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Thailand’s banking sector turns to financial wellness and digital money management apps with the rise of digital challengers

At 72%, Thai banks were the most likely in APAC to say that competition from fintechs and newcomers has been a key challenge in remaining profitable and relevant to customers

New research has revealed a hidden strategy by the retail banking sector to win customers through the provision of financial wellness, and digital money management apps, as they compete against digital challengers.

Commenting on the Backbase commissioned study, conducted by Forrester Consulting, Backbase Regional Vice President for Asia Pacific, Iman Ghodosi, said,

“Our research shows Thailand’s a mature market when it comes to banking, but there are still trust issues with digital challengers with our research showing only 17% of Thai people trust a digital-only bank. In the face of fierce competition but having consumer trust on their side, many banks are capitalizing on this. They are building out their digital ecosystem whilst keeping their heritage roots.”

The study also uncovered that 48% of the retail banking business decision-makers interviewed in Thailand were spending more on financial wellness and digital money management tools. Meanwhile, 84% said they were expanding a financial wellness program or planning to start one.

Financial wellness apps in the Engagement Baking Era

Until now, financial institutions didn’t have the capacity to become fully involved in the day-to-day financial decision-making of their customers. However, through smartphones, advancements in AI, and data analytics there are new and affordable services banks can offer. Spending analysis, budgeting tools, advanced pay and income smoothing, automatic savings, and automatic debt repayments are just some of the features that banking customers can now enjoy from such apps.

“It’s all about winning and keeping hearts and minds. Banks can now add real value to the financial lives of their customers, and this will encourage those customers to bank and engage more and therefore stay longer,” said Mr. Ghodosi.

“These products are very sticky and can lower churn and increase retention. The banks also win from the rich data they can collect and use to develop better financial products.”

“Now more than ever, it’s important to own the relationship with your customer. We’ve entered the Engagement Banking Era – an evolution that stresses a unified platform approach for banking. The number one priority in this new era is to completely re-architect the bank around the customer, moving away from siloed technology investments.”

The path to digital success can be challenging

According to the research, Thailand’s banking sector is facing many challenges. 72% of the retail banking business decision-makers interviewed said outdated or legacy technology was a key challenge to their company implementing or developing digital money management tools. And 70% said organizational silos inhibit their progress.

“There definitely seems to be two camps within the retail banking sector – some are disruptors or innovators who are progressing and have seen the global success of this digital strategy, others are a little slower,” said Mr. Ghodosi.

He added, “The next 12 months will lead to an inflection point where those who have gained a competitive advantage will start seeing the results in customer numbers.

“People want the same high level of customer focus and flexibility for financial services as they can get in other engaging digital experiences. They want access to their personal finances anytime, anywhere, through any channel, and tools on how to manage it.”

Addressing financial literacy

It’s widely known across the industry that financial literacy in Thailand is very low. Thai people prefer spending today instead of saving for the future, and the level of financial literacy drops further in poorer communities. This puts immense financial pressure on Thai people as they grow older.

The recent study found that of the Thai people interviewed;

  • In the past year 67% said there were bills they couldn’t pay due to other financial priorities
  • 61% said they felt overwhelmed by debt
  • 60% where to go for reliable financial advice
  • 70% said they struggled to build savings
  • And 61% said they don’t plan for retirement

“Outside of business objectives such as new customers or collecting data, this is where financial wellness and digital money management apps can make a difference,” said Mr. Ghodosi.

“Imagine if every Thai person had access to personalized recommendations tailored to their needs, along with long-term financial goals with hints and tips about how to stay on the right financial path. Well now they can, and it’s in their pocket every day.”