The second generation of Thai family businesses has a higher succession rate than the global average, but digital expertise remains a critical requirement for them, according to Kasikornbank (KBank).
Perapat Reinprayoon, head of private banking for wealth planning and non-capital market at KBank, said KBank currently offers its private banking service to around 12,000 high-net-worth individuals (HNWIs), 90% of which are family businesses. Around 50-60% of these families are preparing to transfer their businesses to the next generation.
According to Mr Perapat, 85-90% of KBank's second-generation customers plan to take over their family businesses, a significantly higher proportion than in other regional markets such as Hong Kong and Singapore, where the succession rate is around 50%.
Globally, the succession rate for family businesses has been declining, posing a threat to their survival. Global data show that the survival rate of family businesses drops dramatically across generations: 30% for the second generation, 12% for the third, and just 3% for the fourth.
Mr Perapat noted that Thai family businesses are actively preparing for their transition to the next generation, leading to an increased demand for advisory services. In response, KBank Private Banking has introduced a new service focused on family business transformation for sustainable growth and stability.
This new service includes guidance on business direction, workflow, internal controls, human resources, and accounting and tax matters. KBank is also collaborating with several experts to meet the specific needs of their clients.
The next generation of Thai family businesses primarily seeks decision-making authority and professional internal management capabilities as key conditions for succession.
At the same time, the first generation expects their successors to support digital transformation efforts.
"However, the mindset of the first generation of Thai family businesses is shifting, allowing their children more independence in choosing careers or starting their own businesses," Mr Perapat said.
As a result, families have to explore options to sustain their businesses, such as hiring professional managers instead of relying solely on family members. In such cases, the next generation must learn to be effective shareholders, he said.
KBank Private Banking aims for 12-15% growth in assets under management in the family business area, and targets 17% growth over the next few years.