Thai Banks Brace for Major Restructuring Amid Economic Headwinds
Faced with slowing growth, falling interest rates and new market competition, the banking sector is preparing for a new wave of cost-cutting and layoffs
- Thai banks are undergoing significant restructuring, including workforce reductions and early retirement programs, in response to economic pressures and technological disruption.
- The primary drivers for this change are anticipated lower profits, increased competition from three new virtual banks, and the Bank of Thailand's "Your Data" initiative which will make it easier for customers to switch providers.
- In addition to cutting staff, banks are focusing on upskilling remaining employees for more complex advisory roles and investing heavily in technology and AI to adapt to a more digital banking environment.
Thai commercial banks are facing a new period of significant change, driven by a combination of economic challenges and technological disruption.
The restructuring has already begun, with Kasikornbank (KBANK) launching a voluntary early retirement programme.
Data from the Bank of Thailand (BOT) shows that personnel expenses for the entire banking system declined by 2.5% in the second quarter of 2025 compared to the previous quarter.
Furthermore, the number of employees fell by 0.74% in the same period. Over the last five years, the total banking workforce has shrunk by over 15%, a reduction of more than 23,000 people.
A high-ranking financial source told Thansettakij that banks are responding to three key pressures.
First, profits are expected to fall in the first quarter of 2026 due to a downward trend in interest rates and a weak economy.
Second, the upcoming launch of three new virtual banks is intensifying competition, forcing traditional lenders to cut costs and restructure quickly.
Third, the BOT’s new "Your Data" initiative, set to launch in 2026, will allow customers to easily share their data with other financial institutions.
"With the arrival of 'Your Data' and virtual banks, customers can go anywhere," the source said. "It will break down brand barriers. Everything can be done on a mobile phone, making physical branches irrelevant for the majority of people."
Another source suggested that banks could reduce their workforce by 15-20% over the next three years, with a potential reduction of over 30% in the next four to five years.
However, Thanyalak Vacharachaisurapol, deputy managing Director of Kasikorn Research Center, noted that the pace of staff reduction has not been as rapid as in other sectors.
She explained that banks are focusing on upskilling their remaining employees, particularly those from branches that have closed. The goal is to train them for more complex roles, such as financial advisors.
This strategy, while increasing the cost per employee in the short term, is seen as a necessary investment for future efficiency.
Thanyalak also mentioned that banks will continue to invest heavily in technology and AI, with new employees being part of pilot projects using tools like ChatGPT.
Ultimately, she said, the banking sector will need to use innovation to gather customer data from new sources to better assess creditworthiness. In the future, this will put the onus on customers to manage their personal data carefully.
