Thai­land grap­ples with set­backs of go­ing cash­less

The Myanmar Times - - International Business -

JUST a month af­ter cus­tomer data was re­ported stolen from Kasiko­rn­bank (KBank) and Krungthai Bank (KTB) by uniden­ti­fied hack­ers, the lo­cal bank­ing sec­tor was dealt an­other blow on the Aug 31Sept 1 week­end by an elec­tronic sys­tem glitch that lasted sev­eral hours, leav­ing tens of thou­sands of cus­tomers stranded and de­lay­ing mil­lions of fi­nan­cial trans­ac­tions.

The in­flux of in­ter­bank money trans­fers that typ­i­cally hap­pens at the end of each month was ini­tially sus­pected as the cause of the dis­rup­tion to mo­bile bank­ing ser­vices and nearly all over-the-counter and ATM ac­tiv­i­ties re­lated to in­ter­bank money trans­fers and bill pay­ments.

But KBank, whose sys­tem was where the crash orig­i­nated, blamed hu­man er­ror for the net­work glitch, rather than in­suf­fi­cient ca­pac­ity.

Although all bank­ing ser­vices re­turned to nor­mal by the af­ter­noon of Aug 31 af­ter KBank’s sys­tem was cut off from the cen­tral sys­tem op­er­ated by Na­tional In­ter­bank Trans­ac­tion Man­age­ment and Ex­change Co Ltd (Na­tional ITMX), the na­tional switch­ing ser­vice provider, KBank en­coun­tered an­other mo­bile bank­ing glitch the next day.

The bank said the lat­ter sys­tem dis­rup­tion stemmed from Na­tional ITMX, which spot­ted a large num­ber of in­ter­bank money trans­fers from senders pro­vid­ing in­cor­rect re­cip­i­ent ac­count num­bers and sub­se­quently pulled the bank out of the cen­tral sys­tem tem­po­rar­ily.

The lat­est snag is not the first time Thai­land has ex­pe­ri­enced a bank­ing ser­vice calamity of this sort.

Users of the na­tional e-pay­ment sys­tem, Promp­tPay, ex­pe­ri­enced de­lays in cash trans­fers for about 20,000 trans­ac­tions for about eight hours on Dec 31, 2017. That dis­rup­tion was caused by com­puter glitches while for­mat­ting the sys­tem cal­en­dar for the new year.

The tech­no­log­i­cal catas­tro­phes have been a wake-up call for Thai banks as more fea­tures, par­tic­u­larly dig­i­tal lend­ing and on­line ac­count apps, are in the pipe­line for many banks, with plans to roll out more com­plex ser­vices in the com­ing years to add to the ex­ist­ing bill pay­ment, money trans­fer, top-up, ac­count in­quiry and mu­tual fund ser­vices.

Spo­radic glitches can also im­pede the gov­ern­ment’s at­tempts to push the coun­try to­wards a dig­i­tal econ­omy, in which elec­tronic pay­ments are the name of the game, and raise big ques­tions about whether Thai banks are ready to go fully dig­i­tal.

In­suf­fi­cient ca­pac­ity

Although the bank­ing in­dus­try at large has in­creased the ca­pac­ity of their sys­tems in the wake of the in­tro­duc­tion of Promp­tPay, which it­self was rolled out in an­tic­i­pa­tion of rapid growth in dig­i­tal bank­ing trans­ac­tions, ca­pac­ity re­mains in­ad­e­quate, said Anu­chit Anu­chi­tanukul, an ad­viser to the com­mit­tee of na­tional e-pay­ment and na­tional dig­i­tal ID sys­tem de­vel­op­ment. This re­flects the fact that the ex­panded ca­pac­ity is still not suf­fi­cient to keep up with con­sumer be­hav­iour, Mr Anu­chit said.

Be­fore the launch of Promp­tPay, ma­jor do­mes­tic banks in­vested heav­ily in in­fra­struc­ture to pre­pare for higher trans­ac­tion vol­ume over the next five years. The up­grade, how­ever, ap­pears to be in­suf­fi­cient for the tsunami of trans­ac­tions, a mere year af­ter Promp­tPay was launched.

“Even though the crash in the mo­bile bank­ing ser­vice was tem­po­rary, this frus­trated many peo­ple,” Mr Anu­chit said. “This re­flects that con­sumers have al­ready changed their fi­nan­cial be­hav­iour and we have al­ready be­come a cash­less so­ci­ety, de­spite how it has yet to be­come fully cash­less.”

