Supaneewan Chutrakul, First Senior Vice President at KASIKORNBANK
For the past few years, Thailand have encountered rapid change in banking preference and behavior. As more non-bank players jumping into the market, people have become more accustomed to banking alternatives and found traditional banks less imperative. These non-bank players offer fundamental banking services, transfers, and payments, but with higher flexibility. During the early years of market penetration, they made onboarding 100 percent digital, required less identification, and accepted much lower age group than traditional banks. Besides, they provided more variety of fundamental services that better serve the emerging lifestyle.
The coming of COVID-19 pandemic further accelerates this process. As the city is locked down and going out should be kept at minimum, the way people make transactions is extensively reshaped. Businesses are also striving to streamline and reduce cost.
To keep pace with this changing trend, banks need to go further off its comfort zone, and stay ahead of but close to their customers instead of following the trail. Be present and relevant in the moment when customers need us most, or at the point where they interact on a daily basis, without having them spend time reaching for us.
QR and Online Payment
One trend that has evolved during COVID-19 is the increase of QR payment as less contact with cash and card is preferred. In 2020, our bank saw a growth of 125 percent in QR payment transaction comparing to the previous year. As the orders they placed online each day multiply, customers seek way to make these payment as lean and instant as possible. Things like seamlessly switching from checkout cart on an application to a mobile banking for one-click payment fulfill their needs for immediacy. For online payment, our app-switching payment service received flooding interest and grew nearly fourfold in 2020 among partners across industries, including entertainment and food delivery. The source of fund used for payment has slightly changed as well. Card has been predominant in the online world, yet we see rising number of savings account and loyalty points used for purchase as well.
There were large number of new faces, many of which are the group that were not interested in making these types of payment before. Faced with inevitable circumstance, they become more open and willing to adopt digital products and services. As seen in loyalty point redemption pattern, instead of redeeming points for traditional goods or shopping discount at store, customers are using points to purchase digital goods and pay off utility bills. In the foreseeable future, when the adoption rate increases, we can expect to see more exciting trends emerged from this new norm. Thai banks have also been working with multiple international partners aiming to expand QR cross-border payments throughout Asia Pacific.
In 2017, Thai banks have started offering fundamental banking services on LINE, no.1 messaging platform in Thailand with 45 million users in early 2020. The early move includes non-financial features, for instance, real-time activity alert, balance inquiry, and statement request on the chat window of banks’ Official Account. The service received overwhelming interest as users no longer have to approach banks’ platforms for simple tasks. Nowadays, LINE users can make transactions, open savings accounts, issue debit cards, or even receive loans on the messaging platform itself. With 30 percent of approved applicants have never received loans from any institutions before, it is proved that, by being present at the touchpoint where people often reach for, they feel less intrusive and more intrigued. In return, banks receive valuable data to feed their AI engines for analysis, tailor their products and services that better fit the needs, offering them to the right users at the right time.
Additionally, we see movement towards Facebook platform as well. KBank and its affiliates have been collaborating with Facebook to develop more convenient payment solution, which helps easing the payment process and improving customer experience. KBank was also the first Thai bank to offer such seamless app-switching payment on Facebook. On the other side of Facebook platform are the businesses that need assistance for order management. As the demand for purchase soars, payment validation and order management become more difficult to handle. Thus, the presence on social platforms does not necessarily mean being transactional tools. Banks can exploit their technological capabilities and integrate other financial-related services into the platform as well. Social banking is still at its early stage, with potential to bear seeds of captivating services in the near future.