Siam Commercial Bank, the country’s oldest homegrown lender, plans to reinvent its mobile digital payment platform as a lifestyle app to help fend off competition from upstart financial technology providers.
"What I want one day is that you’ll see SCB’s digital platform isn’t just a banking platform; this is how you reach out, this is how you gain customers," says SCB CEO Arthid Nanthawithaya. (Bloomberg News photo)
The lender is working with companies including Accenture Plc, Microsoft Corp and International Business Machines Corp on the project, CEO Arthid Nanthawithaya said in an interview.
The long-term goal is an app that allows customers to search and pay for entertainment options such as restaurants and cinemas, going beyond just day-to-day banking, he said.
"I’m spending my time on every single detail of the new digital platform that we are going to launch very soon, in the next few months," Mr Arthid, 50, said at the bank’s headquarters on Friday. "What I want one day is that you’ll see SCB’s digital platform isn’t just a banking platform; this is how you reach out, this is how you gain customers."
Siam Commercial Bank and rivals including Kasikornbank are crafting more sophisticated digital strategies to compete with fintech companies that threaten to eat into traditional sources of revenue from payments, deposits and lending.
The app platform is being developed amid a wider reassessment of how best to utilise and retrain the bank’s workforce and control costs as technology streamlines operations, according to MrArthid.
"Further easing of regulations will open the gates for top global fintech providers such as Alibaba and Tencent," said Korn Chatikavanij, a former Thai finance minister and president of the Thai Fintech Association. "That fear and threat have woken up big Thai banks."
While major Thai lenders offer mobile apps, a labour-intensive branch-based model remains prevalent in the country’s comparatively conservative banking industry.
Siam Commercial Bank, founded in 1904 by a prince, is the largest bank in Thailand by market capitalisation. The Crown Property Bureau has a 21% stake in the company, according to data compiled by Bloomberg. Net income was 47.6 billion baht in 2016, down from a recent peak of 53.3 billion baht in 2014.
In September, the bank said it plans to spend about 20 billion baht on technology upgrades in the next two to three years.
"Early investment in digital banking will be costly with low return, but it’s a requirement for them to fend off any possible major disruption from non-bank fintech operators," said Kasem Prunratanamala, head of research at CIMB Securities (Thailand) Co in Bangkok.
Mr Arthid said his other key goal is to expand the lender’s wealth management business. Earnings from wealth management may reach 40% of total profit in five years, from about 25% at present, he said.
Siam Commercial Bank’s shares gained 0.6% at 10.46am on Wednesday. The stock has climbed about 4% in the past three years, less than the 8% advance in the Stock Exchange of Thailand’s Banking Index.
The value of transactions via mobile and Internet banking in Thailand rose by a third to 35 trillion baht in 2016 compared with a year earlier, data from the Bank of Thailand show. Cash remains the dominant medium for transactions.