Correction: Fitch Affirms SLM Corporation at 'BB+'; Outlook Stable - Fitch Ratings

Correction: Fitch Affirms SLM Corporation at 'BB+'; Outlook Stable - Fitch Ratings

Correction: Fitch Affirms SLM Corporation at 'BB+'; Outlook Stable - Fitch Ratings

Posted: 30 Jun 2020 10:00 AM PDT

[unable to retrieve full-text content]Correction: Fitch Affirms SLM Corporation at 'BB+'; Outlook Stable  Fitch Ratings

Fitch Affirms ALJ Finansman at 'A-(tur)'; Outlook Stable - Fitch Ratings

Posted: 30 Jun 2020 04:47 AM PDT

[unable to retrieve full-text content]Fitch Affirms ALJ Finansman at 'A-(tur)'; Outlook Stable  Fitch Ratings

How Digitizing KYC Processes Helps Accelerate Onboarding -

Posted: 30 Jun 2020 04:46 AM PDT

Customer onboarding and account opening is vitally important for banks to get right, as the processes kick off customers' relationships with a given financial institution (FI). The ongoing COVID-19 pandemic has forced many of these onboarding processes and interactions online as customers limit their physical branch visits to avoid contagion. Recent research found that mobile account openings increased by 200 percent in April, driven almost entirely by the pandemic.

This shift to digital services is likely to continue even after COVID-19 is contained, with 60 percent of customers who have shifted to digital banking saying they will continue to use these services even after stay-at-home orders and social distancing guidelines have been lifted. Banks do not seem to have been well-prepared to face this surge in online onboarding activity, as only 56 percent of FIs currently offer the ability to open accounts digitally.

Even banks that do offer digital account opening find their customers face several challenges in their onboarding, including tedious application processes and excessive costs. The following Deep Dive explores how these obstacles result in customer attrition as well as how banks are deploying new technologies like biometrics to ease these frictions.

Onboarding Obstacles  

Customer onboarding processes can be rife with obstacles and frustration, and many users give up on the process entirely before they even open an account. A study in 2018 found that in the U.K., 50 percent of potential customers had abandoned an onboarding process with an FI, and 34 percent said they abandoned the process because it was too time-consuming.

This obstacle is well-documented and is at least partially caused by the regulatory checks that all banks must perform on their customers to ensure they are not using their bank accounts for fraudulent purposes or money laundering. These know your customer (KYC) checks involve the gathering of customers' identities, financial statuses and addresses as well as more esoteric information like credit checks, information requests and other data that often involves physical bank visits and reams of paperwork. These checks take days to accomplish, a far cry from the smooth, instant signup processes that customers experience in many other facets of their digital lives. The onboarding time for corporate customers is even more onerous, with a 2019 study finding that the average time to open a business account is a staggering 32 days.

These lengthy KYC checks also come at great costs for banks. Large FIs report spending more than $500 million annually on customer due diligence, and many are understandably looking for ways to accelerate these processes and save money while doing so. Cutting any corners would come at a cost as well, however, as improperly performing these checks could result in fines of up to €3.5 million ($3.9 million USD) a year. The value of lost customers should not be discounted either, as they are predicted to cost banks more than €150 million ($168.9 million USD) in the next five years.

Adopting new technologies could simplify the onboarding process, though, reducing customer headaches and protecting banks from lost business. Biometrics and document identity scans have shown the most promise so far and are popular among bank customers as an alternative to traditional KYC processes.

An FI Onboarding Upgrade

FIs have the opportunity to streamline onboarding with biometrics such as facial recognition technology to verify that applicants are who they say they are. Customers typically either visit bank branches for facial scans or simply upload a selfie to their mobile banking app, which the system can then compare against government-issued identity documents.

