Financial Services Innovator: E. Sun Bank

The survey quizzed more than 1000 Taiwanese company executives and industry experts and independently evaluated companies’ operating and financial performance. It considered not only the level of innovation in the company, but also its track record.

The 2014 top 20 Most Innovative Companies list included regular winners TSMC, Wow­prime and Asus, and new entries like Pxmart, FamilyMart and Grape King Bio.

E. Sun Bank’s place in the top 20 was due largely to its innovative product WebATM, providing cross-border payment services which help to solve a range of obstacles caused by most people’s lack of familiarity with cash flow tools. E. Sun Bank’s achievements exceeded those of its counterparts. With its committed technical team, the bank is able to grasp the trends in cross-strait cash flows, managing both mobile payments and online-to-offline business. In the future, customers shopping in stores will be able to pay for their purchases online by credit card, using their cell phones to scan the products’ bar codes, and so avoiding checkout queues.

With an eye on trends in e-commerce, the bank has integrated with popular mainland Chinese online shopping platforms Tao­bao and ­Tmall. This provides access to popular third-party payment systems Pay­Pal and Alipay to allow cross-border payment services, making the most of opportunities in e-commerce.

According to statistics from the Ministry of Economic Affairs, Taiwan’s e-commerce transactions grew 16% over 2012 figures to reach NT$767.3 billion in 2013, and are expected to reach the trillion NT dollar mark this year. At the same time, cross-border e-commerce transactions grew sharply, with 17% of Internet shops providing cross-border transaction services, thus bringing Taiwan’s products to global markets.

Taiwanese shoppers shopping on Tao­bao or Tmall will be able to complete their transactions through E. Sun Bank’s WebATM, while Taiwanese online stores will be able to collect payments via the same system. When Taiwanese online shoppers pay with NT dollars, online shops in mainland China will be able to receive their payments in RMB, and vice versa. There will be no need to buy and sell currency, making the process more transparent. In addition, the bank is working with PayPal to promote global e-commerce—the E. Sun Global Pass. Taiwanese Internet shops will have to have their receivables collected through E. Sun Bank if they use the PayPal transaction system, regardless of the country in which their goods are displayed.

The bank’s performance has exceeded all expectations, gaining recognition of its innovative development through three decades of effort by Suka Chen, CEO of its Consumer Banking Division.

As e-commerce grows in popularity, E. Sun Bank is promoting innovative services such as cross-strait and mobile payments for their clients.

E. Sun Bank was established in 1992. Only one month later, it launched Taiwan’s first locally developed Internet bank. Chen was the motivational force behind these developments, leading to his recognition as the pioneer of Internet banking in Taiwan.

“It’s always better to be a leader than a follower. Only the leader can take the initiative. Otherwise you’re forced to respond to others’ actions,” says Chen. Innovation is like surfing: if you don’t keep on top of the wave, you’ll go under.

With Internet technology evolving rapidly, e-commerce opportunities multiply daily. In 2000, the bank set up its e-banking department to deal with e-commerce and began promoting Taiwan’s first electronic currency: eCoin.

The functionality of eCoin was similar to today’s Alipay and Pay­Pal. Users made deposits into eCoin before they went shopping online. Once they had received their purchases, a third party paid the online shops. The system largely avoided fraudulent transactions, at the same time accumulating points for customers, and could even be combined with IC cards to make micropayments.

E. Sun Bank fully expected to lead the expansion of Taiwan’s e-commerce market as they were at the forefront of e-currency developments at the time. But things did not progress as smoothly as hoped. At that time, Taiwan’s domestic online payment environment was already mature, and many convenience stores were also providing bill payment services. Furthermore, eCoin was not backed up by a powerful online shopping platform. All of these factors made it very difficult to promote an e-currency business, and eCoin finally wrapped up in 2010.

“This taught us a lesson. Innovation doesn’t mean that newer is better. The technology must be designed and developed to consider its users’ habits and needs,” says Chen. But although eCoin failed in the end, the bank gained valuable experience. They changed from technology-oriented to goal-oriented innovation; it was this transformation that laid the foundations for the future development of a cross-border payment system and WebATM.

While services at E. Sun Bank are fully computerized, there are also a range of face-to-face options for clients who prefer traditional brick-and-mortar banking, integrating physical and virtual services.

