Siam Commercial Bank (SCB) has unveiled its "Digital Bank with a Human Touch" vision of evolving into a fully digital bank by 2025, with more than 95% of customers completing transactions on digital platforms.
Digital banking will become a normal service in the Thai market in 3-5 years, in line with current trends, chief digital banking officer Chalee Asavathiratham said in an exclusive interview with the Bangkok Post.
Mr Chalee joined SCB in 2021 to oversee big data. The bank has since replaced its old data lake and migrated the new lake to the cloud, which reduced the bank's data storage costs, while enabling specific functions for retail banking to apply customer insights to serve their customised needs.
SCB digital banking covers savings, loans, wealth, insurance and other financial services using digital technology.
Digital adoption
SCB transformed its data unit to a digital bank business over the past three years, with its customers adopting digital as they shifted from traditional banking services, he said.
The bank serves 17 million customers, of which around 95% have adopted digital banking services, Mr Chalee said.
Mr Chalee is confident that Digital bank will be the new normal service in the Thai market for the next three to five years in line with the digital banking trend. Nutthawat Wichieanbut
SCB has a mobile banking app named SCB Easy, a Line chat platform called SCB Connect, and a corporate portal.
The positive response from customers regarding its digital banking platforms reflects changing customer behaviour and business opportunities during the pandemic, digital and technological innovations in the banking industry, and the global trend of digitalisation, he said.
The combined user number on all digital platforms totals 16 million, with roughly 7 billion digital transactions per year, accounting for around 16 trillion baht annually.
"Digital banking transactions grew aggressively by 20-30% per year the past few years compared with a lower growth rate of the client base. With a digital footprint, the bank can leverage customers' data to expand the business and generate revenue in the future," Mr Chalee said.
SCB, the country's fourth-largest lender by total assets, aims to increase the proportion of digital sales to 25% of total revenue by 2025 under the bank's new business strategy.
Under the strategy, the bank combines human qualities with technological efficiency in response to customers' requirements in the digital era, he said.
SCB X, a holding company of SCB, reported total operating income of 154 billion baht in 2022. Digital revenue comprises around 5% of SCB X's total income.
The bank defines digital revenue as contributed from purely digital services, along with offline and online services based on data and artificial intelligence-backed technology.
Mr Chalee said 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.
Bread and butter
Digital loans will be a key contributor of digital revenue under the bank's ambitious goal, he said.
SCB expects to grow digital loans by 2.5 times per year to achieve a 25% ratio of digital revenue by 2025, which is a challenging milestone, Mr Chalee said.
Mr Chalee is confident that Digital bank will be the new normal service in the Thai market for the next three to five years in line with the digital banking trend. Nutthawat Wichieanbut
The bank is concentrating its digital lending operations on secured loans covering mortgage and auto loan products. The unsecured loan business was transferred to SCB X under a recent restructuring.
SCB previously developed digital technology and infrastructure to prepare for future digital disruptions, he said.
Given the digitalisation and global technology trends, the bank mainly focuses on convenience, speed and security to meet customers' demands and increase digital revenue, said Mr Chalee.
The bank used the data lake to power key innovations in banking, including a modernised loan application process. Historically, people would submit everything in paper form for manual evaluation, a process that could take weeks.
Now SCB can offer instant loan approvals based on predictive analytics. For high-risk customers, it has a digital system in place to determine risk level and the best collection strategies for each individual. For current bank customers, it can use existing data to predict whether they qualify without the customer submitting any documents.
The bank also adopted alternative data and risk-based pricing for digital loan approval, he said.
The high growth potential of the digital industry led SCB to approve many new financial products and services for launch this year or 2024. The bank prioritises new product launches for digital revenue generation, said Mr Chalee.
"Even with a lot of new products in the pipeline, digital loans are still the bread and butter of the banking business in terms of generating interest income. However, we also focus on fee-based income to support digital revenue," he said.
Trust needed
Though the bank's strategy leans towards digital, the majority of customers still value human contact, especially for sophisticated transactions such as wealth management or insurance, said Mr Chalee.
Staff contact, even through digital channels, will bolster customer confidence in carrying out transactions, he said. As a result, the bank is developing its digital platform under an omni-channel service strategy.
Human touch is another strength and differentiator for SCB compared with purely digital banks amid greater competition in digital banking, said Mr Chalee.
"As the country's oldest bank with 117 years of experience, SCB believes trust is a key element of the banking business, whether it is traditional banking or digital banking," he said.
"I think the core success factors for the banking service depend on trust and tech from now on."
Advanced technology will strengthen business efficiency and the competitiveness of banking service amid greater competition from a variety of business models, said Mr Chalee.
For example, fintech firms can acquire more customers over the short term with a lower cost-to-service ratio than banks, he said. However, fintech has a disadvantage compared with traditional banks in terms of customer trust and longer retention period.
Mr Chalee said digital banking competition in the Thai market is expected to strengthen because of market trends and more players.
The Bank of Thailand is offering three new banking licences for virtual banks in an initial phase.
SCB X expressed interest in a licence, collaborating with KakaoBank, the largest digital bank in South Korea.
Given its clear business direction and strong digital banking infrastructure, SCB believes it can sustain its competitiveness, he said. The business strategy and market segmentation between SCB and virtual banks would differ, said Mr Chalee.
SCB X and any tentative virtual bank would focus on the unbanked, underbanked and new customers whose monthly income is lower than SCB's existing customers. The bank will continue to concentrate on the middle- to upper-income segment, he said.
Technology required
Mr Chalee said SCB is revamping its core banking system, with the project expected to continue for four years.
The upgrade should facilitate SCB's digital banking position in the future, he said, without which the bank would be at a disadvantage among its peers amid higher competition both locally and internationally.
"Consumers in several countries assume banking services are from a digital bank. Nobody thinks about banks in the traditional form any longer, they think of digital banks," said Mr Chalee.
For the Thai market, banking services have been transitioning to digital at a rapid pace. The industry is expected to change significantly over the next 3-5 years, he said.
For example, an applicant for a digital mortgage at SCB can check the required information on SCB Easy, including the house price, loan amount, loan period, interest rate, and other mortgage packages.
The industry needs to continue to churn out digital and technological innovation to match consumer behaviour, said Mr Chalee.
"Modern technology is a way to future-proof a business's potential, competitiveness, profitability and sustainable growth," he said.
