SCB X turns to digital in effort to fend off loan sharks
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SCB X turns to digital in effort to fend off loan sharks

Leaflets advertising quick loans are visible around Bangkok. (Photo: Wichan Charoenkiatpakul)
Leaflets advertising quick loans are visible around Bangkok. (Photo: Wichan Charoenkiatpakul)

SCB X believes its digital loan services can provide underserved customers with greater access to financial sources at fair prices, easing the country's loan shark problem.

As household debt in Thailand has increased to 90.6% of GDP, the company is offering digital loan services under a subsidiary as well as a tentatively planned virtual bank to partially help shift informal lending to a formal loan system.

SCB X is focused on the underserved, low-income segment, presenting new digital platforms to offer financial access with reasonable interest rates, said chief executive Arthid Nanthawithaya.

"Income inequality remains a big problem in Thailand, as many people cannot access loans in the formal lending system," he said.

"Our digital loan services are meant to serve the underserved segment."

SCB X, a fintech firm and holding company of Siam Commercial Bank, is also expanding its virtual banking business.

In June this year, SCB X signed a cooperation agreement with KakaoBank, the largest digital bank in South Korea, to set up a consortium to apply for a virtual bank licence.

SCB X holds the majority of shares, while KakaoBank holds at least 20%.

The company found a new partner to participate in the consortium as it applies for a virtual bank licence from the Bank of Thailand.

Mr Arthid said the new partner is a global tech firm that would support the consortium in digital infrastructure.

The company plans to announce the new partner later, he said, though SCB X remains the majority shareholder.

SCB X offers digital loan services through several subsidiaries, including Auto X, Card X, Monix and Abacus Digital.

Several operators are interested in the Bank of Thailand's virtual bank licences.

As a result, the central bank extended the application deadline from the first quarter to the middle of 2024.

The regulator postponed the issuance of licences from the third quarter to the fourth quarter of 2024 because it wants more time to clarify the business licensing.

The central bank is offering only three licences for new business operations in the first stage of its digital plan.

The regulator said it will consider more licence applications in the future if additional players meet the requirements for virtual banks.

Kasikornbank (KBank) chief executive Kattiya Indaravijaya said Line BK, a digital bank platform under KBank, should post a profit within two years, as targeted.

Line BK has continued to improve asset quality and control its non-performing loans, she said.

However, KBank wants to pay attention to the asset quality of vulnerable customers, particularly small and medium-sized enterprises, after the bank increased both its loan and deposit rates following the central bank's policy rate hikes, Ms Kattiya said.

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