Hyper-personalised and customer-centric services, digital lending and forging partnerships with fintech firms to introduce innovative services are key areas that can increase growth in the banking sector, according to Malaysia-based bank tech service provider Silverlake Axis.
"About 30% of the Thai population use mobile wallets now. Thai banks will need to level up by transforming their business models to enable different platforms to integrate with their systems," Andrew Tan, group managing director of Silverlake Axis, told the Bangkok Post.
Thailand's banking industry is quite developed, which provides a solid framework for effective integration of digital services, he said. A solid and modernised system coupled with a stable and sustainable business model could position banks at the forefront of the digital payments revolution.
He said the business model with the most potential is extremely personalised to customers in order to open up new revenue streams.
Banks need to be innovative by using real-time data analytics to analyse shifts in customer behavioural patterns and putting in place strategies that can meet these shifts.
Mr Tan pointed out the new banking model will shift to a platform-based paradigm, forcing all businesses to restructure and join the ecosystem or be left behind.
Although cryptocurrencies are on the rise, they are deemed as volatile and unstable, he said. However, that does not mean that traditional banks would be completely obsolete.
"Banks in Thailand need to transform as they play a crucial role in the digital economy," said Mr Tan.
He emphasised digital lending will be the future of banking, while payment and transaction services would be a secondary function.
"Although both roles rely on information processing, both hard and soft, verifiable and codifiable digital lending will attract more customers with the right process and technology in place," Mr Tan said.
He said tech market research firm IDC indicated 50% of lending decisions and retail banking in Asean in 2021 were expected to be supported by lending fintech.
"One of the fastest and highly effective ways Thai banks can do digitalised lending is through collaborations with fintechs," said Mr Tan.
The "buy now, pay later" model has been gaining traction with ride-hailing companies as well as e-commerce sites in other Asean countries, he said.
"Rethinking business models include collaboration with fintechs and revisiting credit scoring models to strengthen the banks' unique position," Mr Tan said.
To stay competitive in financial services in Asia-Pacific, he said, banks need to leverage modern, digital first and component-driven transformation technology to scale their digital capabilities.
"By providing Application Programming Interface-enabled core banking systems, our customers can readily accommodate new products, channels as well as enhance customer engagement models," he said.
"The usage of artificial intelligence [AI] and machine learning integration with core banking can expand capabilities with accelerated turnaround times, increased accessibility of financial services to serve the underserved and unbanked segments."