Financial technology needs broad support, e-payment seminar hears

“We don’t worry about fintech, but we’re afraid of how to build confidence in the system,” said Tongurai Limpiti, deputy governor of the Financial Institutions Stability office at the central bank. 

“If we look at the balance sheets of global banks, they all have gaps and have provided fintech to fill the gaps,” she told the seminar on e-payment opportunities and challenges of the financial business. P2P lenders in Thailand are nanofinance companies that have been licensed by the BOT, so the central bank should regulate them because it has two duties – support innovation to help fill the financial gap and ensure the safety of financial services.

About six or seven nanofinance companies that own fintech operators have contacted the BOT about P2P lending regulations.

Banks look at fintech operators as both competitors and partners, Tongurai said after visiting several banks at annual meetings.

Banks have a role in supporting big corporations with cash management.

Punnamas Vichitkulwongsa, chief executive officer of Ascend Group, the fintech arm of True Corp, said at the seminar that the company was doing P2P lending.

P2P lending has grown significantly in the United States because retail investors with enough money to give to others use P2P lending to generate higher returns than deposits, he said.

Banks have limits in accessing consumers unlike mobile operators, which can access people. Mobile operators can partner with banks to strengthen lending. 

However, to control risk, P2P lending should be regulated. 

Alibaba’s P2P lending model is interesting, as it makes public the credit ratings of borrowers. This makes tech borrowers more aware of financial discipline and the importance of protecting their credit rating. 

Rathian Srimongkol, chief executive officer of Krungthai Card and chairman of the national e-payment committee, said KTC aimed to leverage fintech to help its business engage with customers.

In two to three years, the picture of competition will change, not only for banks but also the financial system.

KTC has invested in infrastructure to maintain its position in the competitive credit-card business.

The national e-payment scheme will encourage greater use of debit cards and help slash fees, so KTC has to keep customers aware of credit cards and has to offer convenience to customers.

In the first phase of the national scheme, Any ID is supposed to be completely set up by August, but looking at the timeline and preparation of banks, it might not be ready until year-end. 

The central bank has to check for duplication of bank accounts linked to Any ID, under which people will be able to use their national identity cards or mobile-phone numbers to conduct transactions. It also has to test-run local switching. 

The fee for electronic data capture (EDC) should drop to 25 satang per transaction from Bt3. Currently, such transactions must be processed internationally, but after National ITMX starts running local switching, the cost of EDC transactions will decline.

The transaction fee for credit cards is different from debit cards’ because credit-card operators are exposed to cost of funds and expense risks. 

They are in fact lending money, and if cardholders do not repay their debts on schedule, the operators incur costs from delinquencies and debt collection, Rathian said.