BANKS are breaking free from a traditional focus on deposits and loans to offer an expanded suite of services taking in consumer financial and corporate advisory services under a digital transformation drive accompanying the country’s shift towards a cashless society.
“SCB has invested up to Bt40 billion to digitally transform our business structure over the past three years. We have been working relentlessly to execute the bank’s successful digital transformation,” Arthid Nanthawaithaya, president and chief executive officer of Siam Commercial Bank Plc (SCB), said recently.
SCB is among the banks that have transformed their business models – a key plank of which is that counter staff are increasingly providing financial advisory services, helping customers to better manage their money while moving beyond the traditional focus of guiding them on deposit or loan options.
SCB and its commercial banking peers, along with the state-owned lenders, are updating their business models with the use of digital tools to better serve ordinary customers and corporate clients in an era of changing expectations.
In the competition for personal customers, all the commercial banks and state-owned banks have been investing heavily in digital technology. Animated by the vision of a cashless society, they have been developing their mobile applications and other online services while also linking with strategic partners on the provision of additional financial services.
“Digital technology is presenting a big change for financial institutions,” Bank of Ayudhya’s head of SME Banking Group, Sayam Prasitsirikul, said recently.
“Fintech is the tool that is changing the finance business model in order to let customers do everything on their mobile phones, such as with payment systems using QR codes, blockchain, e-wallets and PromptPay.
“All of the new technology platforms are bringing about changes to the financial business model to reduce the need for the opening of new branches to serve customers’ demand. All financial firms have to move to develop their technology and digital platforms to serve the demands of both the corporate and consumer markets.”
For corporate clients, the banks not only need to continue providing loans but also assume the role of business partner in the companies’ growth plans.
That means serving as a financial adviser to help them manage their financial projects.
“Customers have to be at the centre of everything we do in terms of our service approach, and this approach has to be developed to ensure we serve our customers’ demands,” Arthid said.
Since 2017, most banks have been reducing the number of branches in their nationwide networks at a time when customers are increasingly switching to mobile banking. While some the banks are maintaining the number of branches they have, they are not adding to them.
According to a report by the Bank of Thailand, some 23 banks had 6,734 branches nationwide on December 7. The figures include Thai and overseas banks that have opened in Thailand, and represent a drop of 64 branches from a total of 6,789 branches at the same time last year.
SCB had 1,109 branches on December 7, a drop of 61 branches from the 1,170 branches it had at the same time last year. On the same date, Kasikornbank had 987 branches, a fall of 41 branches from the 1,028 branches outlets it had a year earlier.
According to the Bank of Thailand, 43.9 million customers had registered for PromptPay as of September 10 – with some 28.4 million of these registered by identity card and 15.4 million doing so by their mobile phones. By that date, the PromptPay service had recorded 530 million transactions.
“We have to reduce number of branches at those locations that have less transactions, as we also need to change the roles that our staff perform in the branches in order for them to provide financial advisory services, and not just counter services,” Arthid said.
Government Housing Bank (GHB) chief executive officer Chatchai Sirilai said that the bank is making progress with its shift to providing digital services and will complete the transition by the middle of 2019.
“Digital technology has changed our business model and that means we have moved into digital banking by developing our mobile application, GHB All, to provide all the functions required by customers, such as the ability to make monthly payments, apply for mortgages and make deposits and withdrawals,” Chatchai said.
“We have also created our QR Non Cash Payment service to meet the needs of the cashless society and have plans to make the service available next year. The new services are part of the shift in our business model to the provision of digital services for our customers.”
The coming year will see the advent of new digital services from the banks as part of the country’s transition towards a cashless society.
The challenge for the banks is how well they manage the adjustment towards offering a more comprehensive range of services, such as financial advisory, compared with the traditional preoccupation with interest rate spreads.
The banks and other financial institutions have to take active steps to create more income from digital streams by pursuing collaboration with other businesses. In this way, the increase in the range of services they offer will help ensure their sustainable growth.