Bank agents in the backcountry
Regulations will allow better rural access to formal financial services, write Somruedi Banchongduang and Pitsinee Jitpleecheep
With the amended banking agent regulations taking effect next month, consumers in remote areas are likely to be able to conduct banking transactions around the clock at convenience stores. The banking agent rules allow financial institutions to appoint agents to offer financial transaction services such as money deposits, transfers, withdrawals and payment.
Loan distribution, however, is not permitted through banking agents.
Banking agents, under the amended regulations by the Bank of Thailand, will be permitted to provide cash withdrawals of up to 5,000 baht per transaction and 20,000 baht per day per customer.
The expanded scope of banking agents comes as the closure of banks’ physical branches becomes more pervasive amid the rising usage of digital channels.
Commercial banks, specialised financial institutions and Thailand Post have begun offering the full range of banking agent services.
Counter Service (a unit of CP All, which operates 7-Eleven convenience stores), AirPay and the online top-up machines Boonterm and Termsabai are also banking agents, but their services are largely used for bill payment.
Utain Prachumchon, a 50-year-old teacher in Nakhon Pathom province, said the service should improve convenience for customers, but she thinks the 5,000-baht maximum for transactions is too low.
“Customers may not be as excited as they should be, because banking agents do not provide complicated services,” Mr Utain said. “We can withdraw and deposit money at all ATMs, which have already been installed at many convenience store chains across the country.”
Many people also do their financial transactions via mobile banking, he said.
CONSUMER BENEFITS
Petrol stations are the highest-potential banking agents in rural areas, as they can be reached within the shortest average radius — 5.4 kilometres — from villages. This is followed by post offices at 7.6km, convenience stores at 7.8km and telecommunications company networks along with cash top-up machines at 13.6 km, according to the Bank of Thailand’s Puey Ungphakorn Institute for Economic Research (PIER).
Jutharat Thongsung, 30, an employee at a restaurant in Petchabun province, said she receives her salary through mobile banking transfers. She normally withdraws cash from ATMs located at bank branches or convenience stores.
Within a 3km radius of her home, there are three 7-Elevens, one bank branch and about 10 ATMs. Only one ATM is located at the bank branch, while there are two or three ATMs at the convenience stores.
Ms Jutharat typically withdraws money at ATMs located in front of 7-Eleven stores, rather than at a bank branch. She always buys consumer goods at convenience stores, which makes the ATMs all the more convenient for her.
She said she transfers money to her parents in Trang province on a monthly basis and her mother withdraws cash at ATMs located at 7-Eleven stores, as there are no bank branches around her parents’ home.
Ms Jutharat said that if she were able to withdraw money through 7-Eleven’s Counter Service, she could benefit from this additional option, since she always pay bills through Counter Service anyway.
However, she said that if there is a fee on money withdrawals through Counter Service, she will ignore this new channel and continue using ATMs as she has always done.
According to PIER, banking agents will increase consumer access to financial services by 34%, with more than 200,000 new agents expected to set up shop nationwide.
Some 55% of villages lack access to formal financial services within a radius of 5km, while 30.6% have no access to financial services in any form within a radius of 5km.
Given that 34% of villages have the potential to host banking agents, should all 200,000 potential banking agents manifest, only 21% of villages nationwide would be left unbanked.
Thanachai Srisangrat, 39, is a garage owner in Nakhon Sri Thammarat province.
He said his garage is located in his home, not far from other people in his community. He receives cash from his small business, then saves it for a while before making a deposit at a bank branch that is 20km away from his home.
“If 7-Eleven can offer deposit services, I would have more options for financial transactions,” Mr Thanachai said. “If there is a fee to use the service, I would think twice. But if the fee is at an acceptable rate and saves travelling costs, then it won’t matter.”
Mr Thanachai normally withdraws cash from ATMs installed in front of two 7-Eleven stores roughly 6km from his home. Apart from money withdrawals, he uses Counter Service for mobile cash top-ups. Sometimes he also uses top-up machines installed in the village.
FIERCER COMPETITION
Piyawan Piyapong, senior vice-president for new service development at Big C Supercenter, said the company is unlikely to be affected if 7-Eleven becomes a banking agent, nearly all convenience stores, supermarkets and hypermarkets have ATMs installed in front.
These ATMs are more than enough to offer services to customers to conduct financial transactions, she said.
According to Ms Piyawan, Big C plans to increase development of financial services this year to give customers more convenience when conducting financial transactions, both in-store and on digital platforms.
The company is in the process of requesting approval from the Bank of Thailand to provide e-money service at its stores across the country, so that customers can conduct financial transactions anywhere, at any time.
This is to reduce the use of cash at Big C stores. For example, the company is considering launching an electronic gift card that
can be refilled with money at any time. An e-wallet is also in the pipeline.
Ms Piyawan said Big C will join with banks to provide a quick response (QR) code payment in this year’s second half as a way to increase customer satisfaction.
Hideki Takechi, senior general manager of operations and marketing at Saha Lawson Co Ltd, the local operator of Lawson 108 convenience stores, said Lawson 108 expects to be slightly affected by banking agent services.
“We are confident that our products are distinctive from those of other convenience store chains, and that customers are still interested in products offered at Lawson 108 stores,” he said.
But the company will have to improve its service to provide customers with the utmost convenience and keep up with competitors, he said.
At the moment, Lawson 108 is the only convenience store in Thailand that accepts credit card payments without a minimum purchase. Moreover, 76 out of 100 Lawson 108 stores nationwide are equipped with ATM machines.
Salinla Seehaphan, Tesco Lotus’s corporate affairs director, said the company welcomes the central’s bank move to amend banking agent regulations, as it will increase consumer access to financial services.
Tesco Lotus offers several types of retail
services to customers at nearly 2,000 stores nationwide, including bill collection for 230 companies, booking and purchase of event and transport tickets, and parcel service.
READY FOR THE JOB
Thailand Post is opening doors for all commercial banks to possibly appoint the postal service as banking agent, but this new avenue will not be the company’s main source of revenue.
Samorn Terdthampiboon, president of Thailand Post, said the postal service has provided a channel for United Overseas Bank (UOB) since 2016, but it focuses on collecting deposits for UOB bank accounts.
There are 1,300 Thailand Post offices nationwide, along with 4,000 licensed post offices across the country.
“We [Thailand Post] see the banking agent role as a value-added service to facilitate consumers, rather than a targeted
revenue stream for Thailand Post,” Mrs Samorn said.
She said discussions have taken place with banks on business collaboration, as Thailand Post is open to working with all banks for mutual benefit.
“Banking agent is not new for us, and the company is qualified to do [the job],” she said.
Thailand Post has enacted a digital transformation for its postal and delivery businesses, to be entirely complete by the end of this year.
The plan is a bid to create sustainable growth and compete with the influx of nofrills messenger service apps and international parcel delivery service providers.
Michael Araneta, associate vice-president for IDC Financial Insights at IDC, said banks will lose the opportunity to own the relationship with customers from beginning to end, but they will be able to deepen the relationship through banking products that can be sold faster.
Banking agents will also fast-track the closure of bank branches but accelerate the reduction of costs for product sales, Mr Araneta said.
Banking agents are part of a bigger trend called “open banking”. Banking agents have been recently allowed by several regulators in the region to enable key business processes and outsource customer interactions to third parties.
Agent banking is already a common practice in many European countries, and Indonesia and the Philippines have also started to introduce their own iterations.
Mr Araneta said e-wallet providers have to find more ways for customers to use their wallets as seamlessly as possible.
Customers may not be as excited as they should be. UTAIN PRACHUMCHON Teacher