Last week, the Bank of Thailand (BOT) published data showing a surge in the use of mobile and internet banking in Thailand.
Thai consumers’ rising preference for digital transactions is credit positive and demonstrates the initial success of Thai banks’ digital strategies, which eventually will allow banks to rationalize their branch networks and improve cost efficiency.
Mobile banking transactions is increasing rapidly
Over time, the widespread use of digital banking channels also will allow banks to increase revenue by expanding their product offerings via digital banking channels beyond current transactional products.
The volume of internet and mobile banking transactions continues to expand at a rapid pace (see Exhibit 1) as both internet and mobile penetration improve in Thailand.
Mobile and internet banking accounted for 33% of total payment transaction volume for the first nine months of 2017, a marked increase from 8% in 2010.
In value terms, mobile and internet banking accounted for THB23.4 trillion in the first nine months of 2017, a 22% compounded annual increase in value since 2010.
Thailand’s banks’ increasing focus on digital strategies
Thailand’s increased usage of digital banking channels since 2015 reflects banks’ increasing focus on digital strategies.
Kasikornbank Public Company Limited (KBank, Baa1 stable, baa21 ) in 2014 began investing around THB480 million annually to enhance its digital banking services. As of year-end 2017, KBank had 7.3 million users on its mobile banking channel, recording around 3 billion transactions during the year, a tenfold increase from 2014.
This year, Bank of Ayudhya (BAY, Baa1 stable, ba1) said that it would invest THB20 billion to develop its technology infrastructure and digital banking platform.
Siam Commercial Bank Public Company Limited (SCB, Baa1 stable, baa2) last year planned to invest THB40 billion to enhance its digital banking capability. We expect the volume of digital banking channel transactions to continue increasing.
The shift to online transactions provides Thai banks an opportunity to rationalize their branch networks, thereby extracting operational cost efficiencies.
Exhibit 3 shows the number of commercial bank branches decreasing to 6,826 as of 30 September 2017 from a peak of 7,061 branches as of 30 December 2015.
Concomitantly, the banks’ annualized cost-to-income ratios declined to less than 52% as of the end of September 2017 from 54% in 2015. In January, SCB announced plans to reduce its traditional branches to 400 from 1,153 by 2020, while BAY said it will transform half of its traditional branches into digital or hybrid-digital platforms. BAY expects its investment in IT to result in a 10%-15% decline in operating costs over the next three years.
Rebaca Tan, Analyst, Financial Institutions Group, Moody’s Investors Service
Thai Credit Guarantee Corporation (TCG) Will Launch Bad Debt Guarantee Program for SMEs
The program will also cover SME loans that have turned into non-performing loans (NPLs), defined as loans overdue by more than 90 days, although these NPLs must not exceed two years of overdue payment.
BANGKOK (NNT) – State-owned Thai Credit Guarantee Corporation (TCG) is preparing to launch a 20-billion-baht bad debt guarantee program to assist struggling small and medium-sized enterprises (SMEs) saddled with bad debts.
Can the Subscription Economy Save Financial Services?
Going back to the pre-Covid “normal” is not an option for financial services. Fortunately, the rise of the subscription economy points towards frontiers of untapped growth for the sector.
As the world waits for mass vaccination to revive economic activity, general malaise has overtaken the financial services industry (FSI). And things will probably worsen before they get better: US banks are expected to suffer US$318 billion in net loan losses by the end of 2022, according to Deloitte.
Asia Pacific Banks shrug off commercial property risks for now
APAC commercial property prices were down around 3% on average in 2020, after a 1% rise in 2019. But the coronavirus-induced decline has been modest compared to past downturns, suggesting that the impact on banks’ commercial real estate loans will generally be much smaller this time.
More than half of Thailand’s household debt is good debt says Finance Ministry
The COVID-19 situation caused the economy to contract in 2020, raising the level of household debt against gross domestic product...
Will businesses adopt remote working permanently?
Remote working isn’t possible for our business. If that was your opinion, pre-COVID-19, you’ll have realised over the last few...
COVID-19 situation in Thailand as of 8 March 2021
The post Coronavirus Disease 2019 (COVID-19) situation in Thailand as of 8 March 2021, 11.30 Hrs. appeared first on TAT...
ASEAN, France formalise Development Partnership
JAKARTA, 4 MARCH 2021 – ASEAN and France convened the inaugural ASEAN-France Development Partnership Committee (AF-DPC) Meeting via videoconference today, marking...
Expedia and Accor join UNESCO Sustainable Tourism Pledge
Expedia Group, a mega booking platform, and the global hotel company Accor are joining forces to extend their commitment to...
Disrupted by Covid-19, will South-east Asia’s super apps join forces?
– Super apps explore inorganic growth options– Gojek in talks with e-commerce company Tokopedia over $18bn merger– Grab reported to be preparing...
Subscribe via Email
- Economics1 week ago
1.7 million Thais without smartphones register for "Rao Chana" benefits
- Startups1 week ago
Traveloka to launch financial services in Vietnam and Thailand
- United States1 week ago
US pledges to enhance cooperation with Mekong subregion’s countries
- China1 week ago
Mainland China is in no position to take Taiwan by force