O-Bank Is Supporting Underserved Communities In Taiwan With Financial Innovations
Many large banks cater more to their large, wealthy customers than to small businesses and low-income or underserved communities. In the United States, Community Development Financial Institutions (CDFIs) have helped fill some of these service gaps by providing financial services to such communities. O-Bank in Taiwan is taking a similar approach.
O-Bank is one of nearly 40 banks in Taiwan, with additional operations in California and China, and is also one of Taiwan’s 29 Certified B Corporations. Tina Lo, Chair of the Board of Directors at O-Bank, says the bank is trying to set itself apart from its competitors by taking a long-term approach to growth and by providing innovative financial services to underserved communities in Taiwan, including poor communities and young people.
“If we want to exist, we have to create our own value,” she said. “We want to make a positive influence on society; otherwise, there’s no meaning for us. So we were thinking, ‘How can we make a difference?’ As a bank, we recognize that with great power comes great responsibility.”
I spoke with Lo as part of my research on purpose-driven businesses. She discussed the innovative financial products the bank offers to help underserved communities and also shared insights about the social enterprise ecosystem in Taiwan with me.
Christopher Marquis: Please tell me about some of the innovative services that you provide to help underserved communities, support sustainability, and address social issues.
Tina Lo: Our emphasis on inclusive finance is built into our core business operations. For example, we were the first bank in Taiwan to introduce robo-advisory services for wealth management, a service that often is reserved for wealthier individuals. Young people and people with relatively little wealth are the real people who really need the wealth-management services, but they often cannot get proper services from the banks. We don’t think that’s justified or what a bank should do, so we introduced this robo-advisor to let our consumers access wealth management online. They only need to have about $35 U.S. worth of assets (1000 New Taiwanese Dollars). So what we’re telling people through our robo-advisor services is that you don’t need to be limited by your time, your place, or even your wealth; you’re entitled to whatever financial services that you need.
We are also the first bank to introduce impact projects in Taiwan for our customers. If you want to make a difference, if you want to designate your funds for a certain purpose, you can put it into a Social Impact Deposit account and that money will only go to economically disadvantaged groups through microloans. That way you’re more satisfied that your deposits can make a difference to help other people. For those economically disadvantaged people, it’s even harder for them to get funding, but they are the people who need it the most. We are trying to create a win-win-win situation, not just for the loan recipient but also for the depositor and the bank.
The people who benefit from those impact projects don’t need a lot of money, relatively speaking. If we can just get them a small amount of money with a low interest rate at the right time, it may be able to change their lives and break the cycle of poverty.
We also have an affinity card program. We are affiliated with educational institutions and nonprofits, and we’re trying to create this platform for people to use an affinity card to support certain social issues, educational institutions, or nonprofit organizations. However much I spend, 0.2% of the cash rebate will go directly into one of those organizations. About 10% of our financial clients actually came from affinity cardholders.
Another project that we launched two years ago is the Green Consumption Power@O-Bank Project. It is actually one of the first projects that we have undergone to encourage conscious consumption and encourage conscious consumers to buy products that are good for the environment and society. So we teamed up with about 29 B Corps and social enterprises, and customers can use our debit card to buy products from them. We give 4.22% cash back to consumers to represent Earth Day, April 22. That is a very high percentage, as you can tell. We want to create a little extra incentive, so that the consumers can recognize and then support those products. But also, there is a limit to the cash back, because we don’t want to encourage overconsumption. We’re trying to incorporate sustainable ideas into our products and services in our connection with consumers and society.
Marquis: What is the ecosystem for social enterprises like in Taiwan?
Lo: Even though we don’t have a clear definition of social enterprises in Taiwan because we don’t have Public Benefit Corporation legislation like many U.S. states, I think that social enterprises are growing in a healthy way in Taiwan. Throughout the years, there have been more and more companies and industries involved in socially conscious business. And we at O-Bank have also created our own ecosystem that people are supporting.
Also from the customer side, the consumers in Taiwan are continually becoming more sensitive about the products that they purchase. They won’t just pick up the product that has the cheapest price. They’ll turn to the back and look at the label to see: where was it made, does it come from a healthy manufacturing process, what kinds of materials are in the product?
More young people are willing to join those social enterprises. If we continue to have more young talent willing to participate in this movement, then I think that the social enterprises and the purposeful businesses in Taiwan are in a healthy situation. Even though Taiwan is not that big, I was kind of surprised to find out that we have the most B Corps in Asia.
Since we are a B Corp already, we’re trying to share our experience with those companies who want to apply for certification as well. As we have heard from B Lab Taiwan, some other companies in Taiwan don’t have the resources or the scale to do the research or they don’t know how to apply or they can’t even read English that well. So our colleagues responsible for B Corp Certification joined B Lab Taiwan’s workshops to introduce the B Impact Assessment (BIA)) structure and application process to those companies to help them properly apply for the B Corp Certification. Additionally, we offer preferential services to B Corps. Most of the B Corps in Taiwan are medium-sized and it is hard for companies this size to get funding. We are offering preferential rates — savings rates and lending rates — and we also provide preferable accounts for their employees.
Marquis: You are a publicly traded company, and have been on the Taiwan Stock Exchange since 2017. How do O-Bank’s shareholders view the company’s focus on purpose and B Corp status?
Lo: In 2017, we were transitioning from an industrial bank, which we had been since our founding in 1999, to a commercial bank. There are almost 40 banks in Taiwan. If we are offering the same things as those other banks to all our customers, they don’t need us. If we want to exist, we have to create our own value. We want to make a positive influence on society; otherwise, there’s no meaning for us. So we were thinking, “How can we make a difference?” As a bank, we recognize that with great power comes great responsibility. Even though that phrase was popularized by Spider-Man, the quote has origins dating back 2000 years.
As a bank, we receive massive resources and trust from the public. People give us their money, give us their trust, so how can we return the favor? How can society trust us if we don’t have a long-term objective that they will feel comfortable about? Why would we bother to make the effort? So that’s why we think we should use our influence to make an impact on society in some way.
Regarding the investors, we have had to convince some of them that, with this mission, we’re banking for the long term, we don’t just look for short-term profits — that’s not a responsible way to run a bank. We want to be sustainable. If we don’t focus on that now, then we cannot survive long term. So would you like us to be a bank that is short-lived but has some good financial numbers now, or do you prefer to see a bank that’s sustainable and will grow in a very healthy and ethical way?
It takes some time to convince some types of investors, but I’m very glad that most of our investors believe in what we believe, and then they support us throughout the whole process.
But I also have to say that unfortunately, at this point in time, it hasn’t really led to much of a change in our valuation. One reason, I think, is because we recently transitioned from an industrial bank to a commercial bank, so there are a lot of initial investments that we have made. So far, on the retail banking side, we are still in the investment stage. But we do believe that we’re on the right track, and now those initial investments are already made.
The second reason is because of the relatively large number of banks in Taiwan, and among those banks, we are relatively small, and the international investors typically look to the larger companies.
But the international ESG investing trend is very promising for us. For example, based on the international ESG rating agency Sustainalytics, we are ranked number four in the financial sector in Taiwan. Even though we are not the biggest one, we ranked in the top four on ESG. That is a big boost. And then MSCI is going to evaluate our ESG this year, so hopefully after that rating we will get more attention from international investors for our ESG ratings.