Biometric verification methods are already quite popular among bank customers according to one study, meaning they would likely be readily accepted for onboarding processes. Two-thirds of respondents said they preferred biometric authentication to traditional passwords for bank interactions, so much so that 53 percent said they would switch banks if their current FI did not offer biometric options. Approximately 42 percent were appreciative of the fact that biometrics enabled them to no longer have to remember passwords, while 34 percent thought biometrics offered improved security over passwords.

Another technology to speed up FI onboarding processes is document identity scanning, where customers take pictures of their government-issued identification, Social Security card or other ID document and submit them to an artificial intelligence (AI)-powered analysis system for scanning. The system cross-references these IDs with national databases to ensure their authenticity, providing a much faster alternative to visiting bank branches for manual inspection. These verification systems are particularly handy during the COVID-19 pandemic, as visiting bank branches is a nonstarter for those wishing to avoid infection.

Whichever method banks choose to accelerate their onboarding programs will likely be a welcome improvement over tedious legacy systems. Their replacement may not retain the entire 50 percent of customers who abandon onboarding processes, but any reduction in attrition will go a long way toward improving the financial industry's future.



Payments were starting to lean into "instant" when the pandemic hit. As the nation and economy now struggle to reopen and reinvent, failures around slow stimulus payments and SBA loans that still haven't reached some have rallied the call for instant payments at scale. With the Federal Reserve's FedNow initiative still years away, PYMNTS CEO Karen Webster gathers a trio of experts to map out the delivery of instant payments…instantly.

Asiamoney best bank awards 2020: Taiwan - Euromoney magazine

Posted: 29 Jun 2020 12:07 AM PDT


Best Domestic Bank: CTBC Bank

Best Corporate & Investment Bank: CTBC Bank

Best International Bank: Citi

Best Digital Bank: Taishin Bank

Best Bank for SMEs: E.Sun

Best Bank for CSR: E.Sun

Award winners

Best Domestic Bank
Best Corporate and Investment Bank

James Chen, CTBC Bank
Taiwan's 23 million citizens are served by nearly 40 banks, ensuring a hard fight for clients in both retail and corporate banking. But CTBC has managed to pull ahead of the crowd in both fields.

CTBC, Taiwan's largest private sector bank, increased its revenue, profits and total assets in 2019 to NT$103.7 billion ($3.5 billion), NT$38.5 billion and NT$4.23 trillion, respectively. It did that despite an increasingly uncertain backdrop for Asian banks.

The spread of Covid-19 is the obvious problem facing banks at the moment, but it is not the only one. The on-again, off-again US-China trade war has also been a concern for Asian banks over the last few years, even more so for an institution that is leading the charge offshore for Taiwanese banks.

CTBC's approach to navigating trade war uncertainty has begun with trying to understand its clients. The bank ran a survey of Taiwanese companies last year and found that 20% of those with overseas businesses were relocating operations, either back to Taiwan or to safer locations, such as Hong Kong and Singapore. 

The bank established a dedicated task force to advise clients, dealing with various regulatory issues as well as domicile changes and providing overall support: that helped it to increase its international business by about 13%.

CTBC also fared well in the first quarter of 2020, despite the impact of the coronavirus. The bank, run by chief executive James Chen, managed to boost net profit for the quarter by 8% year on year. 

One source of income was an increase in demand for credit from its less risky customers, who saw the Covid-19 pandemic as an opportunity to double down on investments in the capital markets.

In retail banking, CTBC is keeping pace with its competitors. The bank has partnered with e-payments and e-ticketing providers, linked its ATMs with Taiwan's most popular messaging app Line and, as one of Taiwan's largest credit card issuers, it is doing away with paper bills and redesigning its systems to provide mobile billing – still a new concept in an economy that was slow to accept digital and mobile banking.

About 39% of CTBC's retail customers, or 3.4 million, are also online customers. Those customers account for roughly 71% of its total retail banking revenue.

CTBC's international aspirations have broken the mould of Taiwan's domestic-focused banking system. The bank has already built a network covering 14 countries, which it continues to expand: earlier this year it opened a new Chinese branch in Shenzhen. 

