Quick response (QR) code payment, robotic process automation (RPA), blockchain, big data strategies, and simplified core bank systems are among the top five technology trends for banking in 2018, says a leading global research firm.
"Thailand's banking sector will continue to invest in information technology to prepare for their digital transformation. Those banks will collaborate more with financial technology [fintech] firms," said Michael Araneta, associate vice-president of IDC Financial Insights Asia/Pacific, at the Fintech Innovation Summit 2017.
There are several key tech trends that will attract IT spending in Thailand's banking sector in 2018. QR code payment has already started, with the Bank of Thailand rolling out standardised QR code payment. RPA, or robot software that reduces costs and improves performance by doing repetitive tasks, is also popular with banks.
Blockchain is playing a bigger role in commercial banks, running cash management transfers for suppliers to corporate customers in the supply chain, or money transfer to overseas branches. Big data analytics strategies have gained traction as many banks collect their customers' data in social media accounts.
Mr Araneta said core banking systems will simplify the modern banking architecture, separating transaction engines, databases, lending and channel management. These systems allow banks to be connected with third-party systems including fintech startups through the open application programming interface.
Thakorn Piyapan, chairman of Krungsri Consumer and head of digital banking and innovation of Bank of Ayudhya Plc, said government policy schemes such as national e-payment, PromptPay and QR code payment are accelerating the country towards a cashless society.
Thais still primarily rely on cash and use traditional cash withdrawal channels such as ATMs, so the adoption of digital banking and mobile banking have not grown quickly. However, e-payment increased 23% from 266 trillion baht in 2014 to 328 trillion in 2016. Use of e-money also grew by 63% from 56 billion baht to 91 billion in the same period.
ATM withdrawals grew only 6% in 2016 to 7.76 trillion baht from two years ago. Same-bank ATM money transfers contracted 14% to 2.97 trillion baht last year over the same period. Inter-bank ATM transfers also declined in 2016, down 4% to 911 billion baht from two years ago.
Bank of Ayudhya said Thailand's digital readiness is on target. The country has 81 million bank accounts, 51 million debit card holders, 20 million credit card holders, 28 million PromptPay users, 40 million e-wallet users, 21 million mobile users and 15 million online banking users.
"We expect to see the use of social commerce payment through Facebook Messenger and other applications embracing biometric technology such as fingerprints, facial and voice technology for identification verification with mobile payment," said Mr Thakorn.
Jarit Sidhu, head of operations at IDC Thailand, said the number of fintech firms is still low because they cannot access the mass market quickly, limited to experimental regulatory sandboxes by the central bank. Mr Jarit said close collaboration between regulators in finance, insurance and capital markets is important to drive financial business development.
There are 80 active fintech firms in Thailand, mostly in the payment, price comparison, insurance and wealth segments.
