As traditional banking slows, Thai banks future-proof by capitalizing on fintech

Challenging economic conditions, a stagnating customer pool, and rising competition from regional tech players have prompted Thailand’s domestic-oriented banks to turn outward as they seek more diverse revenue pools.

“Over the past three years, the top four Thai banks have committed over US$400 million for investment into fintech through their venture arms – which is more than all investments made by rest of ASEAN banks in fintech companies and venture capital players,” observes Varun Mittal, global emerging market fintech leader at Ernst & Young (EY).

Siam Commercial Bank subsidiary SCB 10X, launches “Moonshot Mission” / Photo credit: Siam Commercial Bank

The finance executive was referring to the market leaders in terms of assets: Bangkok Bank, Siam Commercial Bank, Kasikornbank, and Bank of Ayudhya.

At about US$200 million committed into venture units so far and further capital injections on the charts this year, Indonesia’s lenders are the only other active players in the corporate VC scene focused on financial technology within ASEAN.

Thailand’s big four banks are scouting corporate venture capital deals more than ever – a level of activity that’s unusual for institutions that have been focused on serving the local market since the 1997 Asian financial crisis. For over two decades, staying local allowed Thai lenders to produce relatively good results, even as its Southeast Asian peers expanded across the region.

Thailand’s top four banks and their corporate venture capital activity 

Data by Tech in Asia and DealStreetAsia. Figures are based on investment amounts already committed.

But the tides have turned. Slowing domestic consumption and infrastructure spending are limiting the Thai banks’ earnings growth, at a time when fast-moving tech players like Alibaba are extending their fintech lead in the country through local tie-ups.The Bank of Thailand’s rollout of nationwide payments platform PromptPay in 2017, which did away with costly fund transfer fees, was a win for consumers, but it eroded valuable fee-based income for banks.

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