Amid the tran­si­tion to the full-blown dig­i­tal era, users are likely to face dis­rup­tions in the fu­ture, but con­sumer con­fi­dence is un­likely to be un­der­mined be­cause the ben­e­fits of con­ve­nience negate the spo­radic fail­ures, Mr Anu­chit said. He said con­sumers can ad­just their be­hav­iour, for ex­am­ple, by avoid­ing mak­ing fi­nan­cial trans­ac­tions at the end of month and us­ing dig­i­tal bank­ing ser­vices from a va­ri­ety of banks. Somkid Ji­ra­nun­tarut, chair­man of Kasikorn Busi­ness Tech­nol­ogy Group, KBank’s tech­nol­ogy sub­sidiary, reaf­firmed that KBank’s trans­ac­tion ca­pac­ity is suf­fi­cient, while the in­ci­dent demon­strates that the ca­pac­ity of some other banks may be in­ad­e­quate.

The bank plans to spend 1 bil­lion baht this year to boost trans­ac­tion ca­pac­ity on K Plus, its flag­ship mo­bile bank­ing app, in prepa­ra­tion for new fea­tures on the app that are sched­uled for launch next month.

“We ex­pect to triple our mo­bile bank­ing ca­pac­ity next month from the cur­rent level be­fore rais­ing it by 10 times next year,” Mr Somkid said.

Fail-safe strate­gies

Shortly af­ter the tech­no­log­i­cal fail­ure oc­curred, banks agreed to dou­ble their mo­bile bank­ing trans­ac­tion ca­pac­ity dur­ing peak pe­ri­ods by this year-end to pre­vent sys­temic crashes in the fu­ture.

They also re­quested that Na­tional ITMX at least dou­ble its ca­pac­ity. Na­tional ITMX’s peak ca­pac­ity stands at 500 trans­ac­tions per sec­ond.

These are part of six prac­ti­cal guide­lines passed to avoid sim­i­lar de­ba­cles and re­store cus­tomer con­fi­dence.

Other guide­lines in­clude tight­en­ing each bank’s in­ter­nal man­age­ment sys­tem; form­ing a joint work­ing group be­tween banks and Na­tional ITMX to spec­ify clear con­di­tions and guide­lines for tem­po­rar­ily re­mov­ing cer­tain banks from the cen­tral sys­tem to pre­vent a domino ef­fect; de­vel­op­ing a cen­tral dash­board to up­date the sta­tus of each bank’s sys­tem; and keep­ing mem­ber banks in­formed to en­sure time­li­ness in prepa­ra­tion and prob­lem-solv­ing.

Re­view­ing the de­sign of mo­bile bank­ing sys­tems and dis­play­ing trans­ac­tion sta­tus mes­sages that are clear and easy to un­der­stand are ad­di­tional goals.

Dig­i­tal trans­ac­tion rise

Thai­land’s to­tal pop­u­la­tion stands at 69.11 mil­lion, of which 57 mil­lion are in­ter­net users and 55.6 mil­lion use smart­phones, ac­cord­ing to KBank data.

The Bank of Thai­land said the num­ber of mo­bile bank­ing users stood at 34.5 mil­lion at the end of March, up dra­mat­i­cally from 31.6 mil­lion at yearend 2017, 20.9 mil­lion in 2016 and 13.9 mil­lion in 2015.

Trans­ac­tion vol­umes and value through the mo­bile bank­ing plat­form have also surged rapidly. Mo­bile bank­ing trans­ac­tions to­talled 179 mil­lion in this year’s first quar­ter, com­pared with 153 mil­lion in 2017, 67 mil­lion in 2016 and 31.7 mil­lion in 2015.

Mo­bile bank­ing trans­ac­tion value amounted to 1.2 tril­lion baht for the three months through March, up from 1 tril­lion logged last year. This year’s first-quar­ter mo­bile bank­ing trans­ac­tions also rose sig­nif­i­cantly from 585 bil­lion in 2016 and 334 bil­lion in 2015.

Although data for April-Au­gust is not yet avail­able, mo­bile bank­ing users and trans­ac­tions are poised to grow sharply af­ter banks scrapped trans­ac­tion fees over dig­i­tal chan­nels in late March.

