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Thailand matching ASEAN fintech aspirations

Thailand matching ASEAN fintech aspirations

(22 January 2019 – Thailand) Mobile payment adoption is accelerating in Thailand as financial markets digitisation takes place at an increasing rate.

Thailand is seeking to leverage digital finance to boost an underdeveloped banking sector, bringing the country into line with nearby countries in the Association of Southeast Asian Nations (ASEAN). Without the entrenched incumbents of developed economies, ASEAN countries tend to view digital finance as a greater opportunity than threat. Singapore has embraced Fintech readily, with an eye towards becoming Asia's Fintech hub as evidenced by the proliferation of regional treasury centres, a topic of focus for East & Partners latest upcoming Global Insights report. Thailand's finance sector has been steadily digitising since 2010, when mobile and internet banking accounted for just 8 percent of total payment transaction volume. By September 2017, digital banking reached 33 percent of total payment transaction volume. Through the first nine months of 2017, mobile and internet banking accounted for 23.4 trillion Thai baht, a compound annual increase of 22 percent compared with 2010.

Standard & Poor’s Global (S&P) has projected a difficult year ahead for Asia-Pacific financial institutions, in light of potentially enervating financial conditions throughout the region. Credit analyst at S&P Gavin Gunning commented: “High debt levels and lofty asset prices have evolved during what has been an extraordinarily long economic and credit cycle across much of Asia Pacific. These elevated risks set the scene for a potential deterioration in Asia-Pacific bank credit quality, over the short to medium term.” According to the report, financial conditions in Asia-Pacific are likely to weaken in 2019 due to volatility across domestic currencies, bond markets and property markets – alongside forecast interest rate hikes across numerous nations. Fintech, in all its diversity through Asia Pacific, continues to expand and transform. Relative to the financial institutions monitor, the S&P report stated: “To date, fintech has not caused us to adjust any bank ratings, although there is the potential this could occur.”

Thailand is notable for its incorporation of mobile wallets into a broader digital ecosystem. Thailand-based TrueMoney Wallet, which began as a provider of simple digital payment services, like paying for purchases and bills, has diversified into cross-border remittances, cash on delivery and top-up services such as gaming. Japanese messaging app Line, which counts Thailand as one of its top markets, currently offers its Rabbit Line Pay service to 4.5 million Thai users. With an overall Thai userbase of 15 million, Line has plenty of room to grow its payments business in Thailand. At the same time, the Thai government is playing a key role in the digitization of the nation's finance sector. In line with the Thailand 4.0 initiative, the government launched PromptPay, an electronic interbank transfer system in early 2017. According to The Bangkok Post, PromptPay registration reached 44.5 million users in August 2018. Total transactions reached 631 million, with an overall value of 3.1 trillion baht. Analysts say waiving transactions fees helped spur a surge in PromptPay usage. After the fees were waived in March, interbank fund transfers from April to June grew 239 percent. Most of the transactions were conducted with smartphones.

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