Although eCoin wasn’t successful, the team wasn’t disbanded; on the contrary, everyone involved was kept in the company. This was a policy that Chen insisted on.

“Innovation doesn’t necessarily guarantee success, but there will never be success without innovation.” Chen believes that innovation is just an entry ticket to the game. When a company continues to confront the challenges, opportunities will come. And the power to challenge comes from nurturing creative talent.

“How does a firm attract talent with innovative power? It’s simple. Let it become known for innovation, and then people will come of their own accord,” says Chen. When Google or Apple recruits new staff, they don’t need to emphasize their innovation because everyone knows they take innovation seriously. As long as a company continues to pursue innovation and change and maintains a good level of performance, it will attract the creative talent necessary to progress. This creates a positive cycle. It not only meets customers’ needs and generates profits, it also creates a good image for the company. And that attracts more talented people, providing the driving force for continued innovation.

The bank also insists on cultivating its own technical team. E. Sun Bank doesn’t outsource IT projects to other companies as many of its counterparts have been doing. “Outsourcing is certainly more economical. But the people whose talents we foster are able to integrate into the company culture, maintaining and passing on experience. The value we gain is incalculable,” says Chen.

Chen believes that in the future, only older people and those with substantial assets will visit brick-and-mortar banks. They don’t care about high-tech, but they do care about the ambiance in face-to-face meetings. In order to meet the needs of such groups, E. Sun Bank is transforming its brick-and-mortar branches, aiming to integrate artworks and provide more open spaces, expanding VIP service areas, and generally enhancing the good feelings generated by personal service.

What these customers really want is quality human interaction, but not just for their business needs. “To be frank, they’re looking for someone to chat to, or even sometimes to open their hearts to,” says Chen. In this new era, banking employees require not only financial, scientific and technical knowledge, but more importantly they need to be human. They should be able to chat with their clients on anything from investment advice to the arts, from family issues to people’s real-life dramas.

But the younger generation is very different. They tend to avoid brick-and-mortar banks like the plague. They accept new technology and so are willing to try a variety of digital financial services. With Internet technology advancing daily, and the bank’s innovation team continually developing new products to make use of that technology, customers are able to conduct almost any kind of service online except opening a new account.

“In fact, I hope our online users don’t come to our branches,” says Chen. WIth real estate prices and wages continually on the rise, pushing up the costs of running a physical branch, the bank hopes to handle most basic services over the Internet. It’s the future: counter services will be transformed to better serve the VIP client, and customers will be divided into two streams: face to face and virtual.

E. Sun Bank’s Sin­ban­te­cyu Branch in Ban­qiao, New Tai­pei City, is the bank’s first concept branch, with high ceilings and open spaces that encourage clients to appreciate the artworks and decor. There are no visible touch screens or other digital devices. Instead the emphasis is on face-to-face personalized services, using art and interior decoration to enhance human interaction—and to raise personal banking to another level.

With innovation, the bank needs a long-term perspective. Behind the integration of face-to-face and virtual services, Chen is extremely concerned about maintaining the security of the bank’s huge database and information platform.

“I once received a threatening letter from a potential hacker demanding a huge sum of money, in return for which he would tell me about a flaw in our security system,” says Chen. But Chen refused to compromise. He personally led the technical team working around the clock for several days until they had located all potential defects and secured the system to his satisfaction.

As well as attacks from hackers, natural disasters also pose a significant threat. During Typhoon Nari in 2001, for example, the electrical systems in the building housing the bank’s information department were destroyed by the serious flooding in downtown Tai­pei, and the servers were completely shut down. The bank immediately launched emergency backup systems, so that within 24 hours all data had been transferred to a backup facility on the outskirts of the city, and service was restored. “The day after the outage, the only bank on Nan­jing East Road providing online services was E. Sun,” says Chen proudly.

Apart from traumatic incidents like these, issues such as ATM connectivity and network congestion often cause Chen severe frustration. But he’s learned a lot from his experiences. On November 11, 2014 (a major shopping day in mainland China), online trading volume exceeded RMB57.1 billion (about NT$287.4 billion) in a single day. With the benefit of a wealth of experience, the bank coped easily with the vast amounts of data passing through its networks.

There are no formulas for inspiring innovation, avers Suka Chen. The path to creativity begins with a continuing investment, but the goal is achieved only through the experience gained from trial and error.