For Taiwanese financial institutions, Calastone offers the fastest route to resilience ______

Blog / 15 Feb 2022

Leo Chen, Managing Director - Head of Asia, Calastone

Even though financial institutions broadly weathered the pandemic successfully, their ability to adapt to and recover from operational disruptions is under increasing scrutiny from regulators around the globe.

Taiwan’s decisive response to Covid-19 prompted universal admiration, and its financial system proved equally robust in the face of the crisis. Nevertheless, Taiwan’s Financial Supervisory Commission (FSC) adopted supervisory measures aligned with international practices to strengthen operational resilience, and conducted a “2021 Supervisory Stress Test” of 36 domestic banks to gauge the impact of the pandemic and the ongoing low interest-rate environment.

The results of the tests showed that all the key ratios (common equity, tier 1 capital, capital adequacy, and leverage) were above statutory minimum standards, and that domestic banks “have maintained strong capacities for bearing risks and capital adequacy”.

Fitch Ratings reported in May 2021 that Taiwan’s “credit metrics have been bolstered relative to peers” because the rigour of its financial system and stronger-than-expected performance of its economy had “minimised the need for large-scale fiscal stimulus seen elsewhere”.

However, just as the virus itself has taught us, even the strongest and most well-managed defences are not impervious to risk. From May to July 2021, Taiwan was plunged into Level 3 restrictions as it was hit with its worst Covid-19 outbreak to date. In many cases, while firms were financially robust enough to withstand the crisis, operationally they were considerably more fragile, and banking associations offered limited guidance to members to help them through it.

With more employees forced to work from home, financial institutions struggled to cope with a new reality, and faced difficulties communicating effectively, accessing real-time data and performing daily operations. Adding to those difficulties was a prevailing workplace culture that valued long hours in the office, leaving companies unprepared to deal with the infrastructural demands of mass remote working.

In turn, this raised long-term questions about long-term future resilience, and the ability of financial institutions to function through potential future crises.

Automation has become essential

As those pressures have mounted, the virus has triggered an awareness of the need for a rapid change in mindset, and Taiwan’s financial institutions have become increasingly aware of the important of implementing new technologies to safeguard both business continuity and long-term business development.

Two issues quickly became clear.

Firstly, financial institutions burdened with legacy technologies and a culture founded on manual processes are much less resilient, and at far greater risk of operational breakdowns than those that embrace automation.

Secondly, companies had much to gain from relinquishing Taiwan’s cultural resistance to remote working. For example, Far Eastern International Bank, which like the majority of fund distributors in Taiwan automates their fund trading systems through the Calastone network, conducted an internal survey of its remote working operations. The survey found that 70% of staff reported no impact on their productivity, while 20% of employees said working from home increased their productivity by one-third.[1] To maximise that advantage, companies need complete digital solutions with the widest coverage and global experience in order execution.

A quick and secure way to ensure continuity

To ensure continuity in the face of current and future disruptions, automation is now a necessity, not a luxury. With the ability to onboard new clients and deliver solutions in a matter of days, our solutions are perfectly structured to enable the seamless transition between office and home working. This will be vital as Taiwan’s working culture shifts toward a hybrid home-office model.

For Taiwan’s financial institutions, plunged in and out of Covid restrictions and under renewed regulatory scrutiny, finding long-term technology partners able to connect them to the entire market quickly, and without the need to change processes, is a huge advantage. As the leading global funds network, Calastone enables local fund distributors to offer the widest range of funds possible to their investors. The automated order routing and reporting solutions enable firms to reduce their total expense ratios

Calastone has been a consistent presence in Taiwan since 2011, and already provides these services to 80% of distributors in the market.

For Taiwanese financial companies needing to future-proof their operations, Calastone offers the fastest route to resilience.

[1] Far Eastern International Bank

Leo Chen, Head of Asia

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