Being a state-owned bank guarantees unique challenges and objectives, as is the case for Thailand’s Government Savings Bank. GSB, headquartered in Bangkok, goes back more than a century, when it began under the king’s directive as a savings office. The Government Savings Banks has evolved over the years, expanding across the country with the addition of new branches, products and services to become one of the largest banking institutions in Thailand.
Long-established banks tend to be stubbornly set in their ways, but this is definitely not the case of Government Savings Bank. With a focus not so much on profits but on reaching out to as many customers as possible, no matter where they live—and even to those whom private banks consider too risky or unprofitable—GSB has provided invaluable support to both citizens and the government alike. With its commitment to maximizing the use of digital, especially mobile, tools, GSB has set an example that other banks, public and private, would be wise to follow.
International Banker was pleased to be joined by Vitai Ratanakorn, President and Chief Executive Officer, and Boonson Jenchaimahakoon, First Senior Executive Vice President-Technology, to discuss Government Savings Bank’s special role and its intention to migrate to a digital bank. Vitai and Boonson, thank you for being with us today….
What is the most significant way in which Government Savings Bank’s retail-banking business is superior to that of its competitors, Vitai?
Vitai: GSB (Government Savings Bank) has the largest customer base, which is one-third of the Thai population. As a state-owned bank, we offer full deposit insurance, thus we have deposits from many Thai who want to save their money for the future, especially high-net-worth individuals. We do not aim for high profits, so we do offer higher deposit interest rates and lower lending rates to help the grassroots people. In addition, we use our funding to help balance the cost of government borrowing; the savings of a few basis points can indirectly contribute to the government’s budget plan.
As a government bank, our mission is mainly to reach out to all Thai people in any location. We have most of our branches upcountry, not in the capital, which is congested with all of the commercial bank branches. We support financial inclusion for depositors and also ensure that lending is not created over the debts of people but creates a better and brighter future for them via sufficient savings from financial disciplines.
Boonson, how much of the bank’s retail-lending business is now being done via digital channels? Do you expect that such channels will provide the bulk of the bank’s personal-loan facilities in the near future?
Boonson: At this point, it is still zero, based on my definition of retail lending. Our belief is that everyone should have their own credit line; there should be no more traditional retail lending via loans origination, with many confusing products, but a pre-defined credit line for everyone. They should be able to obtain the loan amounts based on their credit line; they can put in all of their assets as collateral at the bank—it could be any type of deposit or asset class. But if they don’t have any assets, we will certainly give them an amount for their financial behaviour. The most important factor is that they should not have to pay a higher interest rate for their loan accounts and receive lower interest for their deposit accounts; they should need just one account with the bank for all purposes.
We also do not believe that anyone should get a loan for consumption; but whenever they need a loan, that money should get them a return in a surplus over their paid interest, and the surplus will be their savings for a better future.
We are creating MyCredit inside our mobile-banking (MyMo) app based on this concept.
What do you consider to be Government Savings Bank’s biggest advantage as a state-owned financial institution over private banks? And what is the biggest challenge of being owned by the government, Vitai?
Vitai: Definitely, as a government organization, the main challenge is that we have to follow all bureaucratic government procurement processes, similar to any government organization, despite the fact that we have to compete commercially with all the private banks.
We turn our drawbacks into our advantages; we have to think and plan everything at least 18 months ahead to ensure the budgeting cycle is covered. With this pressure, most of the time, it brings us one or two steps ahead of all our competitors in every business, especially in the technology area.
The new app for the bank’s SME (small and medium-sized enterprise) customers sounds like an exciting offering, Boonson. What are some of the key features of the app? And how does it improve upon what was previously available to SME customers?
Boonson: SMEs need an integration tool in which the bank’s relationship manager uses SUMO (Sales and Services Unit on Mobile) on a tablet as a tool to collect all the necessary information of the customer. SME customers can use our award-winning, ease-of-use mobile-banking MyMo (My Money, My Mobile) app to perform any financial transaction—ranging from salary payment to supplier payment—and receive a cost analysis as well as early warnings for their financial status. As well, our team is there to give them advice to better manage their businesses. The main problem for SMEs is always on the cost-control side; with sufficient information, we should be able to give them their peer benchmarks on the cost structure and advise them accordingly.
Estimates suggest that the underbanked and unbanked people in Thailand represent 45 and 18 percent of the population, respectively. What are some of the most significant ways in which Government Savings Bank is helping to reduce these numbers and boost financial inclusion, Vitai?
