How can banks still thrive as fintech meets 5G? Tech innovation and rising consumer expectations are reshaping Thailand's digital-banking market – and differentiation counts more than ever

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How can banks still thrive as fintech meets 5G?  Tech innovation and rising consumer expectations are reshaping Thailand’s digital-banking market – and differentiation counts more than ever

Digital banking in Thailand has taken a big leap forward in recent years. According to McKinsey’s new Personal Financial Services 2021 survey, which covers approximately 20,000 urban banked respondents in 15 Asia-Pacific markets, the share of Thai customers using digital banking tools at least once monthly jumped from 36 percent in 2017 to 90 percent in 2021.

With more than 80 percent of Thai consumers owning a bank account, Thailand has long been one of Southeast Asia’s most developed banking markets. Recently, leading banks have gone further, optimising branch operations, launching a full range of mobile payment solutions, and even building virtual banks. Consumers have embraced these innovations, particularly as they sought to transact business remotely and shifted to mobile QR payments for in-person purchases.

But banks must do more if they aim to thrive. Fintech startups and large ecommerce platforms are leveraging advances in data analytics, including deep learning, to meet customers’ needs at a granular, tailored level. At the same time, data security standards continue to evolve, and banks must prioritise their customers’ privacy, safeguard their role as trusted advisor, and maintain the flexibility to adapt to new technologies.

Not only are customers’ expectations of their financial services providers rising quickly, but transaction volumes (and associated revenue) are shifting to new products. This is true for savings, wealth management, and insurance, as well as for payments and lending. Seizing the opportunities arising from the fast evolution of digital technologies will require banks to reinvent themselves, with a number of local banks already establishing fintech arms as part of their reinvention.

None of this is easy to achieve. As they think about how to differentiate their value proposition for this new era of digital banking, incumbent banks can focus their strategic planning around three key themes:

  1. How should banks rethink the ways they engage with customers?
  2. How should banks position themselves?
  3. What role will branches serve in this phase of the digital evolution?

How should banks rethink the ways they engage with customers?

“Super apps” increasingly offer seamless access to a broad range of services through a single screen. To meet this disruption, Thailand’s incumbent banks should accelerate their efforts to make the full range of financial services—deposits and payments, savings, credit services, investments, and insurance—available not only through their proprietary apps and platforms but also through partner ecosystems. Leading banks are also partnering with organisations of varying types and sizes to increase the appeal of their platforms and engage more deeply with customers.

How can banks still thrive as fintech meets 5G?  Tech innovation and rising consumer expectations are reshaping Thailand’s digital-banking market – and differentiation counts more than ever

The rollout of 5G will further increase opportunities for customer engagement, as well as the quality of that engagement. Not only will it enable banks and others to extend service to diverse segments, including those living in rural areas, but it will also improve incumbent banks’ ability to integrate offline and online customer journeys. Perhaps the most important impact of 5G is low latency and speed. The new infrastructure will allow AI-powered organisations to craft highly personalised messages and offers, from merchant discounts to competitive credit offers, in near real-time.

How should banks position themselves in the market?

While the advancement of 5G opens opportunities for banks to expand their customer base, it also strengthens the ability of virtual banks, fintechs, and ecommerce platforms to compete aggressively with incumbents. Organisations with experience deploying AI technologies and machine-learning decision-making engines in other markets could see their advantage widen with the adoption of 5G.

McKinsey’s survey shows that market penetration of fintech tools and e-wallets has grown four-fold, from 11 percent in 2017 to 51 percent in 2021. Consumer use of e-wallets may increase further as major ecommerce companies seek to build their user base around platforms offering a broad range of services, including mobile payments.

For now, customer loyalty in Thailand is generally high. While most consumers in Asia-Pacific are open to switching to a virtual bank, 53 percent of Thai consumers said they would not consider switching to a virtual bank. That said, consumer behaviours can change quickly, particularly as new virtual banks leveraging AI and machine learning seek to attract customers with superior experiences at low cost.

Traditional banks should consider how they will position themselves as the market evolves. Will they aim to be a full-service omnichannel institution? Will they build their own digital ecosystem or seek to participate in multiple ecosystems? Some may compete as the lead provider of embedded financial services, while others provide the infrastructure and balance sheet (providing banking-as-a-service/BaaS) to fintech companies that own the customer relationship.

What role will branches serve in this phase of the digital evolution?

Approximately 41 percent of Thai consumers visit a branch less than once a month, and these “digital-first” customers represent primarily mass-market customers. Further, 70 percent of customers are open to using digital channels to consult with their banker. As branch transactions continue to decline and consumers express greater comfort with digital advisory services, Thai banks should consider doubling down on their efforts to redefine branches and create value.

Such efforts could include leveraging digitisation fully to automate account openings, loan applications, and more. In our survey, affluent customers said they are open to moving as much as 36 percent of their portfolio to a digital bank. Banks can therefore redesign branch operations to create a distinctive omnichannel experience, for example, by integrating teleconferencing with investment experts into branch-based meetings with a relationship manager. Banks should note as well that affluent consumers are using innovative advisory services, including enhanced reporting, financial-planning, and wealth-advisory tools. Incumbent banks could consider how to enhance their digital wealth-management platforms and remain alert to the growth of independent robo-advisors, which have the potential to build market share over time.

For organisations that commit to reinvention to compete in Thailand’s increasingly crowded digital banking market, the rewards for embracing a bold strategy and developing a careful implementation plan can be significant. Regardless of their market position, each bank will need to deliver highly differentiated products and services through compelling omnichannel journeys.

About the Author: Harry Seip, is a partner at McKinsey & Company’s Bangkok office and leader of the firm’s digital and analytics practice in Thailand. For further information please contact Alan Laichareonsup at email:

How can banks still thrive as fintech meets 5G?  Tech innovation and rising consumer expectations are reshaping Thailand’s digital-banking market – and differentiation counts more than ever

Harry Seip

Series Editor: Christopher F. Bruton, Executive Director, Dataconsult Ltd, Dataconsult’s Thailand Regional Forum at Sasin provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.

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