CAPITAL markets will experience exponential growth in the number of clients seeking opportunities within them over the next five years, thanks to the disruptions brought about by new financial technologies (fintech), experts say.
“In the next five years, with the help of fintech, there will be a democratisation of financial services, meaning that the capital markets will be more accessible to the population than ever before,” the secretary-general of the Securities and Exchange Commission (SEC), Rapee Sucharitakul, said yesterday at an industry event.
Only around three million Thais have financial accounts in the capital market, equating to a fraction of the total population. However, the increasing prevalence of fintech will bring more Thai people into the capital market, Rapee told those attending Fintech Challenge 2018: The Discovery.
The event was co-organised by the SEC and the Fintech Association of Thailand to discuss trends in the financial markets and the prospects for fintech startups. The event also featured the final round of the Fintech Challenge 2018:The Discovery competition in which 12 startups competed for a total prize pool of Bt400,000.
“In the next five years, we expect to see an increase in clients within Thailand’s capital market from seven to eight digits, from 3 million to at least 10 million,” said the co-founder of fintech startup Finnomena, Jesseda Sookdhis, on the sidelines of the event. “By as soon as 2019, we expect consumers to be able to create their own financial accounts and start investing in the capital markets through mobile applications within 20 minutes, no matter which banking services they use,” he said.
One potential challenge to the digitalisation of financial services offered in the capital markets concerns the adoption of artificial intelligence (AI) as investment advisers to replace humans.
“When consumers make a loss from their investments as a result of following investment advice from AI, it is not clear who should be held accountable,” said Vasin Vanichvoranun, chairman of the Association of Investment Management Companies (AIMC). This may lead consumers to lose trust in the financial services which companies provide, he said.
Rapee said: “The SEC is working to regulate the capital markets with a principle-based approach. This means we will make sure that advisers, regardless of whether they are AI, human or a hybrid of both, give reliable information that can be accessed and investigated.” Jesseda said fintech firms have addressed this challenge by introducing hybrid solutions. This means that AI is used to support human brokers in giving financial advice to their clients.
Rapee said: “I believe we are at a tipping point. With the growth of fintech firms and an ageing population that demands stable income after retirement through investing in the capital market, there will be an exponential growth in clients within the capital market in the next five years.”