Just a month after customer data was reported stolen from Kasikornbank (KBank) and Krungthai Bank (KTB) by unidentified hackers, the local banking sector was dealt another blow on the Aug 31-Sept 1 weekend by an electronic system glitch that lasted several hours, leaving tens of thousands of customers stranded and delaying millions of financial transactions.
The influx of interbank money transfers that typically happens at the end of each month was initially suspected as the cause of the disruption to mobile banking services and nearly all over-the-counter and ATM activities related to interbank money transfers and bill payments.
But KBank, whose system was where the crash originated, blamed human error for the network glitch, rather than insufficient capacity.
Although all banking services returned to normal by the afternoon of Aug 31 after KBank's system was cut off from the central system operated by National Interbank Transaction Management and Exchange Co Ltd (National ITMX), the national switching service provider, KBank encountered another mobile banking glitch the next day.
The bank said the latter system disruption stemmed from National ITMX, which spotted a large number of interbank money transfers from senders providing incorrect recipient account numbers and subsequently pulled the bank out of the central system temporarily.
The latest snag is not the first time Thailand has experienced a banking service calamity of this sort.
Users of the national e-payment system, PromptPay, experienced delays in cash transfers for about 20,000 transactions for about eight hours on Dec 31, 2017. That disruption was caused by computer glitches while formatting the system calendar for the new year.
The technological catastrophes have been a wake-up call for Thai banks as more features, particularly digital lending and online account apps, are in the pipeline for many banks, with plans to roll out more complex services in the coming years to add to the existing bill payment, money transfer, top-up, account inquiry and mutual fund services.
Sporadic glitches can also impede the government's attempts to push the country towards a digital economy, in which electronic payments are the name of the game, and raise big questions about whether Thai banks are ready to go fully digital.
Insufficient capacity
Although the banking industry at large has increased the capacity of their systems in the wake of the introduction of PromptPay, which itself was rolled out in anticipation of rapid growth in digital banking transactions, capacity remains inadequate, said Anuchit Anuchitanukul, an adviser to the committee of national e-payment and national digital ID system development.
This reflects the fact that the expanded capacity is still not sufficient to keep up with consumer behaviour, Mr Anuchit said.
Before the launch of PromptPay, major domestic banks invested heavily in infrastructure to prepare for higher transaction volume over the next five years.
The upgrade, however, appears to be insufficient for the tsunami of transactions, a mere year after PromptPay was launched.
"Even though the crash in the mobile banking service was temporary, this frustrated many people," Mr Anuchit said. "This reflects that consumers have already changed their financial behaviour and we have already become a cashless society, despite how it has yet to become fully cashless."
Amid the transition to the full-blown digital era, users are likely to face disruptions in the future, but consumer confidence is unlikely to be undermined because the benefits of convenience negate the sporadic failures, Mr Anuchit said. He said consumers can adjust their behaviour, for example, by avoiding making financial transactions at the end of month and using digital banking services from a variety of banks.
Somkid Jiranuntarut, chairman of Kasikorn Business Technology Group, KBank's technology subsidiary, reaffirmed that KBank's transaction capacity is sufficient, while the incident demonstrates that the capacity of some other banks may be inadequate.
The bank plans to spend 1 billion baht this year to boost transaction capacity on K Plus, its flagship mobile banking app, in preparation for new features on the app that are scheduled for launch next month.
"We expect to triple our mobile banking capacity next month from the current level before raising it by 10 times next year," Mr Somkid said.
Fail-safe strategies
Shortly after the technological failure occurred, banks agreed to double their mobile banking transaction capacity during peak periods by this year-end to prevent systemic crashes in the future.
They also requested that National ITMX at least double its capacity. National ITMX's peak capacity stands at 500 transactions per second.
These are part of six practical guidelines passed to avoid similar debacles and restore customer confidence.
Other guidelines include tightening each bank's internal management system; forming a joint working group between banks and National ITMX to specify clear conditions and guidelines for temporarily removing certain banks from the central system to prevent a domino effect; developing a central dashboard to update the status of each bank's system; and keeping member banks informed to ensure timeliness in preparation and problem-solving.
