The President of Kasikornbank, Thailand’s fourth largest bank, says that banks should leverage on fintech services to serve customers better
It is often said that banks are slow to change, or rather, they are slow adopters of new technology. But with the fintech industry growing exponentially, these giants of financial services risk seeing a sizeable portion of their market share being swept away by fintech’s wave of disruption. Banks need to adapt and innovate if they want to stay on top of their game.
Teeranun Srihong, President of Kasikornbank, called KBank, Thailand’s fourth-largest bank which serves 12 million customers and 250,000 SMEs and corporations, understands these challenges. In an email interview with e27, he explains what is necessary to accelerate innovation in the fintech and banking sector, and how he is helping KBank lead the charge.
Here are the edited excerpts:
How can banks accelerate innovation in their industry through collaboration with fintech startups?
Banks can leverage on Big Data in real-time to enhance speed and efficiency, and to increase the pace of new product innovation as well as service offerings through data analytics.
Fintech startups can help them master customer relationship and experiences by creating brand loyalty and personalised services. Banks should also be open to embracing the digital innovation, internally and externally, by encouraging innovative culture and be a part of the startup ecosystem.
What are the key obstacles and challenges banks will have to overcome in their push to innovate their service?
Firstly, it would be the compliance and regulations issue. As a bank, we can only innovate as much as the ceiling allows, in this case — regulations. We have to adhere to strict capital requirements, high-risk lending restrictions, and changes in the consumer protection laws.
The banking sector not being able to keep up with new technological trends, is a key factor.
Things like Big Data analytics, P2P markets, Blockchain technology, mobile accessibility, location-based marketing, and new distribution channels have given rise to a sort of entropy of platforms and allowed tech startups to differentiate from traditional banks. The cash-dominated Thai market lags behind compared to the Western markets, and we’re seeing these new entrants expanding, not taking, the pie in financial services markets that were unfortunately underserved by banks.
Banks also need to take note of shifting consumer behaviour. Millennials are demanding more transparency, improved UI (user interface)/UX (user experience), automation, always-on access, and lower-cost transactions. They are driving the change in consumer behaviour that will set the minimum standards for financial services from here onwards.
As the President, how are you leading the charge to spearhead innovation?
For fintech startups, we will offer access to funding, provide further market reach, build stronger customer relationships, integrate security and regulatory compliance to their platforms.
We will also allocate our infrastructure to expand innovation, lend KBank’s credibility and trusted branding, and can even become their exit strategy.
We are looking to establish relationships with startup communities from abroad; such as e27, Money 20/20, Finovate, FinTechCity, etc. We may also reach out to industry experts, incubators, venture funds, and third party’s database services.
How do you evaluate a startup before deciding whether it is a suitable partner for KBank?
We look for those attractive, alluring ideas that will wow us. Then we ask ourselves: What business problem does it solve? Does it address our digital project’s objectives? And which customer segment does it tackle?
An innovative product can be a great idea, but if it’s not targetted to a large enough customer segment, it’s not as appealing. We need to see value-added elements to our operations and customers, and how its key technological architecture can be integrated with our platform.
Thirdly, we want to see that the company is backed by an experienced and talented management team. This is where we assess in more detail the startup’s business model, SWOT, competitors, management teams, intellectual property, addressable markets, etc.
Finally, we look at our own capabilities and capacity to address such innovation [in areas such as] personnel talent, technical resources, integration timeline and customer demand.
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