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1
Driving Innovation
for Financial
Inclusion
in the Mekong
Subregion
Teeranun Srihong
President of KASIKORNBANK &
Chairman of KASIKORN Business-Technology Group
3 October 2016
2
“RISING ASIA”
The Greater Mekong Subregion is the
new frontier of South East Asian
economic growth.
3
Thailand : 68 Millions
CLMVT Population Vietnam : 94 Millions Myanmar : 56 Millions
Laos : 7 Millions Cambodia : 16 Millions
4
Greater Mekong subregion Population
Population : 240 Millions
5
However, Lack of financial inclusion
would limit income distribution and hence sustainable growth for GMS
6
Copyright © 2016 Accenture. All rights reserved.
6
Thailand is not sufficiently leveraging the power of digital
and technology innovations to drive cost-efficient
financial inclusion at scale
Source: Accenture Research, DBS, GSMA, Cambridge Centre for Alternative Finance March 2016 Source: DBS ASEAN Banks Industry Focus
… but Digital Banking Penetration
continues to be low
1319364144
94
Thailand Singapore Malaysia Vietnam Phillippines Indonesia
% (2014)
China India Indonesia Japan Thailand
1,198 694 293 137 85 million
Rank #1 2 3 7 14
In 2020, the top 15 smartphone markets globally will
include Thailand….
Digital Financial Services
7
Financial Inclusion Overview in EAP and Selected Economies -2012 (% + 15 Age)
8
Financial inclusion create the real
value and generic growth for the
World economic.
9
10
11
12
Financial Inclusion
Access to a full suite of financial services
Through a diverse and competitive marketplace
Provided with quality
Add financial capability
To everyone who can use financial services
13
Copyright © 2016 Accenture. All rights reserved.
13
Governments are encouraging the growth of new models to
improve financial inclusion Global financial inclusion trends
Source: Accenture Research
G20
recognizes the benefits of
financial access for inclusive
growth, stability and integrity.
Ministries of Finance and
Central Banks are including
financial inclusion in their
mandate
GOVERNMENTS put pressure on the
service providers to
extend reach, products
and services to the under
banked/served
FINANCIAL
ACCESS
is no longer only a
development concern
but a cornerstone of
economic
development
frameworks and models
REGULATORY
FRAMEWORKS and technological
innovation are driving
new digital financial
service models that
support access to
finance
“(We) set an ambitious goal to
achieve universal financial
access for working-age adults by
2020”
14
Top Barriers for Agency model to Financial Inclusion
1. Lack of trust.
2. Lack of financial capability and digital literacy
3. Agent networks
4. Data - privacy, security, cost
5. Regulatory issues
6. Lack of coordination among government bodies.
7. Lack of connectivity/infrastructure
Banks as key drivers of financial inclusion
15
TECHNOLOGY IS A GAME CHANGER
“First, let’s make electronic transactions. Then let’s
build out the financial inclusion ecosystem.”
Alejandro Toro, Director of Channels, Bancolombia
16
Copyright © 2016 Accenture. All rights reserved.
16
Kenya successfully adopted mobile money services to
dramatically improve the country’s financial inclusion
Kenya’s successful adoption of mobile money
Source: GSMA, 2015 State of the Industry Report: Mobile Money; GDDFI, Financial Inclusion, The 2016 Brookings financial and digital inclusion project report, news articles
Mobile Money Number of Mobile Money Services by
region
Mobile Money
services
411
million Registered Mobile
money accounts
worldwide,
+31% v 2014
134
million
81%
90-day active
users, comparable
to 173m users of
PayPal
lower income
countries have mobile
money services
(v 47% up/mid
income)
4% 4%
1%
8%
11%
72%
Transaction values ($bn)
$18.9bn
P2P transfers Remittances Airtime top-up
Merchant Payment
Bulk disbursement Bill payment
17
Copyright © 2016 Accenture. All rights reserved.
17
China is fast filling the SME financing gap for online
merchants by leveraging big data generated from its
marketplaces for banks’ credit dispersal SME financing via marketplace platforms in China
Source: Company reports, CBRC, news articles
Example E-commerce
Platforms
Banks
Instant
Microcredit
SMEs
Kbank offers E-Commerce quick loan via Alibaba in
Thailand, which is working capital loans for gold
suppliers and their trade partners on Alibaba.com
DHgate.com holds
transactional data on
1.2 million SMEs in
China registered on its
platform
CCB offers
“eMicro" line of
credit products and
LongPass, a digital
wallet service, to
DHgate customers
18
Copyright © 2016 Accenture. All rights reserved.
