How Taiwan’s Banking Industry Develops the New Products and Control the Operational Risks in Bank 3.0 – lesson from the Global Markets

The population of digitalization and cell phones not only brings new product features to the public but also changes the way that customers reach financial service. It inspires many new business models and financial technology (so called FinTech) in particular some unicorns with value over USD 1 billion in many countries. The trend makes the traditional banking industry very uneasy as banks have made big money by doing business mainly with big clients and big transactions in the pass hundred years. In 2015, some deregulations have been launched in Taiwan so local financial industry finally starts to move on forwards. The thesis mainly discusses how Taiwan banking industry to cope with the changes by developing digital service and managing the operational risks properly. In the beginning, the thesis explains the electronic banking, online banking, Bank 3.0, banking operational risks, related locally financial policies, SWOT, and local banking regulatory guidelines respectively. Secondly, it analyzes and identifies the strengths, weakness, opportunity and treat for some popular foreign digital financial products which if possible, will be utilized locally. Moreover, what does the malpractice during digitalization enlighten us? Finally, based on the analysis above and the interview results with 2 major foreign banks in Taiwan, the thesis reaches recommendations for Taiwan local banks. The author suggests that banks should reconsider core value and market positioning in order to develop new proper strategies and services, then the banks make the best usage of technology to create more value added products and services in particular from customer perspective. Though more automation is expected, it''s important not to be involved into detailed discussions of new system development in early stage so to avoid quick conclusions. Given the banking industry represents a service industry involving lots of financial expertise, customized planning / solutions, and information / property security, the banks are still very competitive than the other FinTech in Bank 3.0. However, they''re more risky as the tolerance level for transaction error, late or unlawful deals, and system breakdown are diminishing. Furthermore, any breach of global market practices or rules e.g. Basel, AML (anti-money laundry) or FATCA might end up with huge penalty to banks.