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Is Digital transformation envisioned as the next frontier for banks in Thailand to conquer?

Financial institutions cannot escape the impact of digital revolution which has become a necessity to meet complex expectations of the customers.For many Thai financial institutions, however, building a completely new digital bank will not be an easy task. Thailand is still a middle-income country and has only managed a digital banking penetration of 19% which is lower than Indonesia (36%) and Malaysia(41%) (BBVA Research, Oct. 2015). Banks should thus align their business models by focusing on a particular retail segment first and must provide digital functionality for speed and convenience as well as thoughtful human interactions.

Quantum of mobile banking transactions in Thailand has seen rapid growth over the past five years, which have surpassed internet banking transactions in the first half of 2015 (See Figure below)

According to Bank of Thailand data, the volume of internet banking transactions grew at a rate of 32% between 2010 and 2014, while the volume of mobile banking transactions grew at an impressive rate of 62% during the same period.


At the forefront of digital banking transformation in Thailand is Kasikornbank (Kbank), which embarked on its K-transformation project in 2006. KBank also tightened its credit card approval criteria in response to increasing household debt.

Bangkok Bank only allows foreigners that are permanent residents, holders of a work permit, or having a long stay extension on their visa to have online banking. Whether it is loans to villages, easy credit for SMEs, banking technology overcomes challenges through online channels which are on equal footing with branch networks. Banks are focusing highly on technology in redefining customer offerings of the banks. 

There are also few other reasons which necessitate digital transformation in banks:

  • Inefficient credit scoring mechanism and weak collections;
  • Weak bank branch network which hinders consumers purchasing or servicing a loan;
  • Competition among financial institutions in retail lending will bring boost customer base and increase consumption of loans, thereby enhancing customer service (


Deriving value through trust: The valuable consumer for the bank may not be the salaried consumer with a predictable profilethat lends itself to cross-selling products defined across a lifecycle any more, but the aspiring young entrepreneurs or netizens who are easy to profile and trust. Banks will continue to push the boundaries of innovation with lending products, once trust is established based on reliable patterns over time.

Latest technology with automation benefits, omni-channel presence and digitisation of processes are the key features every bank looks for in this era. Technology has its own benefits.It not only helps in enhancing customer experience but also improves banks’ processes in a holistic manner. IT vendors like Nucleus Software enables banks to transform their business and improve their service proposition by offering best industry standard processes and lending functionalities. The adoption of digitally enabled services presents a unique opportunity for banks to deepen the relationship with their customers  going beyond everyday banking to helping customers better manage their financial lives every day.

By: Mufaddal Dahodwala


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