Siam Commercial Bank (SCB), the country's third-largest bank by assets, estimates cash transaction volume at its physical branches will be halved by the end of next year after the bank rolls out its quick response (QR) code payment service in the coming months and adopts digital banking platforms.
QR code payment will disrupt cash payments, said president and chief executive Arthid Nanthawithaya.
Transactions at the bank's branches have continued to decline as digital banking develops. Branch activity accounts for 20% of overall transactions, with the rest coming from electronic and digital channels.
SCB's QR code payment service is being tested out in the Bank of Thailand's regulatory sandbox, which is it expected to exit this month after passing testing on Wednesday.
SCB and Kasikornbank (KBank) were the first two banks allowed to test out QR code payment services in the sandbox from the beginning of this month.
The central bank recently allowed six more banks -- Bangkok Bank, Krungthai Bank, Bank of Ayudhya, Thanachart Bank, TMB Bank and Government Savings Bank -- to try out the same services in the sandbox.
SCB, in collaboration with Kasetsart University, launched its QR code payment service at the university as a part of the sandbox. The partnership aims to create a cashless society to increase digital efficiency and lower operating costs in the long run.
In another development, Mr Arthid expects SCB's cost-to-income ratio to peak during the middle of next year, largely on account of greater investment in digital platforms.
The bank's costs, however, are not expected to reach half of its income.
After the cost-to-income ratio peaks, it will decline, albeit at a gradual pace, he said.
That ratio increased to 47.8% in 2016 when SCB Transformation started, up from 42% at the end of the previous year.
In June, the ratio stood at 44.5%.
The bank set a digital infrastructure investment budget of 40 billion baht for this year, of which 4 billion was for mobile banking development. It will continue to invest in digital platforms and marketing campaigns to build up awareness in digital banking to transform the country into a cashless society to comply with the government policy.
The bank needs to further invest in both digital platforms and marketing, Mr Arthid said.
The SCB Transformation programme, designed to sharpen its competitiveness in the face of rapid changes in the global business environment amid wide-scale disruption, will run through to 2020.
SCB shares yesterday closed on the Stock Exchange of Thailand at 153.50 baht, down one baht, in trade worth 688 million baht.