Home Banking Transforming to the Digital Age Country of Smiles – Battleground of Titans

Transforming to the Digital Age Country of Smiles – Battleground of Titans

by internationalbanker

By Dr. Jens Lottner, Senior Executive Vice President and Chief Transformation Officer, Siam Commercial Bank



Thailand is currently on the forefront of digital transformation with local Western, Chinese, Southeast Asian and Thai firms striving for market share and leadership. This has resulted from Thailand being one of the most digitally native countries in the world, in which consumers are heavyusers of digital content. In fact, recent surveys have shown that Thailand is the global leader for using digital media, with an average of 9.5 hours daily spent on mobile devices and with consumers using applications such as Facebook and Instagram as a way to keep in touch with friends, Line as a messaging and lifestyle service, Lazada for shopping, and YouTube for video streaming. This has led to the emergence of new, non-traditional business models: in the absence of traditional e-commerce platforms, small, single-proprietor businesses have created e-commerce solutions, leveraging social-media platforms such as Facebook and Instagram. With this in mind and with Thailand being at its first stage of nationwide digitization, technology disrupters are using this opportunity to rapidly expand.

Moreover, Thailand is one of the premier destinations for Chinese tourists, with around 10 million to be projected to visit in 2018. China itself has been a major influencer for digital disruption, accounting for 40 percent of worldwide e-commerce transactions. Companies such as Alibaba, Baidu and Tencent have started off with very focused offerings for digital natives, but are now omnipresent in the everyday digital lives of Generations X, Y and Z. They basically serve every need, including financial services as part of an integrated digital ecosystem. Following their customers, these tech giants, such as Alibaba and Tencent, have started to expand into the e-commerce and digital space in Southeast Asia. They are now also looking at financial-service opportunities in Thailand and are using the country as a testing ground for international expansion. For example, Alipay and WeChat Pay are accepted in more than 10,000 7-Eleven convenience stores in Thailand.

Seeing the groundbreaking changes in China coupled with aggressive overseas expansion of some of the best tech companies in the world, efforts to cater to the extremely “mobile-native” digital Thai customer base have led to major disruptions and innovations. Boundaries between industries are becoming blurred and will eventually disappear in the context of “digital”, coupling tech giants, telcos, fintech companies and banks all together. Faced with these radical changes, the traditional playbook for incumbent banks to move to digital—gradually upgrading their existing online banking offerings while digitizing processes for cost optimization—might not be good enough. The competitive environment of “mobile first and only” and “blurring competitive boundaries” has implications on the “what to do” and “how to do it” for digitization, potentially holding some lessons for other markets that are increasingly moving to a “mobile first” world.

Mobile first and foremost

Thailand is a “mobile first” country—many consumers access most digital services on their smartphones, and in fact, many consumers do not own a personal computer or tablet. For example, across Asia around 30 percent of customers registered for digital banking are active mobile users. In Thailand, this number goes above 50 percent, and for the leading banks, it is around 70 percent. This means that most self-service customer journeys and applications need to be designed for a mobile environment. The smaller screens of mobile devices have thus raised the bar for good user experience and user interfaces accordingly. It also means that banks need to be more selective in which way information gets presented to customers and which functionalities are really “must have” vs. “nice to have”.

Furthermore, given the predominance of social media, it also means tighter integration of banking offerings and easy real-time payments as core for customer engagement in digital channels. “Mobile first” also requires banks to think about how to move beyond transactions and servicing, enhancing the mobile phone as a full sales channel for their customers—offering products that meet customers’ basic needs.

Strategic implication #1: Ecosystems matter.

In a world in which consumers spend almost 10 hours per day on social media, ecosystems become much more relevant as the gateway to the digital world. Banks need to give customers a reason to use their offerings, and for this they need to go beyond traditional banking services. For example, instead of thinking about mortgages, banks should think about “homeowner” or “living” ecosystems; instead of life insurance or pensions, banks should think about “retirement ecosystems” that would have information and services that go beyond traditional banking offerings. What matters is the right content, a superior customer experience and the use of data to engage the right customer at the right time with the right offer. Banks are still behind new entrants and tech players in orchestrating these ecosystems. However, at this point banks have the advantage nevertheless because of their large customer bases, added to the trust they have built in the relationship between bank and customer. With that being said, the race is on to learn the hallmark traits of tech players—true customer-centricity, use of data, seamless engagement and experiences—while the new entrants are trying to build up their customer bases. 