Its overseas operations contributed about NT$12.6 billion, or 38%, of its 2019 profit, up 12% from the year before.

CTBC's domestic business and overseas network have helped it to develop one of the most prominent positions of any Taiwanese bank in Asia's syndicated loan markets. It worked as a mandated lead arranger and bookrunner (or MLAB), or mandated lead arranger on 78 transactions between April 2019 and March 2020: 53 of those were offshore deals.

Three of the international syndicated loans sold were led by CTBC: a $340 million deal for CMB International Leasing Management; $120 million for CMB Financial Leasing (Shipping Finance); and $100 million loan for Haitong Unitrust International Leasing. 

Among the bank's domestic loan mandates was an MLAB and joint adviser role on the NT$89.4 billion CIP Changfang Wind Power and Xidao Wind Power project financing. The deal, completed in January 2020, is the largest debt package yet for Taiwan's burgeoning wind power sector.

CTBC was also sole MLAB and agent for a NT$31.2 billion leveraged buyout loan for KKR's acquisition of Taiwanese company LCY Chemical Corp, the largest LBO in Taiwan in 2019. 

The bank has worked in leading roles on a host of international and domestic bond issues, notably a series of green bonds last year, including a pair of deals by Danish power company Orsted denominated in new Taiwanese dollars.

With a dominant position in its home market and a growing overseas network, CTBC is following its goal of being a 'Taiwan champion, Asia leader'. 

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Best International Bank

Citi stands apart from other foreign banks operating in Taiwan. It combines a leading retail bank with a

world-class corporate and investment banking franchise. It has also built deep relationships with its clients in the region.

Citi opened its first representative office in Taipei in 1965 and its first branch the following year. Since breaking ground in Taiwan, it has established a network of 47 branches and a workforce of 4,000 employees. Under the watch of its Taiwan chairman Paulus Mok, it had an impressive year in 2019.

Citi booked $982 million of revenue in 2019 and generated a 13% jump in income year on year to $482 million, while reporting a net return on equity of 11.7%. It has $28.4 billion of total assets, $21 billion in deposits and an $11.9 billion loan portfolio, with a 0.41% non-performing loan ratio.

Citi has leveraged its retail network to make a bigger push into wealth management, adding a 'total wealth adviser' (TWA) advisory tool to its online banking services last year. 

Using the TWA service, Citi's clients can access their finance portfolio through their online accounts or the bank's mobile app.

The new tool follows consistent digital development by the bank, with mobile stock trading and FX trading platforms launched in 2017 and 2018, respectively. It also has a comprehensive mobile banking app for managing finances, and recently adopted voice biometric technology for authentication, which 80% of its customers are using.

The bank's CIB division worked on several large transactions during the year, including Taiwanese electric component manufacturer Yageo Corp's $1.8 billion acquisition of US firm Kemet Corp – one of the largest outbound acquisitions in Taiwan for two decades. 

In the capital markets, Citi alone led Foxconn's $273 million block trade of Alibaba shares.

The bank's commercial banking operation capitalized on the impact of the US-China trade war on Taiwanese companies, which have faced challenges including relocating production facilities out of mainland China and keeping up with disruptive digital technology. It was able to boost its outbound cross-border revenue by 7% last year. 

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Best Digital Bank
Taishin Bank

Oliver Sheng, Taishin Bank
Although banks in Taiwan moved later than international rivals when it came to betting on digital, this is now a core part of many banks' business plans. Taishin Bank, however, stands out for its fully digital bank, called Richart.

Some of Taiwan's banks focus on a piecemeal knitting together of offline operations in branches and ATMs with mobile apps. But Taishin's president, Oliver Shang, opted to establish a service fully independent of any physical presence, and in the process created Taiwan's largest digital bank.

Through a suite of products and services, including savings and foreign currency accounts, personal loans, insurance and fund investment, Richart has captured 50% of the online market: more than 2.1 million customers have applied for its savings accounts and foreign currency accounts.