Vitai: Without sufficient earnings, people will never be able to retain any money for deposits. We created a product more than a decade ago called “People Bank” for those who are not in the payroll system but consistently own a small business; they can get funding from us—it may be considered small to many, but it is sufficient for them and comes without any collateral, which they don’t have. This is the group of people normally ignored by commercial banks. To deposit their earnings in cash, they do not have time to leave the shop to go to the bank, so we offer the service of our officers to meet them at their own place, carrying a tablet that can perform most teller transactions. We call this device SUMO (Sales and Services Unit on Mobile), which is securely online through the 4G network. From these integrated products and services, a few shop owners can now afford their kids’ education up to a bachelor’s degree or higher.
How important will robotic process automation (RPA) technology be to the bank’s digital journey over the next few years? And what would a greater reliance on robotics mean for the total number of people employed by the bank, Boonson?
Boonson: Personnel costs are higher every single year and eat up our earnings more than anything else; in addition, the pain point is always to get every staff to follow the standard operational procedure, no matter how much we train them or apply penalties based on KPIs (key performance indicators).
We need robotics, or RPA, to process the major part of the production line without getting off the standard procedure, but we still need staff to fill the checker roles for the initiation part, which is mostly data entry, and the final part, which is mainly decision or approval. The effective design of the new production line with RPA will involve the best use of people and machine complementing each other to do the job productively with better accuracy.
You have only very recently commenced your role as president and chief executive of Government Savings Bank, Vitai, after your predecessor retired in June (although you were previously chief financial officer and held other executive positions at the bank). What do you consider to be your biggest challenge in this role over the next 12 to 18 months?
Vitai: The biggest challenge is to get equality in Thailand. The rich people get the lowest interest rate, but the poor get the highest interest rate; our society cannot live like this, where the rich get richer, and the poor can only get poorer. Their financial discipline and behaviour will determine that they will get sufficient loan amounts at a suitable rate at the bank. Most of them have very good discipline, and if they don’t, they have to go back to the unofficial financial services with extremely high interest rates.
What aspect of the bank’s digital journey is the most challenging for you specifically, Boonson? And what do you consider to be your most significant achievement to date as First Senior EVP-Technology?
Boonson: The most challenging is that all of us have totally different definitions of digital and inconsistent beliefs on how the digital world should look. Most people who talk about innovation never create any innovation in their whole lives.
All of my successes are from the simple ABCs—Aspiration, Belief and Change—to create the critical element for sustainable success, which is the business model. GSB is one of the very first that adopted revenue sharing in the area of digital, starting from mobile banking. This business model encourages partnership and the partners to bring all revenues generated and innovation to the table together.
Design thinking is another element of success, where the scope of the work will not get out of certain ranges. I have created the three most important applications:
- MyMo (My Money, My Mobile), the prominent mobile-banking application for customers, with the belief that all customers should be able to view their own information, similar to bank employees, and perform all transactions, including cash.
- SUMO (Sales and Services Unit on Mobile), a tool for the bank’s employees to use on tablets, which matches all the functions that they can perform with banking transactions but outside the bank premises.
- MEMO (Modern Employee on Mobile), a mobile app for employees, addressing all they need from employee self-service to performance monitoring.
Vitai, one of the most impressive aspects of the bank seems to be the willingness of staff to visit customers at their premises in order to gain a deeper understanding of their respective businesses. What are some of the main advantages that the bank has realised from adopting such an approach?
Vitai: Our staff treat our customers as their own family members; we learn from them as they learn from us. We do understand their needs and cultivate the processes of digitalization and design thinking, helping us to get the right things for them at the right times.
Most bankers always talk about customer-centric, but from my observation, every banker has thinking-centric on the bank, not the customer. Customer-centric are just buzz words to look good in the public but never result in real actions. This is inevitable if the highest profit is still the top priority for commercial banks. We are the bank that the customer perceives as their family member because we support them in every aspect that we can.
One of the challenges of migrating towards a digital bank is the need to ensure that the bank staff fully understand the concept of digitization, at the employee level and at the board-of-director and management levels, Boonson. How difficult is this challenge proving to be?
Boonson: We plan to overcome this challenge by leading them into the digital world. With complete self-service via MyMo, we will soon not allow any bank employees to obtain the service from the branch, even if they work at the branch. With this approach, we certainly believe that they can perform all their needed banking services via mobile and tell us more about what they really need on mobile and recommend the same services to our clients accordingly.
Gentlemen, thank you very much for your time today. I’m certainly impressed by your innovative dedication to enhancing the lives and futures of your customers.