Digitisation of banking system to continue in 2017

The number of branches operated by the 11 listed commercial banks as of November 30 had dropped to 6,697 from 6,758 in 2015 and 6,732 in 2014, according to Bank of Thailand data.
Siam Commercial Bank (SCB), Kasikornbank, Thanachart Bank (TBank) and CIMB Thai Bank (CIMBT) all reported more closures in 2016 (see graphic).
As of the third quarter, the number of mobile-banking users reached 19.37 million, up from 13.92 million in 2015 and 6.23 million users in 2014.
As of the third quarter there had been 395 million mobile-banking transactions, against 248 million for the whole of 2015.

Branch banking ‘not dead’
Phanporn Kongyingyong, first executive vice president of SCB, said branch banking was not dead, but the bank believed that even in the branches some transactions should be serviced by machines. Therefore, it is essential that there are enough automated teller machines (ATMs) and cash deposit machines (CDMs) to accommodate customers’ needs in the digital era.
Meanwhile, employees at branches eventually will be transformed into financial advisers, she said.
Anuwat Luengtaweekul, chief financial officer at TBank, said its branches would become more electronic, and he agreed with Phanporn that the number of ATMs and CDMs must sufficient to accommodate customers.
TBank will spend time training its branch employees to handle complex services as the transactional banking that used to dominate their duties will increasingly be done electronically instead, he said.
CIMBT senior executive vice president Adisorn Sermchaiwong said the bank had to scaled down the number of its physical branches as more banking services became digitised. On average, CIMBT’s customers visit a branch only once a month, so the physical branches now should provide financial advisory, rather than transactional, services.
KBank too is seeing more mobile-banking transactions, but this has not resulted in a decline in the number of transactions at its branches. The bank will improve the electronic facilities at its branches, said its president, Kattiya Indaravijaya.
Saithip Konggiatnarong, senior researcher at Kasikorn Research Centre, said the arrival of financial technology and telecommunications providers and the national e-payment system had created a new landscape for transactional banking. Payment services will be first to be affected, followed by lending due the Bank of Thailand is opening P2P license to new players.
Fee incomes from transactional banking via mobile banking are being affected by new players and the cashless-society goal of the government. However, the good news for banks from this trend is that the cost of cash management will be reduced, she said.

Analyse Big Data
As well, even though banks will lose fee income from mobile banking when the PromptPay system is fully implemented early in 2017, banks will be able to analyse Big Data from those transactions to develop products that cater to the changing behaviour and requirements of clients, Saithip said.
According to Gallup research, physical branches are not dead but need to be more versatile rather than focusing on transactions. 
Thai bank customers want more quality and consistency across physical and virtual channels.
Thai banks need to evolve from an “omni-channel” (many channels) to an “opti-channel” (preferred channels) strategy and enhance how customers experience their preferred channels and interactions in a seamless, coordinated way by focusing on experiences that matter the most to customers.
Generation X and baby-boomers must adjust to these changes, according to PricewaterhouseCoopers. Boonlert Kamolchanokkul, a partner at PwC, said the arrival fourth-generation telecommunication technologies in remote areas had brought down the barriers for people upcountry to access the Internet.
Banks should also educate their customers on the actual cost of conducting transactions at physical branches, and if they charged appropriate fees, this would force customers to shift to digital banking, he suggested. However, the banks must also deal with their customers’ lingering concern over the security of digital banking, he said.