Internet giants bigger challenge to banks than fintechs: experts

Kasikornbank president Teeranun Srihong told the “BOT Symposium” held by the Bank of Thailand yesterday that banks do not consider financial-technology firms or finance start-ups as their major competitors.
Rather, he said, the banks are competing with the likes of Alibaba, which is managing the world’s fourth-largest money-market fund.
“It is already here, and has the capability to offer financial services as well.”
In his keynote speech to the conference, Andrew Sheng, distinguished fellow at the Asia Global Institute, University of Hong Kong, said big banks were not worried about fintechs since only a few of them could become a unicorn (worth over US$1 billion), and even those that have succeeded could decline within a short period.
Big banks are instead very afraid of firms such as Google, Facebook and Alibaba that sit on multiple platforms and know more about consumers than their respective governments, and increasingly dominate the world’s marketplaces.
Sheng, a former central banker, said that in a zero-interest-rate environment, firms such as Amazon could, for example, offer a 5-per-cent discount on purchase of their goods to consumers who open an account with them, and that would be more attractive than depositing their money with banks.
Teeranun said that as data becomes a new weapon and the “uberisation” force has made banking services “disappear” in the eyes of consumers, banks had to alter their competition model to stay relevant.
He said, “Banks may have to expand their roles. If competitors like Alibaba, which is not a traditional [financial-service provider, can offer banking services], should we also be able to step into areas that are not financial services?”
He said “cognifying” was cited as one of the most disruptive technologies in |the book “The Inevitable” by Kevin Kelly. Cognifying is the age of “winner take all” where companies like Alibaba benefit from being a first-mover that uses consumer data to dominate their market positions.
Teeranun said the roles of regulators and government were paramount for a country’s competitiveness and public well-being.
“I would like to argue that the government should not invest in start-ups but let the market forces or VC [venture capitalists] do their jobs,” he said.
Rather, government should invest in common infrastructure such as providing a centralised “e-know-your-customer” facility, to help innovators reduce their costs. Furthermore, a national data pool will be an important tool to help foster start-ups.
IBM Thailand managing director Parnsiree Amatayakul said speed and agility were key for business in the current cognitive computing era.
“The best use of data is real time. Firms must learn to monetise data,” she said.