This ecosystem thinking has, for example, shaped our thinking when we re-launched our “SCB Easy” mobile banking application. Beyond the traditional banking services, SCB (Siam Commercial Bank) is incorporating lifestyle offers. For example, customers can browse movie offerings and purchase them, receiving the electronic ticket instantly. They can also shop for special merchant offers, make donations to charities and share these events with friends and families.

In the meantime, we have also created business platforms such as BusinessLinx to provide non-financial services—offering industry-related information, performing business matching and retrieving special offers to help launch a new business or grow existing businesses. The intent is always the same—be relevant to the customer and provide additional value by leveraging our network of individual and corporate customers alike to offer the ultimate customer experience.

Strategic implication #2: Focus on the essentials, and then move at digital speed.

Talad Noi – Siam Commercial Bank’s first branch

Time is of the essence as new entrants are attacking traditional banks. There is a real need to transform the organization: this means becoming truly agile and empowering teams, moving away from a product-led model to a customer-centric operating model, and becoming analytics-driven. On the one hand, banks have the advantage of a large consumer base, trust and plenty of data on their customers. On the other hand, they need to shed years of legacy systems, processes and ways of working to be able to compete in the new digital environment. Furthermore, although banks have the competitive advantage with their customer base compared to start-ups that struggle to scale, there are nevertheless cases of some digital-native companies that are able to match or even exceed banks. Case in point: SCB has built a customer base of more than 15 million customers in more than 100 years of operation; the social-media service Line has signed up more than 30 million customers in Thailand in less than 10 years. 

It should not be forgotten that despite all of the focus on digital, many customers still use physical channels regardless. So beyond mobile, there is also a need to redesign the physical customer journey using digital, for example, by empowering relationship managers using external and internal data to better serve their customers or build digital tools that reinvent the customer on-boarding journey in a branch. 

Strategic implication #3: Don’t reinvent to move fast.

Customer expectations are always context-specific and can quickly change. However, banks should also not obsess about perfection when competing against digital natives. Traditionally, banks prefer a “slow and steady” waterfall approach through which all aspects of development can be controlled and optimized for “zero defects”. Thus, we believe that this needs to shift in the new competitive environment with two key principles:

Fintech companies are friends: Many fintechs have impressive solutions for specific customers or operational problems. They are able to set up new services unencumbered by legacy systems and red-tape processes. Accordingly, we believe the ability to partner with fintechs and integrate their solutions is a competitive differentiator. It is also a win-win situation as fintechs gain access to a larger customer base to refine their solutions. Case in point, at SCB we partnered with a fintech company to create a networking platform for small businesses, which was already tested in other markets. Instead of developing this networking platform from scratch, we were able to reduce the time-to-market by more than a year.

Fail fast, learn fast: Although this is an adage for many companies nowadays, it is tough to execute in reality—especially when large organizations have the pressure to deliver profit to their shareholders. Most importantly, it requires significant and visible commitment and encouragement from the board and the CEO to “walk the talk” and lead by example—something the top leadership at SCB established very early in our transformation process. An example is that SCB had built a large data-lake infrastructure on premise, only to find out a year later that there is a much bigger need than anticipated to move the data lake to the cloud, which we then did.

Another example is that we had developed a comprehensive digital tool for corporate relationship managers (RMs), putting everything from macroeconomic information, to prospecting, to product recommendation—and ultimately opening accounts—into one workbench. It took us about eight months to build and launch it as an in-house solution. After two months of usage, however, we realized that we could create a far more advanced application for RMs by integrating modules of standard software and various other fintech applications, which we did within 3 months, leveraging all the experiences from the first release.


SCB embarked on its transformation journey in the middle of 2016. Since the beginning of this year, we have talked internally about “going upside down” to help challenge conventional paradigms and ways of thinking. We are seeing that the bank is moving in the right direction on indicators of customer uptake and engagement. With the changes happening in the marketplace, we know that we cannot be complacent—the race continues to reinvent and evolve the banking experience!


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