Banks enter fintech start-up sphere
BBL latest in corporate venture capital foray
The greater presence of local commercial banks in corporate venture capital (CVC) is making financial technology (fintech) start-ups red-hot investments.
Bangkok Bank (BBL) is the latest to enter the fintech fray to keep pace with the latest developments in the sector.
Siam Commercial Bank (SCB) and Kasikornbank (KBank) have already launched their own CVC firms to invest in tech start-ups.
Banks are following telecom companies that invested in tech start-ups including fintech the past two years.
CVC is a corporate investment unit that directly funds external start-ups, providing cash for an equity stake in a small but innovative or specialist firm. The larger firm may also provide management and marketing expertise.
Fintech start-ups create innovative products and services that compete with the traditional financial services industry.
Virasak Sutanthavibul, BBL's senior executive vice-president for commercial banking, said the company's board approved an initial investment budget of 2 billion baht for its CVC. The budget is slated for tech start-ups, he said at Startup Thailand 2016 last week.
BBL is considering whether to set up a new CVC business unit.
Arthid Nanthawithaya, chief executive of SCB, said the bank had set aside US$50 million to invest in tech start-ups locally and overseas. Last month SCB formed wholly owned subsidiary Digital Venture Co to manage and operate its venture capital.
"Our new investment arm is set to acquire innovative businesses, especially in the fintech sector, to make inroads in the digital arena," said Mr Arthid.
Somkid Jiranuntarat, vice-chairman of Kasikorn Business Technology Group, a subsidiary of KBank, said the bank was also focusing on fintech investment.
Thanapong Na Ranong, vice-president and head of the venture capital team at InTouch Holdings, said the telecom sector took a leading role in investing in tech start-ups.
"E-payment and peer-to-peer lending services [the practice of lending money directly to individuals or businesses through an online service] are fast-growing areas," he said.
Punnamas Vichitkulwongsa, chief executive of Ascend Group, a subsidiary of CP Group, said it established a new CVC this year to capitalise on the burgeoning fintech industry.
Ascend plans to limit its investment to less than 30% in existing tech companies. The company is also looking to develop innovative services by finding and hiring talent to drive its businesses, with Ascend holding a majority stake of 90% in any new ventures it creates.
Mr Punnamas said it planned to target fintech services including payments, insurance, e-commerce, customer relationship management, cloud computing and logistics for investment.
Sompoat Chansomboon, director for business innovation of Total Access Communication (DTAC), said the company's incubator programme -- DTAC Accelerate -- planned to invest in pre-seed funding for local tech start-ups with investment of less than 1.5 million baht.
"We have a policy to invest in any awesome teams that can solve daily problems in life that benefit over 1 million people," he said.
Since its inception in 2013, DTAC Accelerate has had 11 teams participate with the programme.
Mr Sompoat said DTAC allocated 100 million baht this year to invest in fintech, medical technology, the Internet of Things, artificial intelligence and telecommunications.
Vilaiporn Taweelappontong, lead partner of PwC Consulting (Thailand), said fintech was gaining significant momentum and reshaping financial services. Banking and payments industries are feeling the pressure from fintech companies as they could lose their market share.
PwC estimated within three to five years, cumulative investment in fintech globally would exceed $150 billion.