18
India is looking at the entire ecosystem in order to deliver to
the needs of the financial inclusion customer
Bank
Agents
Mobile
Banking
New Banking
Licenses,
MSME Bank
• Issuing three types of
banking licenses to
new entities in 2015:
small finance banks,
payments banks and
universal banks
• Launched a MSME
bank (MUDRA) with
$3 billion capital
allocation for the
sector
• Issued Mobile
Payment System
Guidelines in
2011
• Enabled eKYC
based on Aadhaar
(Universal ID
Program) that is a
verified identity
linked to a
financial profile
• Introduced agent banking in 2012;
business correspondent model has
become pervasive for financial
inclusion
Source: Accenture Research
Social Benefits
and Welfare
Net
• Channeling all government-to-person (G2P)
payments to beneficiaries’ bank accounts,
instead of cash payouts, such as under Jan
Dhan Yojna
• Introduced three national welfare schemes,
including life and accident insurance
eKYC
(Know Your
Customer)
Merchant
s • Driving adoption of
digital technology for
the local merchant
with a debit card
(RuPay card)
Unified
Payments
Interface
• Enabling payments on a
common platform through
which consumers can transfer
money from one bank account
to any other bank account
instantly
Ecosystem of India’s Financial Inclusion
19
Copyright © 2016 Accenture. All rights reserved.
19
New innovations enabled by technology are reducing risks,
improving efficiencies and service in the microfinance space
Source: Accenture Research
Mobile Phone Data:
Online and Social Media:
Psychometric Tests:
Mobile Cash Pick-Up:
Loan Disbursements and Repayments:
Smartphones/Tablets:
Process Efficiency:
Connectivity:
Credit Assessment Cash handling & Payments Field Applications
Convenient cash management services An important role In lowering cost-to-serve
‘’Loan TAT
decreased
from 72 to 6
hours’’
‘’ new digital credit
scorecard delivering a
credit-decision in the field
for 80% of targeted loans’’
‘’ Average
loan officer
case load
(applications
processed)
increased by
134%’’
Improved risk profiling
20
Traditional Banking Alternative Lending and Investment
Source: WEF 2015
FinTech changes the model of lending and saving/investment
This role is similar to capital
market players
21
2. Simple and speed over price
When building financial inclusion solution.
Banks need to recognize that Needs of the next
Billion are Different
1. Flexibility in terms and conditions
3. Small product size
4. Clear and simple instruction
22
Banks’ Top Opportunities in Financial Inclusion
1. Build on digital payments
2. Start with the underbanked and use data to understand their needs.
3. Cross-sell the full range of products.
4. Address the usage gap by building financial capability.
5. Develop the ecosystem through bank-led partnerships
6. Enable remote account opening using digital IDs
7. Align all systems to digital banking
Banks as key drivers of financial inclusion
23
Banks need to adjust themselves
from their traditional business models
24
Be Innovative themselves
2. New business model of efficient operation and
reduced risks
1. Different approches to products and marketing
3. Tailored rewards with clear accountability and
governance
4. Enhanced digital innovation and collaboration
capacities ,e.g. with FinTechs, NGOs, government
agencies and local leader.
25
Banks also need to drive for development of ecosystem to
develop Digital financial inclusion in Region
(1) The adoption of a robust regulatory framework
(2) Appropriate monitoring and policy tools
(3) Talent training and development
(4) Good governance, predictability and ease of doing business
(5).Crossborder Agent banking ( Business corresopondents)
(6).Mobile Phone Technology builders
(7).Diversifying Providers
26
KBank has been a leader in creating meaningful innovation to our market
27
KBank as the leader in digital banking
# Active Users (million)
1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016
0.00
0.50
1.50
2.00
2.50
3.00
3.50
4.00
#1 Digital Financial
Service in Thailand
3.5 Million
Active Users
28
KBank’s views toward FinTech & Startups
The views
(on FinTech innovation)
5. We are well positioned for regional growth
if our innovation capacities are quickly improved.
2. Banking could become less visible. Our
brand is at risks.
1. FinTechs create real values. Inevitably,
adoption will accelerate.
3. Real threats are from non-traditional
players, not among players in the sector.
4. We can never out-innovate competitors by
relying on just ourselves.
KBank’s Approaches
(to embrace FinTech innovation)
3. Provide true value to high potential FinTech
partners
2. Scan global landscape and bring relevant
innovation to the markets.
5. Create platform for internal innovation and
partnership collaboration.
4. Build Thailand's robust financial innovation
ecosystem.
1. Rather than competing, focus now should be
on collaborating to co-innovate.
29
Establishment of KBTG KASIKORN BUSINESS – TECHNOLOGY GROUP serves as a solution to the transformation key challenges,
to address digital culture, agile operating model and encourage innovative creation.
30
KBTG’s strengths and core capabilities
Machine Learning
Blockchain
Advanced
Mobile Programming
API
World Class Design
Internet of Things
Cybersecurity e KYC &
Authentication
31
KBTG is created to be a platform
for innovation and regional collaboration
32