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Bangkok Post - Building a digital bank with a human touch
Building a digital bank with a human touch
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Building a digital bank with a human touch

SCB is making a strong pivot, yet retaining personal services

The Siam Commercial Bank Park Plaza on Ratchadaphisek Road.
The Siam Commercial Bank Park Plaza on Ratchadaphisek Road.

Siam Commercial Bank (SCB) is moving towards digital banking services, though the 117-year-old financial institution still believes in a combination of human quality and technological efficiency, describing its strategy as a "digital bank with a human touch".

Chief executive Kris Chantanotoke believes human capital and effective risk management are crucial to sustainably growing the bank's business over the long term, as part of SCB's framework for a universal digital banking entity.

Process digitalisation

According to Mr Kris, under the digital bank with a human touch strategy, the digitalisation of its operational processes is the first priority. The goal is to reduce paperwork, moving towards paperless processes; improve business efficiency and staff productivity; cut operating costs; and facilitate business expansion.

He said the bank established internal benchmarks for the digitalisation, such as determining how many out of 100 processes should be digitalised, as well as deciding when a process should be completed.

Mr Kris explains that Siam Commercial Bank has established internal goals under the process of digitization. (Photo: Varuth Hirunyatheb)

Mr Kris said this clear direction should help the bank reduce paperwork and move towards a paperless system, improve business efficiency and staff productivity, reduce operating costs and contribute to business growth.

Under a three-year business plan for 2023-25, SCB set an ambitious target to increase the proportion of digital sales to 25% of the total by 2025, up from the low single digits. He said the bank is committed to achieving the goal to prepare for future digital disruptions.

"If we can increase digital sales to 25% of the total, it will provide a secure buffer against future banking disruptions or increased competition from virtual banks," said Mr Kris.

The Bank of Thailand is offering a new banking licence for virtual banks and many operators have expressed interest.

Top in digital wealth

The strategy also calls for SCB to become the top player in digital wealth management services. The bank is already leading in several areas in the segment, including the most wealthy customers and licensing relationship managers.

SCB X Group, the holding company of SCB, has several business units that offer wealth management services with strong expertise in the field. However, having numerous wealth business units can sometimes cause confusion for customers.

The wealth management units include SCB Wealth Management, SCB Private Bank and SCB Julius Baer. In addition, other units under SCB X offer such services.

The bank is planning a rebranding of the business to offer a clearer picture of the financial service and to help customers understand their options, he said.

"We plan to relaunch SCB Wealth Management in the second quarter this year, making it a comprehensive service under SCB Group as part of the upgrade to a digital wealth service," Mr Kris said.

SCB, the country's fourth-largest lender by total assets, requires minimum assets under management (AUM) of 2 million baht for wealth customers.

The bank also caters to digital-savvy younger clients who may not meet the minimum AUM requirement, aiming to cultivate them as future wealthy customers.

SCB's digital platform offers wealth management services through its mobile banking app, SCB Easy. The bank is studying whether it needs to develop a new banking app specifically for digital wealth, with the findings expected to be issued later this year.

"The bank is considering two factors in deciding whether to develop a new app: a seamless customer experience and costs. If the conditions are feasible, the bank has no problem creating more apps," he said.

SCB's priorities are digital sustainability and cybersecurity in building customer confidence in its digital banking services, said Mr Kris.

Universal bank

SCB wants to maintain its position as a universal bank by offering a full range of financial products and services. The bank provides loan products for all business segments, including corporate, small and medium-sized enterprises (SMEs), and retail loans.

For its commercial lending, wholesale and SME loans, he said SCB prioritises potential growth businesses that align with the country's economic development roadmap and digital economy.

The bank concentrates on industries where it possesses strong expertise and a comprehensive understanding, said Mr Kris.

When it comes to consumer finance, SCB exclusively concentrates on secured loans, such as mortgages and auto loans. Moreover, the bank targets middle- to upper-class customers who possess a minimum AUM of 2 million baht each.

The bank does not provide unsecured loan products, like those offered by SCB X, said Mr Kris.

"While the bank's strategy emphasises digital wealth, human capital plays an important role in business expansion," he said.

"We don't think a purely digital service would adequately meet customers' demands."

Amidst its transition to a digital bank, SCB recognises the continued importance of physical branches in meeting the demands of certain customers.

The bank wants to redesign, remodel or digitise physical branches in line with changing customer behaviour and business opportunities, said Mr Kris. SCB has around 700 physical branches across the country, a sharp decline from 1,200 branches in recent years.

He said the bank received a positive response from customers regarding its digital banking platform. Roughly 90% of its individual customers use SCB Easy, while around 90% of all banking transactions can be carried out using the mobile banking app.

Many customers do not need to visit physical branches, which is a testament to Thailand's quick digital adoption, said Mr Kris.

Better profitability

He said SCB will not search for new S-curve income sources, which are handled by SCB X.

The bank's main focus is to improve its financial targets, especially cost-to-income ratio, return on equity (ROE) and bottom line.

For 2023, the bank aims to achieve a cost-to-income ratio of 35% and an ROE of above 10%, both of which would best the year before, said Mr Kris.

The improved performance would be supported by the digital bank strategy, focusing on digital wealth services, he said.

In addition, the bank's selective universal banking model will help to minimise risk, said Mr Kris.

"From now on, SCB will no longer set an aggressive loan growth target of 2-5% per year," he said.

"If there is an economic slowdown, the loan growth rate should be low. If there is economic growth, our loan growth should not exceed 5%."

With strong risk management, the bank believes it can handle the ongoing US and European banking crisis.

SCB has not been affected by any external banking risks and continues to operate normally, said Mr Kris.

The Thai banking sector as a whole is expected to be unaffected by any turmoil in the Western banking sector, as the former is in compliance with Bank of Thailand requirements, and in many cases exceeds these requirements, he said.

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