Fintech eats into bank branch figures

Fast-growing fintech is shifting consumer behaviour towards the digital banking channel and forcing commercial banks to pare down their brick-and-mortar branch networks, says a Bank of Thailand senior official.

“Since the beginning of this year, most commercial banks have shuttered more branches than they have opened to adapt to the change in customer behaviour and lifestyle,” said Somboon Chitphentom, the central bank’s assistant governor for the financial institutions policy group.

According to central bank data, the number of physical branches of commercial banks in Thailand fell to 6,980 at the end of February from 7,016 at the end of last year.

Kasikornbank (KBank), the country’s fourth-largest lender by assets, saw the biggest drop. The number of KBank branches fell by 17 to 1,093, followed by Thanachart Bank, the country’s fifth-largest bank, which saw a decline of 16 to 577.

Krungthai Bank and TMB Bank each reduced their branches by three, while Standard Chartered Bank Thai dropped two and Siam Commercial Bank (SCB) axed one.

Some commercial banks opened new branches. Bangkok Bank added three, while Bank of Ayudhaya, ICBC Thai and Thai Credit Retail Bank gained one each.

Mr Somboon said technologies, including a cost-efficient approach in management, have been increasingly adopted by commercial banks’ financial services.

“As a result, these banks have adapted by reconsidering their branch size, relocating existing branches and adding more service channels such as mobile or internet,” he said.

Additions of electronic machines allow customers to make transactions with fewer costs and more convenience because they need not visit a branch, Mr Somboon said.

Commercial banks are also reducing their branch size and making them easier to access, he said, opening more branches in dense markets such as department stores and community malls.

“Branch staff will be trained and rotated within their organisations to gain experience and be able to operate in various roles,” Mr Somboon said.

SCB is the manifest example of physical branch transformation after revamping branches into three models to serve different customer segments: mass market, affluent and small and mediumsized enterprises.

Some 50-60 SCB branches are being renovated over the next two years. More self-service machines are scheduled to be installed as digital banking becomes more popular.

Disruptive digital technology is changing not only branches, but also tellers. They are being converted into relationship bankers who can offer a broad array of financial products and services that are beyond the simple current and deposit accounts.