply chains after the pandemic
    With increasing needs and decreasing interest rates, financial services and supply chains will come up with the hybrid service model, in which banks, suppliers and enterprises will form a new alliance. In this hybrid service model, enterprises will help the supplier to increase their credibility, banks will decrease the risk, and the supplier will be able to obtain the funds. In the local market, where 91% of enterprises are SMEs, this will lead to a decrease in capital costs and an increase in cash flow, benefitting both enterprises and banks.
  • Cross-disciplinary talents are the key to digital transformation
    FinTech is set to be the next big thing in the banking industry. With rapid digital transformation in financial services, the banks are looking for talent from cross business units. This talent pool will be the key in simplifying the complex core systems and setting up the new digital foundations.
  • Cybersecurity will become a key part of the digitalization of financial services
    FSC released Financial Technology Roadmap and Fintech Security Act back in August 2020. With digitalized financial services becoming increasingly important in the daily lives of people, providing secure, convenient, and consistent financial services to the public will be a constant pursuit for the government agencies, as well as a key priority for the financial institutions.
  • Mobile payment becomes universal to the consumer market
    With the maturity of the financial environment, the growth of mobile payment is enormous. The below table shows the growth in mobile payments since 2017.
    Year Total Amount (USD)
    2017 50.2 million
    2018 501.7 million
    2019 1.6 billion
    2020 6 billion
    During the pandemic, non-contact consumption surged, and mobile payments increased to 14 billion dollars, which is double the growth rate compared to 2020.


As the proliferation of digital services expands, the outlook for a digital ecosystem seems to be positive in the coming days as far as the financial services industry in Taiwan is concerned.

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