Reviewing the design of mobile banking systems and displaying transaction status messages that are clear and easy to understand are additional goals.
Digital transaction rise
Thailand's total population stands at 69.11 million, of which 57 million are internet users and 55.6 million use smartphones, according to KBank data.
The Bank of Thailand said the number of mobile banking users stood at 34.5 million at the end of March, up dramatically from 31.6 million at year-end 2017, 20.9 million in 2016 and 13.9 million in 2015.
Transaction volumes and value through the mobile banking platform have also surged rapidly. Mobile banking transactions totalled 179 million in this year's first quarter, compared with 153 million in 2017, 67 million in 2016 and 31.7 million in 2015.
Mobile banking transaction value amounted to 1.2 trillion baht for the three months through March, up from 1 trillion logged last year. This year's first-quarter mobile banking transactions also rose significantly from 585 billion in 2016 and 334 billion in 2015.
Although data for April-August is not yet available, mobile banking users and transactions are poised to grow sharply after banks scrapped transaction fees over digital channels in late March.
Siam Commercial Bank (SCB) chief marketing officer Thana Thienachariya said recently that mobile banking had grown "exponentially" after transaction fees were eliminated.
KBank is Thailand's largest mobile banking service provider by users, at almost 9 million, representing 61% of the bank's 14.6 million total customers and up 46% year-on-year at the end of July. The bank aims to gain 10.8 million users for its mobile banking service by year-end.
The bank saw the number of transactions through K Plus, its flagship mobile banking app, surge 76% year-on-year to 2.7 billion, with a 42% year-on-year increase in transaction value to 4.8 trillion baht, for the seven months to July.
KBank saw mobile banking transactions peak at 4,000 per second, rising from 600 before the fee was waived. For SCB, a peak of 2,000 transactions per second made through SCB Easy was recorded.
SCB ranks in the second spot after KBank in terms of domestic mobile banking transactions. SCB expects the number of SCB Easy users to reach 9 million by year-end.
Bangkok Bank, the country's largest lender by assets, has about 5 million users on Bualuang mBanking and aims for 8 million by year-end.
Teflon customers
Although Teerapong Suwannakit is among those who have experienced delays in digital transactions, he continues to use mobile banking because of its convenience.
The 38-year-old was confident that the banking system would resume after being disrupted, but information and immediate communication from banks are what he wants to see when the system breaks down.
A restaurant owner, speaking on condition of anonymity, said he used K Plus after 8am on Aug 31 to transfer money to pay his employees' salary, as he does every month, but he could not access the system.
He then attempted to use K-Cyber banking, KBank's internet banking service, to complete the transactions, but his efforts failed.
"I told my employees about the delayed transfer because of the system glitch and they understood the situation," he said. "I was afraid of losing the transferred money, which was quite a big sum for me, so I did not continue to attempt the transaction again."
Banks should inform users of how long a system glitch will take to be corrected in order to let them manage and handle the disturbance, he said.
The restaurant owner always uses the mobile banking app for money transfers and bill payment for his business and personal spending. Normally he uses mobile banking every day for payment of food and drinks using a QR code.
"The fee waiver is what draws me to mobile banking for everyday use," Mr Teerapong said, adding that he has downloaded two mobile banking apps, KBank's and BBL's, to his smartphone.
He is also considering downloading another app for mutual fund investment at a smaller bank.
Nattaporn Phannakarn, 44, said she will continue using mobile banking services despite the latest glitch, as it allows her to make financial transactions at her fingertips any time, anywhere and, most importantly, free of charge.
"As far as I know, when the system crashed, there were no reports about clients facing financial losses," said Ms Nattaporn, who works in an office. "The system failure only annoyed users, as their transactions were delayed."
She normally uses mobile banking for money transfers, credit card payments and mutual fund purchases. Ms Nattaporn has downloaded KMA -- Bank of Ayudhya's mobile banking app -- and Bualuang mBanking to her mobile phone.
KBank says its most recent system disruption stemmed from the central system operated by National ITMX. PATTANAPONG HIRUNARD