• People in retail as well as banks face difficulties in understanding how an end-to-end process across different organisations and industries works
• Banks do not have an end-to-end market capability yet
• A lot of API capabilities are a bit lagging behind

Central Group, a retail conglomerate in Thailand, is turning its traditional retail business model into an omnichannel player led by Axel Winter, the company’s chief technology officer.

As an ex-banker who worked in the area of technology for several years, Winter is using his expertise to strengthen Central Group’s position in the marketplace. The company is partnering with aggregators and coming up with smarter tools that will provide significant convenience to customers, both online and offline.

Emmanuel Daniel (ED): I'm here in Bangkok, speaking with Axel Winter, an old friend, ex-banker and now the chief technology officer of Central Group, which is a huge retailer in Bangkok. One of its businesses is in the process of initial public offering and in a huge transition from a traditional retail conglomerate into a digital one. Axel is in the position to make that transition possible.

Describe to me the supply chain of your industry, your business, the digital platform, the digital transition of your business, where financial services should be playing a better role and where we are in that regard. Being an ex-banker, tell us both sides of the story.

Axel Winter (AW): Being an ex-banker makes it more interesting to be in conversations with banks and my colleagues in retail. Both sides do not always understand how an end-to-end process across different organisations and industries works.

Central Group is a retailer in Thailand, Vietnam, Germany, Italy and Denmark. For the bigger markets, we also have hotels and property business across the region. Right now, what I'm building is an omnichannel platform, so it’s e-commerce first and foremost, allowing online sites and people to shop online. We have marketplaces in Thailand. We have the jd.co.th that is online, a central department store that is online and so on. There are many businesses.

What’s important from a consumer point of view is “How can I pay immediately the different credit cards or non-credit card products in debit or wallet?” What we like is to get one type of application programming interface (API), so we can deal with all of these different products, which today is very difficult.

Banks, more or less, don't have this end-to-end cost, market capability yet. It's not only about payments, but it's also about financing products. You buy a very expensive product or if your salary is very low—it depends on what expensive means to you—then models like ‘buy now pay later’ become extremely important.

For credit card owners, this goes to the credit card, but banks don't always collaborate with each other. They cannot be an effective aggregator for us. Usually, this comes through third-party aggregators, like cash and card payment processor (2C2P). Or we need to go the heavy route and deal with individual banks one by one.

The other thing is how loyalty points work. Loyalty, from a consumer perspective, is super interesting. Not all banks have APIs yet that allow them in the time of purchase to immediately use loyalty points. That's a gap there, so this whole integration across multiple points becomes difficult.

Our colleagues in the banks can do a lot. API is a channel for banks. I understand the challenge this has, but on the other side, this is where the business is going.

ED: When the banks come to speak with you, what are they selling today?

AW: Mostly, for international banks, they would be more interested in the foreign exchange business. For the local banks or any credit card payment utilities, they really sell on the merchant discount rate (MDR) point, which we should. It's good for them and for us, but a lot of the API capabilities are a bit lagging behind. In terms of scalability, if you think about things like 1111, it's a third of the transaction volume generated in a day. We are talking about tens of thousands of transactions in a second. How many banks in the world can manage that volume?

ED: How are you dealing with that? Are you building your own infrastructure and then figuring out where the bank should fit in? Or, are you working with banks so that you can deal with that kind of volume?

AW: We have our own cloud infrastructure and we deal with that. There is still a bit of saving grace. There are a lot of cash on delivery orders, which reduce the transaction load. This goes into credit card and non-credit card. In Thailand, there are only 20 million credit cards with almost 70 million people, a similar ratio in Indonesia and other markets.

Non-credit card payment products and digital payment products are increasingly more important. For this, we can probably also cater, but we do need an aggregator like 2C2P or others. If there's a single bank out there who can do it, I'm happy for you. I'm always for good news. But not everybody cares right now. That's to be said.

There is another sense there, in terms of supplier finance and how you can be part of an ecosystem of supply chain. It also becomes a very complex topic. Financial service institutions should be part of the process.

ED: Are you talking about automating the supplier finance process? Is that something you're already working on or do you have the manual version of it and looking for financial institutions to plug in the flow?

AW: Right now, everybody has a manual version somehow. People are thinking about how to automate it and fully digitise it, any regulatory gaps aside. You may also have a financial startup. We have JD, an e-commerce marketplace. We have the payment option through wallet, on and offline. This goes into the supply chain of consumer financial services, where possible.

There are a lot of things happening here. There are a lot of online commerce in all of Asia: Indonesia, Vietnam, Thailand, Singapore and Malaysia. All of Southeast Asia is booming in that sense. I’m not even talking about other countries. Here, it’s quite a bit of opportunity for banks and financial institutions to come with smarter tools, not only the core payment process, but also how we market to the banks’ customers.

ED: How do you profile your organisation? How many customers do you have?

AW: In Thailand, we have about 15 million customers, probably more day by day. In a sense, given that on the model side we’re a significant size, I’d say there is enough space to do things together, do promotions together. But again, it has to be in a digital automated way.

It's not working if I talked about one promotion, and then I plan for it for six weeks, eight weeks or three months. How can we do this today? Is there an API I can call to make it happen? For me, it's about the execution process.

ED: Are you further down the road on the cloud infrastructure, the cloud ecosystem? Do you have a cloud ecosystem that you think banks can match?

AW: We probably spend too much on cloud. We probably need to renegotiate the deal. But the truth is that since I came in, we started to build only on cloud, as you would do it if you don't have legacy in mind. All the new things we build are all on cloud, so my area is fully on cloud. That's also a very high scaling cloud platform.

In this case with Amazon Web Services (AWS), we also use Google or we also use Microsoft to be politically correct. Banks are working on it, but that has to be faster. If you think about 11-11, doing that in-house is not always practical because of the significant differences in scaling that are required these days. You need to think about whether it’s cloud-only or hybrid models.

ED: Your role is in the largest retail conglomerate in Thailand, with 15 million customers and building that whole journey towards what you call omnichannel.

AW: The integration between online and offline is important. Think about it in a branch. You start a transaction in the branch and why could you not finish it by walking out on your mobile phone? Or, you started on your mobile phone and then you find out you have some information missing, you walk into a branch and suddenly you continue your transaction.

This is exactly if you liken it to what we want to do in the retail world. We want to provide significant convenience to customers both on and offline, with integration. If you subscribe to certain foods or order in a supermarket, why can you not do this online in an app? And if you then come into the store, why would the store associate not see that offer and then maybe help you complete it? These type of combinations are quite important.

ED: I'm familiar with the intentions of the large e-commerce players like Alibaba, Lazada and so on, the delivery capability of the commercial banks in supply chain and transaction finance, but there's nothing like talking to someone like yourself, who is actually building the engine for the transition of a traditional retailer into the digital space. Some of the points you've raised are very practical. I've enjoyed listening to you about some of the problems you have in working with banks.

AW: Thanks for that discussion. My best advice to everyone is, “Meetings in boardrooms are nice, PowerPoint discussions are good, but really making it happen and being execution-focused, that is the sense of urgency we have to have today.”

ED: Thank you.