Digital savings accounts have become increasingly popular due to their convenience and are expected to become even more so as people look for a safe way to access banking services during the coronavirus pandemic.

Part of the digital bank's success has come from targeting customers with product bundles, including high-interest savings accounts offered with credit cards and loans with a 'Maji Score'. The latter is a scoring mechanism that changes a customer's credit line with Richart in response to behavioural changes. For example, a customer could reduce the interest rate charged by completing tasks such as making five account transfers within a month.

The digital bank also provides an entirely paperless lending process that can go from application to release of funds within 20 minutes.

While Richart is targeted at Taiwan's young population, there is a broader service available in Taishin Mobile Bank, which increased its user base from 1.3 million to 2.3 million from 2016 through 2019. The smartphone app had 590,000 active users a month. Among the perks that come with Taishin's mobile banking are cardless foreign currency withdrawal from ATMs and non-designated foreign currency transfers online.

Taishin's third digital banking pillar is its streamlining of online credit card applications. From a clunky and confusing process, the bank has partnered with the government's MyData service to identify and verify card applicants. By the end of 2019, 50% of Taishin's credit card applications were made online.

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Best Bank for SMEs
Best Bank for CSR

Taiwan's economy is built on small and medium-sized enterprises. More than 95% of the companies

Joseph Huang, E.Sun
registered there are defined as SMEs. They can vary considerably in size and income, but the vast majority are family-owned. They are also E.Sun Bank's primary focus under chief executive Joseph Huang.

With a determined effort to serve such a large sector, E.Sun is expanding its traditional business of lending while developing new innovative approaches to boost its market share. At the end of 2019, E.Sun had NT$365 billion ($12.2 billion) in SME loans, up 5.6% year on year; these account for 25.4% of its total NT$1.44 trillion loan portfolio, making this the largest segment.

The bank has invested heavily in technology to improve its products and services for SMEs, among which is an easy online loan application process for small enterprises. Within three minutes of using the online service, an applicant is told how much they can borrow and at what rate. 

Behind the scenes is E.Sun's risk modelling technology, created by its artificial intelligence team, which at the same time passes on the applicant's information to the bank's sales staff.

E.Sun recorded 2,000 online loan applications in 2019, resulting in NT$1.6 billion in lending, double that of the previous year. The bank's average unsecured and secured SME loans are NT$20 million and NT$100 million, respectively. It has managed to grow while maintaining a low-risk approach, with a non-performing loan ratio of 0.3% for its SME loan portfolio.

The bank was able to increase its customer acquisition rate by 2.6 times last year by using a novel algorithm that predicts which corporate clients are likely to apply for loans in the coming year, creating precision marketing information for the bank's sales team.

E.Sun also partnered with the government-backed Small and Medium Enterprise Credit Guarantee Fund of Taiwan on a number of SME initiatives, including its SME micro loan programme.

In corporate social responsibility, E.Sun Bank aims to be a green finance leader in Taiwan. In 2019, it announced a policy of prohibiting lending to coal power projects and companies, and it worked in leading positions on two syndicated loans for an offshore wind farm.

It has issued NT$5.9 billion ($197 million) in green bonds, or about 16% of the bank's total bond issuance. It was the first Taiwanese financial institution to be included in the Dow Jones Sustainability indices.

E.Sun' social contributions have largely come from its 'Smile and hope' loan scheme, launched in March 2019. The product is designed to help solve financial problems faced by social enterprises, shortening the loan application time from one month to 10 days. Since its launch, the programme has increased the number of eligible borrowers from 45 to 200 enterprises and lent a total of NT$26 million to 17 enterprises.

E.Sun also runs the Golden Seeds project, which aims to improve reading among primary school-aged children. The project is funded by income from the E.Sun World Card, a credit card with a charity function. The bank has built 150 local libraries since launching the project in 2008 and is committed to building a total of 200.

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