Siam Com­mer­cial Bank (SCB) chief mar­ket­ing of­fi­cer Thana Thien­achariya said re­cently that mo­bile bank­ing had grown “ex­po­nen­tially” af­ter trans­ac­tion fees were elim­i­nated.

KBank is Thai­land’s largest mo­bile bank­ing ser­vice provider by users, at al­most 9 mil­lion, rep­re­sent­ing 61% of the bank’s 14.6 mil­lion to­tal cus­tomers and up 46% year-on-year at the end of July. The bank aims to gain 10.8 mil­lion users for its mo­bile bank­ing ser­vice by year-end.

The bank saw the num­ber of trans­ac­tions through K Plus, its flag­ship mo­bile bank­ing app, surge 76% year-on-year to 2.7 bil­lion, with a 42% year-on-year in­crease in trans­ac­tion value to 4.8 tril­lion baht, for the seven months to July.

KBank saw mo­bile bank­ing trans­ac­tions peak at 4,000 per sec­ond, ris­ing from 600 be­fore the fee was waived. For SCB, a peak of 2,000 trans­ac­tions per sec­ond made through SCB Easy was recorded.

SCB ranks in the sec­ond spot af­ter KBank in terms of do­mes­tic mo­bile bank­ing trans­ac­tions. SCB ex­pects the num­ber of SCB Easy users to reach 9 mil­lion by year-end.

Bangkok Bank, the coun­try’s largest lender by as­sets, has about 5 mil­lion users on Bualu­ang mBank­ing and aims for 8 mil­lion by year-end.

Te­flon cus­tomers

Although Teer­apong Suwan­nakit is among those who have ex­pe­ri­enced de­lays in dig­i­tal trans­ac­tions, he con­tin­ues to use mo­bile bank­ing be­cause of its con­ve­nience.

The 38-year-old was con­fi­dent that the bank­ing sys­tem would re­sume af­ter be­ing dis­rupted, but in­for­ma­tion and im­me­di­ate com­mu­ni­ca­tion from banks are what he wants to see when the sys­tem breaks down.

A restau­rant owner, speak­ing on con­di­tion of anonymity, said he used K Plus af­ter 8am on Aug 31 to trans­fer money to pay his em­ploy­ees’ salary, as he does ev­ery month, but he could not ac­cess the sys­tem.

He then at­tempted to use K-Cy­ber bank­ing, KBank’s in­ter­net bank­ing ser­vice, to com­plete the trans­ac­tions, but his ef­forts failed.

“I told my em­ploy­ees about the de­layed trans­fer be­cause of the sys­tem glitch and they un­der­stood the sit­u­a­tion,” he said. “I was afraid of los­ing the trans­ferred money, which was quite a big sum for me, so I did not con­tinue to at­tempt the trans­ac­tion again.”

Banks should in­form users of how long a sys­tem glitch will take to be cor­rected in or­der to let them man­age and han­dle the dis­tur­bance, he said.

The restau­rant owner al­ways uses the mo­bile bank­ing app for money trans­fers and bill pay­ment for his busi­ness and per­sonal spend­ing. Nor­mally he uses mo­bile bank­ing ev­ery day for pay­ment of food and drinks us­ing a QR code.

“The fee waiver is what draws me to mo­bile bank­ing for ev­ery­day use,” Mr Teer­apong said, adding that he has down­loaded two mo­bile bank­ing apps, KBank’s and BBL’s, to his smart­phone.

He is also con­sid­er­ing down­load­ing an­other app for mu­tual fund in­vest­ment at a smaller bank.

Nat­ta­porn Phan­nakarn, 44, said she will con­tinue us­ing mo­bile bank­ing ser­vices de­spite the lat­est glitch, as it al­lows her to make fi­nan­cial trans­ac­tions at her fin­ger­tips any time, any­where and, most im­por­tantly, free of charge.

“As far as I know, when the sys­tem crashed, there were no re­ports about clients fac­ing fi­nan­cial losses,” said Ms Nat­ta­porn, who works in an of­fice. “The sys­tem fail­ure only an­noyed users, as their trans­ac­tions were de­layed.”

She nor­mally uses mo­bile bank­ing for money trans­fers, credit card pay­ments and mu­tual fund pur­chases. Ms Nat­ta­porn has down­loaded KMA -Bank of Ayud­hya’s mo­bile bank­ing app -- and Bualu­ang mBank­ing to her mo­bile phone.–

Photo: EPA

Peo­ple use a Thai bank ATM in Bangkok, Thai­land.

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