Retail financial services in recent years have been digitised via mobile apps, while internet banking and robo adviser-based investment platforms are making automated portfolio allocation advice. What's more, savvy financial technology (fintech) firms are making these transactions faster, cheaper and more convenient and accessible.
Banks, large players in particular, are well aware of both the threats and opportunities from disruptive factors. They have enthusiastically embraced the innovative technology in a do-or-die game by putting money into fintech startups to prepare themselves for the digital age.
Banks
Kasikornbank (KBank), the country's third-largest commercial bank by assets, is among the first to dive head first into this world of emerging innovations by setting up a subsidiary, Kasikorn Business-Technology Group (KBTG), in April 2016 to invest in fintech startups both locally and internationally through direct and indirect investments.
Going digital is a key strategy for the business direction of big banks in 2017. KBank -- the country's top mobile banking service provider in terms of users and transactions -- aims for revenue generated from digital businesses, covering individual to commercial banking services, to surpass 10 billion baht in the new year.
KBank is aggressively targeting 42% growth in its mobile banking users in 2017, which would represent an increase to 7.1 million, up from 5 million at present, says president Teeranun Srihong.
The bank also aims to increase the ratio of digital banking transactions to 65% by 2017, up from 60% at present. Although the ratio of traditional banking transactions is expected to fall to 35% in 2017 from 40% in 2016, the number of such transactions will actually increase, albeit at a slower pace than digital banking transactions.
KBank further plans to roll out a mobile app for visually impaired people in the first three months of 2017.
The bank is scheduled to launch a document certification service application using blockchain technology, OriginCert, to certify letters of guarantee in 2017.
Mr Teeranun says security of digital banking services is the bank's focus, with an eye to improving inspection, detection and protection of data leakages of digital transactions.
Meanwhile, Bank of Ayudhya (BAY), which has been preparing its digital infrastructure system for some time, is gearing up to roll out a series of digital banking services and platforms from the beginning of 2017, says Thakorn Piyapan, head of digital banking and innovation and head of Krungsri Consumer Group.
In 2017, BAY plans to offer smart contract services using blockchain technology for trade financing. The country's fifth-largest bank by assets is also seeking the Bank of Thailand's approval for its international money transfer service, focusing on Cambodia, Laos, Myanmar and Vietnam.
The bank is installing Application Programming Interface (API) and Big Data systems in order to upgrade its software and artificial intelligence technology to develop mobile applications and call centre services, respectively.
"We are scheduled to roll out the new mobile app, U-Choose, for Krungsri credit-card holders in January 2017," Mr Thakorn says. "The app will serve as a real-time call centre."
Bangkok Bank (BBL), the country's largest lender by assets, is also eagerly bracing for fintech by emerging as the first Thai bank to join a blockchain consortium led by financial innovation firm R3, a distributed ledger technology developer.
The R3 consortium, comprising 55 leading financial institutions, is developing what could become the technological standard for the financial market.
The consortium develops innovative and groundbreaking commercial applications that the bank can adopt for its services, both in finance and non-finance areas, says president Chartsiri Sophonpanich.
Mr Chartsiri says fintech will be a disruptive factor for the banking industry, so BBL needs to develop innovative services to cope with evolving customer requirements.
Like its industry peers, BBL in June set up a venture capital subsidiary, Bualuang Ventures Ltd, with registered capital of 2 billion baht.
Siam Commercial Bank (SCB) is another bank moving forward into the digital age. It has established SCB Digital Venture, a venture arm in fintech startups, and is set to contribute 1-1.5% of its annual net profit for related investment.
This is all a part of the SCB Transformation programme, which runs from April 2015 to 2020. The programme includes efforts to sharpen competitiveness amid disruption from fintech innovations.
SCB Digital Venture has already put money into two foreign funds, Singapore-based Golden Gate Ventures and Ripple, a San Francisco-based leader in blockchain technology, in a bid to boost the bank's digital foothold through startups across Southeast Asia.
Securities brokers
Paiboon Nalinthrangkurn, chairman of the working group on financial innovation reform at the National Reform Council, says innovative fintech will initially be used in the back-office operations of brokerage houses.
For example, the technology can shorten the securities settlement date to two or even one day from three at present.
Fintech can also provide new investment tools, says Mr Paiboon, who is also chief executive of Tisco Securities.
Some of the business areas of securities brokers will feel the effects of the technology, and it's more than likely that stock brokers will use it to replace staff in the future, he says.
"During the first step, blockchain and fintech will support securities businesses in beefing up efficiency for customer services, but they will later change the market's landscape into a new technological era," Mr Paiboon says.
Pattera Dilokrungthirapop, chairwoman of the Association of Securities Companies (Asco), says fintech will jolt the way the industry works in the future, so securities companies will not survive if they fail to acquaint themselves with the new technology.
With the highly competitive market, the technology could be adopted to slim down operating costs, she says.
Like a double-edged sword, fintech such as robot-related programmes can be used to expand one's customer base in the future, but it can also damage the industry if the programmes are developed by those who do not have investment skills, Ms Pattera says.
"I expect that there will be no consolidation among brokers despite the high competition, but some will exit the industry quietly as the business model changes and starts veering into full digital trading in the near-distant future," she says.
Regulators
Thai financial regulators are increasingly keen to prevent fintech companies from destabilising and taking a toll on consumers by making progress on a regulatory sandbox, a safe space where banks and non-bank players can test and conduct fintech trials while ensuring that consumers are not exposed to risks.
The Bank of Thailand will allow financial institutions and non-bank players to submit requests to experiment with financial technology innovations in a regulatory sandbox from the first quarter of 2017.
Still, the Securities and Exchange Commission (SEC) is likely to let 10 fintech startups that have won FinTech Challenge Awards be the first batch to experiment with their innovative products in the regulatory sandbox.
The securities regulator has also proposed that the Finance Ministry amend the Securities and Exchange Act to permit blockchain-based securities trading, a move that could see the Stock Exchange of Thailand (SET) lose its monopoly advantage because the technology lets any party execute trading orders of securities.
Both the central bank and the SEC have restructured their organisations by setting up units tasked with oversight of financial innovation technologies.
The Bank of Thailand governor, Veerathai Santiprabhob, says large banks are enthusiastic to play a role in fintech developments, while smaller financial institutions are still muted.
The central bank has set up the Planning and Examiner Development Department to serve fintech innovations and the national e-payment system.
The Financial Consumer Protection and Market Conduct Department was also formed to create fairness and protect consumers, Mr Veerathai says.