The reinvention of a long-established Taiwanese government-owned bank, facing challenges in a tough business environment, would likely involve innovative strategies to adapt and thrive. Embracing digital transformation to stay competitive in the rapidly evolving financial landscape through, for instance, more investments in digital banking platforms, mobile apps and online services would be one of the strategies a bank might employ.
Other challenges include the diversification of services to offer a broader range of financial solutions, which could help mitigate risks associated with fluctuations in specific markets and industries while tapping into new revenue streams, as well as the incorporation of sustainability and social responsibility into business practices to attract socially conscious customers and investors. Social responsibility is gaining significant traction in the financial landscape, contributing positively to society and the environment.
By aligning with global sustainability goals and demonstrating a commitment to corporate social responsibility, the bank can enhance its reputation and differentiate itself in the market. These are the key strategies put in place by the Mega International Commercial Bank/Mega Bank, which came into being as a result of the merger of the International Commercial Bank of China and Chiao Tung Bank, effective on August 21, 2006.
Formerly known as the Bank of China (later renamed as the International Commercial Bank of China) and the Chiao Tung Bank during the late Qing Dynasty and the early Republic of China, it has made significant contributions to the internationalised deployment of Taiwanese manufacturers and enterprises, industrial upgrades, and activated economic development through its global presence and extensive remittance network. Presently, it plays a leading role in Taiwan’s banking industry including international trade and foreign exchange operations, international syndicated loans, project financing, and start-up and entrepreneurial investments, among other things.
Mega Bank has been cultivating a comprehensive culture of compliance
Leveraging the advantage of its global presence and correspondent banks, the bank has made immense contributions in supporting domestic companies to expand internationally, upgrading industries, and promoting economic developments. In recent years, by following in the footsteps of peers in advanced countries, the bank has dedicated all efforts to optimising corporate governance and promoting sustainable development.
Mega Bank is headquartered in Taiwan, with overseas operations mainly in Asian countries. The group is focused on developing emerging markets and countries in Southeast Asia, and as of the end of 2023, has 108 branches in Taiwan and 39 overseas operations in 18 countries/regions. Among the 39 overseas locations, Mega Bank has 31 overseas branches and sub-branches, three overseas representative offices and marketing offices, and five subsidiaries and branches in Thailand.
Chairman Paul C. D. Lei holds a Cornell Ph.D. in Economics and took office in June 2023. He told World Finance that Mega Bank cannot rest on its laurels. He expects all employees to adopt a proactive attitude of “facing challenges and embracing changes” to tackle various obstacles, including geopolitical conflicts, escalating inflation, and intensifying competition in the financial landscape.
Lei also outlined three major strategies, which include the implementation of environmental, social and governance (ESG) principles, systems optimisation, and nurturing talents, aiming to lead Mega Bank into another century of glory. Mega Bank also actively develops new financial products and has launched marketing projects to continuously promote business development, to respond to market dynamics, meet customer needs in real time, and adapt to technological and digital financial trends.
Mega Bank also continues to strengthen research and development, deepen various digital financial services, seek cross-industry cooperation opportunities, expand service scope and develop new customers. While Mega Bank is actively investing in digital financial research and development, it has also applied for financial patent protection. As of August 31, 2023, a total of 564 new patents and a total of 116 invention patents have been approved by the Intellectual Property Bureau of the Ministry of Economic Affairs, for a total of 680, which ranks it first among public stock banks.
Committing to net zero
Mega Bank places great emphasis on global climate change and carbon reduction initiatives. It has set targets aligned with the Science-Based Targets initiative (SBTi) and Taiwan’s 2050 Net Zero Emissions Goals. It not only aims to reduce 25 percent of greenhouse gas emissions by 2030 but also to achieve net zero emissions by 2050.
It has planned an ‘Environmental Sustainability Pathway’ by implementing systematic carbon reduction measures and introducing various international ISO standards and green building solutions to enhance its operational environmental and energy management efficiency. Currently, three of its self-owned office buildings have obtained dual certifications for ISO 14001 environmental management and ISO 50001 energy management systems.
