Siam Commercial Bank (SCB) is positioning its newly opened Shanghai branch to serve as a financial services innovation resource to develop the skills and expertise required by the banking sector.
The strategic move by the country's second-largest lender by assets is to push towards a digital transformation that allows SCB to create customer-centric digital financial services in anticipation of a severe competitive environment.
Banks are waging a technological arms race to compete with companies like Alibaba and Amazon, both of which are active in fintech. Technology has turned e-commerce into a multi-industry powerhouse.
China's tech firms have already begun overtaking Silicon Valley in the local e-commerce and mobile payment space.
"Given China's explosive growth in e-commerce and mobile payments, our Shanghai branch will give SCB a good chance to learn how China's consumption-led economy is evolving digitally, as well as adopt execution strategies from their online platform," said Orapong Thien-Ngern, chief executive of Digital Ventures, SCB's fintech investment and development subsidiary.
SCB had an official opening of its Shanghai branch last week as the bank zooms into its overseas expansion and seeks to promote Sino-Thai trade and investment.
The Shanghai branch targets Chinese seeking to expand into Thailand and neighbouring countries, as well as enabling Thai clients to take advantage of business opportunities under China's Belt and Road Initiative (BRI).
Vichit Suraphongchai, chairman of SCB's executive committee, said China is considered an important market because of its large population and the BRI.
Thailand is an ideal strategic destination linking investment from China to Asean given its infrastructure readiness, a favourable legal system, supply of skilled labour, and abundant natural resources, he said.
SCB's current market cap of about $13 billion puts it in a good position to help facilitate projects under China's BRI and to support Chinese companies to trade and invest in Thailand, particularly in the Eastern Economic Corridor.
China has been Thailand's largest trade partner for years, with bilateral trade volume of over US$73 billion in 2017.
Foreign direct investment from China into Thailand has grown significantly, with 75 investment projects worth $316 million approved by Thailand's Board of Investment last year, said Piriya Khempon, the Thai ambassador to China.
Over the past five years, Chinese foreign direct investment into Thailand has grown an average of 14% annually.
The Shanghai branch started operations in May 2018, and serves business clients with deposit products and foreign currency-denominated loans, trade finance, and international money transfers, payment, and China-Thailand business advisory.
Mr Vichit said the Shanghai branch reflects the bank's strong commitment to providing services to clients exploring opportunities for Sino-Thai business expansion.
The branch underlines the bank's intention to boost Thailand's economic growth, propelled by bilateral investment between the two countries.
The Chinese consumer market holds great potential for Thai businesses, particularly in the food and beverage segment, because of the quality of Thai products and their popularity among Chinese.
The Shanghai branch will also boost SCB's service capabilities in China, where the bank has almost 40 years of experience in providing services to Chinese clients through its Hong Kong branch, operating since 1979.
SCB has been entrusted by a wide range of leading Chinese companies investing in Thailand in manufacturing and more recently high-tech industries.
The bank (including Shanghai and Hong Kong branches) has extended financing support of over $1 billion to Chinese clients and expects to grow the business rapidly in the coming years.
SCB has overseas offices in Shanghai, Beijing, Hong Kong, Singapore, Cambodia, Laos, Vietnam, and Myanmar.