New payment methods such as by scanning the QR Code to pay-later offered by Fintech are quite attractive to consumers. Some financial technology (fintech) services have begun to threaten the dominance of banks as a provider of payment instruments in e-commerce. Thai youths seem to be starting to switch to using fintech payment to replace credit cards, mBanking, or eBanking.
Increased use of fintech-base payment
Several surveys in Thailand showed that payments through mobile banking rose 3% over the same period last year to 49%. While payments through an Automated Teller Machine (ATM) fell 7% to 30%, and transactions through e-wallet or fintech services increased from 5% to 16%. This is certainly a challenge for the bank.
One of the drivers of the increasing use of payment fintech services in 2019 is convenience. Some fintech payment companies allow users to make purchases without top-ups (do not need a balance in their e-wallet account). This system can obviously replace the credit card function.
Several fintech payment companies in Thailand also allow users to transfer funds from their e-wallet accounts. They can pay the funds they transfer in a certain period of time. This is like borrowing something and loaning it back to someone else.
The fintech payment service has also penetrated into several other aspects in the lives of Thai people. The fintech payment companies cooperate with various parties to provide ticket purchase services, even purchasing vehicle fuel. You can also use this to pay for various bills such as electricity, telephone, internet, etc. The various conveniences offered by fintech payment are clearly able to increase people’s interest in shifting from conventional banking systems to digital.
Big driver in fintech, also in Thailand, is the comparison sites, such as sabaikrapao.com, where users can compare different financial services and payment methods.
Bank defense strategy
Banks in Thailand answer the challenges of technological development through investment. They invest in digital payment platforms that they consider potential. They want to show that the bank is an institution that is able to follow the development and lifestyle of its customers. They want to leave the impression of “conventional and difficult”. The bank wants to show that fintech-based banking services will be better than fintech payments non-banks.
Banks are considered to be able to provide safer services compared to non-bank services. Even so, the fintech payment companies also continue to develop their security systems in order to increase community trust. They hope that fintech payment users not only get convenience but also get security at the bank’s security level.
Basically, the only thing that distinguishes between the two services is the amount of funds that can be used. Banks will certainly be able to provide greater allocation of funds to their users, while fintech payment companies can only provide funds with relatively smaller amounts than banks. The bank certainly has a larger source of funds than fintech payment. In addition to having sources of funds from customers, banks also get full support from the government. Fintench payment companies in Thailand actually also received support from the government, but the amount was considered still not enough to support the entire technology-base business.