The bank has made immense contributions in supporting domestic companies to expand internationally
Moreover, Mega Bank incorporates sustainable business concepts into financial product design, as well as investment and financing approval systems to encourage Taiwanese enterprises to prioritise and implement ESG practices. In line with the Financial Supervisory Commission’s ‘Green Finance 3.0’ policy, it offers various sustainable-related financial products and services, effectively guiding its customers towards low-carbon transitions. For example, it provides venture capital loan projects focusing on renewable energy and job creation, consumer credit products for green buildings and maternity support, issuance of green credit cards, and investment in green energy technology industries amplifying Mega Bank’s core business impact on positive sustainable finance.
System optimisation
In response to the rapid changes of the digital era and challenges of outdated core host system architectures, Mega Bank has initiated a five-year core host system transformation plan from 2021. Starting from the perspectives of users/customers, employees, and senior bank management, it has gradually adjusted the traditional ‘big core and small peripheral’ system architecture to a ‘lightweight core and micro-services’ architecture.
Meanwhile, it has introduced key middleware components, including applications, data, reports, and monitoring, to achieve the long-term goal of core host system transformation. This allows front-end services to be applied flexibly and to respond to business needs swiftly, meeting customer demands. Taking the transformation of the consumer finance business as an example, credit loans have been streamlined with an online application platform while ensuring personal data security and privacy protection.
Mega Bank has introduced the Autonomous Use of Personally Related Data (MyData) platform and integrated personal data functions with the bank’s IXML (Financial Electronic Certificate), simplifying the loan approval process with the i-Loan Approval Management system. Leveraging automated preliminary review and data analysis, along with the development of a ‘Loan Value Model Calculator’ for data-driven portfolio evaluation, the bank aims to deliver a satisfying lending experience to its customers.
Talent cultivation
Lei emphasised that employees are the most valuable assets of an enterprise, and a primary aspect of implementing ESG is taking good care of them. Immediately after assuming office, Lei took steps to ensure an immediate increase in employee remuneration and increased meal subsidies and maternity benefits. These measures, which resonated deeply with the employees, show Lei’s commitment to supportive leadership and a positive work environment.
Indeed, Mega Bank is deeply committed to fostering a happy workplace. Apart from offering competitive salaries and benefits, it promotes effective communication channels between labour and management through employee dedication surveys, human rights due diligence investigations, and labour-management meetings. Furthermore, Mega Bank also cares for the physical and mental health of its employees, obtaining ISO 45001 certification for occupational health and safety management systems in 2022.
On the other hand, its employees in this happy enterprise reciprocate with enthusiasm and dedication to their work. In 2023, Mega Bank achieved a post-tax net profit of NT$31bn ($960m), with each employee contributing an average of NT$5.11m ($158,130). The post-tax earnings for the first quarter of 2024 reached NT$9.9bn ($306m). As Mega Bank is a systematically important bank (D-SIBs) in the Coalition of Movers and Shakers on Sustainable Finance, Mega Financial Holding, its parent company, has been selected for inclusion in the ‘TWSE RA Taiwan Employment Creation 99 Index’ and ‘TWSE RAFI Taiwan High Compensation 100 Index’ for many years. With such honourable achievements, it is no surprise that Mega Bank has been rated as Taiwan’s Best Commercial Bank by World Finance magazine for two consecutive years.
However, these are not the most important achievements for Lei. In his vision, Mega Bank should be “a happy Mega Bank for its employees; a friendly Mega Bank for its customers; a profitable Mega Bank for its shareholders; and a sustainable Mega Bank for Taiwan.”
Establishing a compliant corporate culture that balances profitability and risk is crucial for the long-term success and sustainability of any financial institution. In recent years, Mega Bank has been cultivating a comprehensive culture of compliance, balancing short-term profitability, business expansion, and risk management.
Developing clear ethical standards, implementing a comprehensive compliance framework, fostering a culture of compliance from the top down, providing ongoing training and education programmes to ensure that employees have the knowledge and skills necessary to comply with regulations and internal policies, as well as implementing solid risk management practices, are only some of the strategies put in place to ensure a balanced approach that helps to protect the interests of stakeholders while maintaining regulatory compliance and upholding ethical standards.
The implementation of the Global AML and Sanctions Programme aims to enhance the effectiveness and sustainability of the overall anti-money laundering system. With a solid foundation in place, the bank further strengthens its overseas profitability and business development, giving its overseas branches a significant boost.
