Embracing tech is the only way forward

opinion February 16, 2018 01:00

By The Nation

The government needs to keep up with the rapid shift to digital economics

As is the case in most countries, the Thai government faces massive challenges due to advances in digital and other technologies. The private sector has a few notable examples that should be taken seriously by state leaders as they strive to build government innovation.

Siam Commercial Bank recently announced it would close more than half of its 1,100-plus branches within the next three years and switch more to using digital and mobile technologies to serve customers. Most banks around the world fret over the rise of non-bank competitors, especially those from the tech fields, known collectively as fintech, and the giant e-commerce platforms such as Alibaba and JD.com

Fortunately, Thai banks now have a wider range of opportunities to respond to these challenges, since the Bank of Thailand has decided to allow them to operate e-commerce platforms so they can stay relevant in this digital age.

At present, Siam Commercial Bank has more than six million mobile-banking customers, while Kasikorn Bank has seven million people using its banking apps. These banks are set to leverage their retail customer base with hundreds of thousands of other customers – the small and medium-sized enterprises. The matching of these potential buyers and sellers for e-commerce transactions can be done automatically by computers and artificial intelligence (AI) programs.

Unless banks are permitted to play this new role, they’ll likely go out of business in the next few years due to the advent of e-commerce giants. Such online marketplaces are in fact not just selling goods and services, but are also highly competitive money lenders that can utilise the massive amounts of data collected about both retail end-users and business customers to make instant and better loan decisions.

In other words, Alibaba and the like have become data-driven enterprises that sell products and make loans more efficiently than banks, blurring the traditional business boundaries of banks and non-banks.

This private-sector example shows that the government has a lot to learn about innovation. It means a formidable task lies ahead in catching up with the challenges posed by new tech and people’s changing behaviour and expectations. In this context, Prime Minister’s Office Minister Kobsak Pootrakool said recently the government should not be hindering economic and social development by its failure to recognise the significance of mega-trends.

Government regulations must be well balanced. Under-regulation is not sound, and neither is over-regulation. How can ride-sharing platforms such as Uber and Grab or cryptocurrencies such as bitcoin best be regulated? These are among the challenges at hand.

Under-regulation can bring negative consequences, while over-regulation could block opportunities to take advantage of fresh business and social trends, leading to erosion of the country’s international competitiveness. 

The government also has numerous opportunities to use new tech to manage economic and social inequalities. Decades-old methods of handing out taxpayers’ money to low-income people are out of fashion now. More sustainable methods include the welfare cards being issued to 11.4 million low-income Thais. Rather than just giving them the money, a responsible government has the duty to help them earn money themselves over the long term, via counselling, training and coaching, financial assistance and other such programmes.

These programmes are crucial to sustainability. One fine cooperative example is CORS (cross-origin resource sharing), in which sensors facilitate the use of drones in spreading fertiliser and pesticides over farmland.