Central bank plans to issue up to three virtual banking licences in 2024 Consultation paper on licensing framework issued Financial sector seen to become a leader in transition to digital economy New article design- Test Page 2023 New article design- Test Page 2023 New article design- Test Page 2023 New article design- Test Page 2023 Thailand is one step closer to the creation of its first digital-only banks. The main thrust of which is to enhance financial inclusion by widening access to banking products and services, including credit and loans, and at the same time drive down the cost of financial services for businesses and individuals. Tharith Panpiemras, Assistant Governor of the Financial Institutions Policy Group, Bank of Thailand BoT’s assistant governor Tharith Panpiemras said that for new players to obtain a licence, they must show a solid business plan. He also acknowledged the need to facilitate open infrastructure and address challenges in sharing data as the government prepares to invite applications. He said: “They will have to prove to us that they can serve the underserved better than the traditional banks. Also, they must show that they can offer a more seamless experience to the customer. We expect to see them as a bank, not a fintech.” Challenges in accessing and sharing data Digital finance leaders also recognise that the ability to connect and collaborate through customer-centric platforms and extract data to deliver personalised experiences is key to achieving a sustainable digital economy. Innovations from platform players are expected to pose more competitive pressures to incumbents than digital-only or virtual banks perceived to have a narrower scope of functions and operations around the underserved. However, new and small players face challenges in accessing shared data, especially non-bank, alternative data. Martin Buchholz, Head of CIMB Thai Digital Bank Atis Ruchirawat, Managing Director, General Card Services Martin Buchholz, head of CIMB Thai Digital Bank commented that CIMB is finding ways to innovate and compete with big players. With a small data base, it looks at getting data from small platform partners or second-tier organisations. He explained: “We don’t have the budget, so we must make very wise decisions. We must use the data as best we can. We have a problem with data sharing. We can’t get the data, because nobody wants to share data with us.” Atis Ruchirawat, managing director at General Card Services, said that while they share data with parent firm Ayudhya Bank, consolidation and analysis of data remain a challenge. He agreed with Buchholz, saying: “No one wants to share raw data. Everyone would have their own team to do the data analysis, and then probably package that data. Then those two packages don’t really mix together. We must sit down and discuss—how do we as two common platforms, merge the data into one and then do total targeting based on that data?” Suporn Sunthornrohit, Chief Business Innovation Officer, Krungthai Bank Punpisut Krikul, Head of innovative credit product, Kasikornbank Other than consolidation, another challenge for incumbents is how to use data efficiently on mass customisation, seamless payments, lending and investments, said Karin Boonlertvanich, innovation division head at Kasikornbank. He remarked: “It’s not about the amount of data but what we want to use it with. As an incumbent, we also have a lot of problems about data sharing.” Suporn Sunthornrohit, chief business innovation officer at Krungthai Bank, emphasised that in data, collaboration is a cornerstone. She said: “We always see the banking transaction. We really want to see phone and app usage, or the SKU (stock keeping unit) level of basket that the customer spent; that’s very important.” Gaps in data make it difficult for traditional banks to assess lending risks for the underserved population, said Punpisut Krikul, head of innovative credit product at Kasikornbank. To expand its lending portfolio and have access to reliable data, it has partnered with e-commerce service providers like Shopee and Lazada. Krikul said: “It’s very difficult to evaluate risks. Data is very important. We partner with Shopee and Lazada. We use social, merchant and financial data to evaluate, to lend to our customers.” The bank currently provides quick loans to sellers on these platforms. Balancing customer-centricity and channel economics With the rise of nimbler and more customer-focused fintechs, balancing customer-centricity and channel economics is another speed bump for incumbents as they respond to customer needs while adjusting their service delivery methods based on what customers prefer. Even if the future of banking is now skewed towards digital, incumbents in Thailand believe an omnichannel approach is still best for the moment. Pitiporn Phanaphat, FEVP, Head of Digital Platforms and Products, Siam Commercial Bank Rachada Danpongchareon,Head of Digital Partnership at Siam Commercial Bank Pitiporn Phanaphat, head of digital platforms and products at Siam Commercial Bank remarked: “We learned that not everything has to be 100% digital. Some high-net-profile customers are still omnichannel, and we must live with that. We move with whatever the customer would be comfortable with.” For Rachada Danpongchareon, head of Digital Partnership at Siam Commercial Bank, a digital-only approach is not the easiest solution for now when reaching the underserved as there are still roadblocks to digital customer onboarding for this segment. She said: “It depends on the need of the customers. If they are underserved by the banks then we have to reach them in ways that fit their needs. The challenge is pretty much on how we onboard them on the digital journey with adoption, education or familiarity.” Karin Boonlertvanich, EVP, Corporate Strategy and Innovation Division Head, Kasikornbank Thadpong Pongthawornkamol,Managing director of Kasikorn Business-Technology Group (KBTG), Boonlertvanich of Kasikornbank, also pointed out that while it may be easier to obtain financing from platforms, their unguarded expansion through aggressive pricing and quest to enhance valuation could exacerbate household debt and not serve consumers’ long terms interest.
