BoT develops digital system for better SME funding access

BoT develops digital system for better SME funding access

The Bank of Thailand has been developing digital technology to help small and medium-sized enterprises (SMEs) more easily access funding sources and improve their business potential and competitiveness in preparation for the new phase after the pandemic.

Digital development will help SMEs survive the coronavirus crisis and strengthen competitiveness after the pandemic wanes, governor Veerathai Santiprabhob said during the virtual seminar "Bangkok Fintech Fair 2020: Digital Transformation for the New Normal".

"Higher business potential will allow SMEs to better access funding sources," he said.

The central bank will continue adopting digital technology in several areas to support both individuals and businesses, especially digital payment infrastructure based on ISO 20022, a standard for electronic data interchange between financial institutions, to improve the back-office systems of business operators, Mr Veerathai said.

This development is expected to take 1½ years to complete, which will encourage PromptPay transactions in the business segment, he said.

Thailand has operated PromptPay, a digital transaction platform, for about four years. PromptPay registrations have increased to 55.1 million and reached a peak of 20 million transactions a day. Payment via the quick response (QR) code technology has also expanded to 6 million transaction points.

The central bank issued digital personal loan regulations on Sept 15 this year, enabling both individuals and business owners to better access loans through alternative data analytics. The innovative financial service will also afford better access to loans in the formal financial sector and ideally reduce lending through loan sharks and other informal channels.

The central bank has continued to develop its authentication technology, National Digital ID (NDID), and expanded the service to other financial service providers apart from banks.

Digitalisation is another development area, and the central bank has issued a consultation paper for innovative financial products, Mr Veerathai said.

Santitarn Sathirathai, group chief economist of Sea Group, one of the top tech companies in Asean and Taiwan and operator of Garena, Shopee and Airpay, said the company's survey of 10,000 Thai youths found that the pandemic has expanded funding gaps in Thailand.

One in four youths reported struggling with remote working because of funding constraints. The top four types of jobs faced with the most funding constraints are startup charities, social enterprises, gig work and entrepreneurial endeavours.

The financial resources of interviewees during the crisis largely come from personal savings (58%), followed by family and friends (50%), the government (26%) and banks (25%).

In Asean, banks rank third as funding sources, reflecting the lack of ease experienced by consumers in accessing bank loans.

A lack of collateral and regular income, as well as a minimal credit profile, tend to hamper a typical borrower's request for bank loan approval.

With this scenario prevailing at large, digital lending based on alternative data analytics will be a solution to provide better access to funding, Mr Santitarn said.

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