Bank SinoPac, a mid-sized commercial bank in Taiwan’s fragmented market, was a latecomer to digital bank-account services.
By the time it launched a digital account service in June 2019, 25 other banks had already done so.
What its managers realized, though, was that just having a mobile version of an offline account wasn’t necessarily the best way to go.
Regulations and marketplace habit mean Taiwan’s financial institutions are siloed. Many operate as part of holding companies. The legal entities for credit cards, securities brokerage and investment management operate independently, and their managements defend their fiefdoms jealously.
Bank SinoPac’s team realized that they might be able to break through with a digital app if they found a way to better integrate their services, says Irene Huang, head of the digital division.
The key was what she refers to as an ecosystem, meaning in this case bringing together SinoPac’s various offerings under one app, called DAWHO.
From a regulatory point of view, SinoPac’s consumer bank remains separated from its securities arm. “But we created a good interface to transport users to their securities accounts,” she said.
The biggest customer opportunity for DAWHO is younger people aged 20 to 45. They are more mobile-savvy, and they represent growth for Bank SinoPac, whose median customer age is 48.
“Younger people were surprised that they can’t simply transact everything in one app,” Huang said. Other banks required customers to access different apps for different functions.
SinoPac worked hard internally to get these disparate business units to coordinate, which was similar to negotiating a deal with separate companies, and to satisfy regulatory requirements – DAWHO still requires people to transact in a separate app, but it makes the process as seamless as possible.
Finally it required Huang’s team to build the necessary protections and firewalls for data and pathways for consumer consent to share their data among SinoPac Holdings’s entities.
“Now other banks are following our example, but combining these is hard,” Huang said. “The challenges are technological, institutional and cultural.”
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It turned to a longstanding vendor, Temenos, to support the app’s rollout. “Temenos processes all the data associated with our business functions,” Huang said. “It’s a powerful tool for composable banking.” (Composable banking refers to a systems architecture built on interchangeable components, versus monolithic mainframe-based systems.)
Temenos has worked with SinoPac since it delivered a core banking system in 2009. Now it has upgraded the bank to its open platform, which helps banks assemble, test and extend their capabilities, and combine them with outside fintech companies or other partners.
The bank says the effort has paid off. DAWHO stands for ‘digital account with happiness opulence’, and its Mandarin pronunciation, dahu, sounds like ‘VIP’. It is both a portal to different services, including wealth management and mortgage loans, as well as a data-gatherer that relies on artificial intelligence to pitch better offers.
The app has garnered around 1.2 million users in a short time, making it the most popular banking app after Taishin Bank. Huang is even happier with the engagement rate: 80 percent of users are active.
DAWHO also is a profitable business, although Huang declined to quantify this. Revenues come from fee income from selling mutual funds and stocks but the biggest generator is now mortgages.
Online to offline
She says mortgages is where DAWHO works best: by helping affluent 30-somethings research a loan, which they must complete by visiting a branch.
This is often the first time Bank SinoPac’s customers may visit the bank in person. But big-ticket, complex products are best sold by humans – which gives brick-and-mortar banks an edge over their newest competitors, Taiwan’s three virtual banks (LINE, Rakuten and Next).
Those newest entrants have huge consumer bases, via LINE’s messaging service, Rakuten’s brokerage and e-commerce, and Next shareholder Chunghwa Telecom.
But Bank SinoPac has integrated DAWHO with local online property websites, so people searching for a home can obtain a mortgage valuation and a referral to visit a Bank SinoPac branch to complete the application.
“There are times when you need a hybrid approach,” Huang said.