MFS Thailand
April 1st, 2020

Mobile Financial Services in Thailand: Synergy Between Banks and Telecoms

Today, mobile financial services are gaining the upper hand. Most experts agree that the financial world has drastically changed. The same goes for conventional payment vehicles that give way to more advantageous digital methods. Not yet universally, but that’s unstoppable.

Southeast Asia region is a desirable slice of the financial pie in that respect. And there’s a rationale behind that. To understand the FinTech landscape in the ASEAN region, let’s have a look at Thailand.

Mobile payments in Thailand

According to Digital 2019 Thailand, the total population is 69.24 million with half living in urban areas. The mobile phone penetration level is rather high reaching 133%.

According to the figures provided by the Nikkei Asian Review, the country has the highest level of financial penetration among Southeast Asian nations (67%). The mobile payment system turns out to be thriving.

Hootsuite provides the stats that seem to reflect an upward trend as well:

Country Insights Thailand

source

That said, according to J.P. Morgan 2019 Global Payments Trends Report, e-commerce in Thailand leaves much to be desired, making up as little as 0.8% of the total retail market as only 21.7% of Thai population make internet purchases.

The country’s infrastructure of mobile financial services is in sore need of developing as the nation has the enormous untapped potential of mobile banking. Now then, why are mobile financial services, having many points in their favor, doing things half-way? The market players are trying to improve the situation.

Thai Telecoms

The mobile market in Thailand is dominated by AIS (43.8%), TRUEmove (31%), DTAC (23%), which hold 98% of mobile telecommunication market share, Krungsri Research states.

Mobile wallets in Thailand

There are several mobile wallets available in the market including True Money, AirPay, mPay, LINE Pay, PaySocial, etc. All of them target the final market functioning on a B2C basis.

On the one hand, these mobile wallet providers face the challenge of having the merchants accept mobile wallet payments. On the other, there is no nationwide MFS platform to connect telecoms and banks making the cooperation mutually beneficial.

Largest Thai banks

According to Bank of Thailand report, Thai banks are subdivided into 3 categories:

▪ Large Banks with a market share of Total Assets more than 10%

▪ Medium Banks with a market share of Total Assets 2.5% - 10%

▪ Small Banks with a market share of Total Assets less than 2.5%.

The major bank players in Thailand are Bangkok Bank, Kasikornbank, Siam Commercial Bank and Krungthai Bank. Only Bangkok Bank has a market share slightly more than 20% with the rest of the banks penetrating the market within merely 10–20%. Consequently, none of the banks has an overarching market share. This is why the penetration of bank products appears to be rather inconsiderable as compared to any leading telecom company holding about 30–40% of the total market share.

The need for the synergy of banks and telecoms

As a result, any of the three big mobile providers is sure to cover a much larger proportion of the population. Unlike telecoms, banks are always up against the problem of client acquisition. To acquire new clients and encourage mobile payments, the nation's four largest banks had to reduce fees for clients conducting mobile transactions.

Telecom companies have an established customer base and can supply various information on a client. The banks are aware of nothing but the financial information on a client – their financial transactions and assets.

A telecom knows everything about its customers – their geolocation, web search, etc. Mobile providers possess an enormous amount of data including inside information, which can be turned to advantage while managing the client relationship. This data, for example, is valuable to promote the product through cross-selling and up-selling. All in all, a telecom is sure to succeed in taking on the task of client acquisition.

Banks have to weaponize quite complicated process to acquire a client as they have various products including payroll cards, deposits, loans, etc. As such, the client is free to turn to different banks.

In the case of depositing money, the customers are likely to choose the financial institution offering a higher rate of interest. To take a loan they are to seek for lower or teaser rate. A payroll card is issued according to the payroll program. Every bank product has its client acquisition process, which makes the entire acquisition model very complicated. As a result, the bank client is not loyal, since they can turn to 2–3 banks meeting their needs.

Telecoms make this process easy and clear. They use a simple model of client acquisition – low acquisition cost – which is a lot more efficient to acquire a client. Mobile providers always verify ID as well as utilize the strategy Know Your Customer (KYC), constantly seeding the database by tracking their users through mobile internet.

Comprehension and timely character of a telecom’s customers data is not to be compared with those of a bank. Admittedly, banks are trying to apply a client-oriented approach but taking all things together, the picture remains discouraging.

Problem solution

Thus, it may be reasonable to conclude that banks are bound to coop with telecoms with their huge and solid customer database.

There is certainly a need for a reliable B2B mechanism to enable this mutually advantageous cooperation. With several projects to find the solution being in progress, there is one that is worth considering. It’s about MFS enabler with the name speaking for itself.

MFS enabler is a platform offering both a technical solution and business development. Technologically it is an enterprise-grade platform. On the other hand, it is a business drive-up. Having supplied the MFS enabler platform, the developers help make money off of it. The platform is to integrate market players making the cooperation mutually beneficial.

What exactly and how is to be integrated with the MFS platform?

▪ Financial institutions

▪ Merchants

▪ Service providers (aggregators)

▪ Telecoms with their customer database.

Telecoms are offered a white label product. MFS enabler developers have a standard technical mobile application, which is to be customized according to the brand. The application makes it possible to pay from a mobile account, to add bank cards and accounts, to make a QR code payment, to pay utility, to buy e-tickets, etc.

The MFS enabler model makes it possible to get a benefit from the synergy between banks and telecoms. Between banks and telecoms, there is a mediator, which is supposed to take on most of the responsibility for business development. This solution is sure to accelerate financial inclusion as well as to generate profit for all the participants.

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