Three major trends transforming financial sector

The first trend is likely to have the most impact, as both banks and insurance companies have to improve their technologies in line with changing lifestyles, and the smartphone is the crucial platform for accessing consumers digitally.

Sara Lamsam, president and chief executive officer of Muang Thai Life Assurance (MTL), said his company was moving towards being the “digital insurer”.

Customers have changed the way they buy insurance because they have been influenced by the digital trend, he said. People use their smart devices to search for insurance programmes and find which ones are suitable for their lifestyles.

MTL uses digital channels to build deep relationships not only with clients but also with partners, as the latter have different lifestyles as well.

In several countries, digital channels have a crucial role in the segmentation of customers. Sara said MTL had to use its database to analyse the behaviour of customers before designing products to appeal to micro-segments.

Siam Commercial Bank believes financial services will change dramatically over the next few years and the smartphone is a key tool for digital banking.

“We believe that almost everybody will be using smartphones, not just young people. Digital banking, therefore, must be designed to reach out to all customer segments. The smartphone will be a key platform for the banks to improve customer experience,” said SCB first executive vice president Rungruang Sukkirdkijpiboon, who heads the customer segment division.

He said the next wave of digital banking could be likened to a shopping mall. Providers must instil their digital banking services with a variety of information sources, allowing for customer engagement.

Kasikornbank estimates that digital banking in the next three to five years will be driven by mobility. As an example of that mobility, KBank recently adopted near-field communication (NFC) for its credit cards.

 “Devices for making financial payments will not be only mobile or physical cards but all devices using cloud technology,” said Kwannet Rattanaprug, first senior vice president. The mobile device is a platform on which the bank will have to focus because mobility will play an ever-increasing role in financial transactions.

“We are developing digital banking to encourage customers who have never made transactions either through their mobile or on a desktop computer. Users of pre-paid or feature mobile phones are not familiar with digital banking, so we will now have digital partners at all our branches. These digital partners will be ‘K-Experts’ and will demonstrate to these customers how easy digital banking is with KBank products,” she said.

“For example, customers who want a mortgage will no longer need to talk with bank staff. Instead, it will be suggested that they check their qualifications through the K-Home Loan Smile Club and learn about their debt-service ratio and their ability to repay a house loan.”

Krungsri Group is looking at how to provide a seamless experience across both online and offline channels and bringing all financial services from the traditional channels (branches, call centres, interactive voice response and ATMs) to online channels (mobile and Internet banking), said Dan Harsono, head of marketing and international business development.

The second mega-trend will be the ageing population. A study by Chulalongkorn University has found that Thais are living longer. The average life expectancy of Thai females in 2030 will be 81 years, up from 78 in 2010, while that for males will be 74, up from 71, it predicts.

Retired people in 2030 are expected to account for 25 per cent of the population, up from 12.3 per cent in 2010, according to the same study.

To tap the trend, Bangkok Life Assurance will become active in annuity insurance programmes, as its premium income from pension insurance is less than 1 per cent of the total. It aims to boost this proportion to 10 per cent within three years.

Ruangsak Panyabodegun, senior executive vice president for marketing, said the company had launched BLA Unit Pension, which aimed to tap white-collar workers with monthly incomes of Bt20,000 and above, as this segment is among the 2 million Thais who pay income tax. These kinds of customers are looking for pension insurance that they can afford.

Sara of MTL added that health riders on life-insurance policies would become a big issue for ageing consumers. Moreover, longer life spans will oblige insurers to review the age ceilings of buyers. Another response to the ageing society is direct communication of insurance firms with their customers through direct-response television.

The final mega-trend is urbanisation. The growing economy upcountry, especially in border provinces benefiting from Asean integration, has encouraged financial institutions to shift their focus outside of Bangkok. Banks and insurance companies have attempted to expand their outlets in the provinces and offer financial solutions that fit the requirements of urban consumers.

Sara suggested that insurance designed specifically for consumers upcountry might be seen in the future.

Pakorn Partanapat, senior executive vice president of KBank, said it had placed a lot of importance on urbanisation. Apart from opening more branches in the provinces, it believes offering wealth-management services to rich people upcountry is essential.

About 20 per cent of KBank’s high-net-worth clients are upcountry, and they are demanding financial advisory from banks to manage their wealth. KBank’s private banking will increase the frequency of visiting customers in provinces, he said.

 

The rising number of elderly people in Thailand has forced the financial sector to focus more on developing products to fit the requirements of this segment. We will look at this more closely on Saturday, December 27.