SCB X focuses on technology at spin-offs
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SCB X focuses on technology at spin-offs

Major outlays in R&D in recent years

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Arak Sutivong
Arak Sutivong

SCB X, a financial technology company, expects improved performance from its Generation 2 financial subsidiaries this year following business transfers the past few years.

According to deputy chief executive Arak Sutivong, Generation 2 subsidiaries including Auto X and Monix are projected to increase profitability in 2025, building on positive results from the third quarter of 2024, while Abacus Digital achieved net profitability in 2023.

Card X, another Generation 2 subsidiary, is expected to post better results this year despite not yet turning a profit, he said.

Under these circumstances, Mr Arak said SCB X's profit this year is expected to remain neutral.

As part of its group restructuring, SCB X divided its operations into three generations.

The core business, Siam Commercial Bank (SCB), represents Generation 1 and focuses on traditional banking under a single entity.

Generations 2 and 3 represent new growth and future-oriented businesses, respectively, and are managed under the SCB X umbrella.

Despite improvements in Generation 2 profitability, he said substantial investment in R&D from Generation 3 recently put pressure on the company's profit margins.

SCB X's R&D efforts focus primarily on three core technologies: artificial intelligence (AI), blockchain and climate technology.

These initiatives align with the company's aspiration to become a regional leader in financial technology, with a focus on building an AI-first organisation through in-house technological advancements.

"Thailand's R&D investment is relatively low at around 1% of GDP. SCB X is emphasising this area, allocating 5% of its net profit annually for R&D," said Mr Arak.

The company also applied for a virtual bank licence from the Bank of Thailand in September 2024, partnering with KakaoBank, South Korea's leading digital bank, and WeBank, a prominent Chinese digital bank, in a consortium.

The regulator is expected to announce the three winners of the virtual bank licences by mid-2025.

"During discussions with our foreign partners in the consortium, they expressed surprise and appreciation for our ability to develop our own technology," he said.

In the initial stage, the enhanced technological capabilities will primarily support the business operations of SCB X. In subsequent phases, the company aims to evolve into a tech service provider, offering customised technologies tailored to the specific requirements of other local businesses.

Mr Arak, who also serves as chief executive of Data X, a Gen 3 subsidiary, said Data X has been making significant progress in technology development, particularly in big data, data science and AI.

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