driving innovation for financial inclusion in the mekong ... · 1 driving innovation for financial...

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Driving Innovation

for Financial

Inclusion

in the Mekong

Subregion

Teeranun Srihong

President of KASIKORNBANK &

Chairman of KASIKORN Business-Technology Group

3 October 2016

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“RISING ASIA”

The Greater Mekong Subregion is the

new frontier of South East Asian

economic growth.

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Thailand : 68 Millions

CLMVT Population Vietnam : 94 Millions Myanmar : 56 Millions

Laos : 7 Millions Cambodia : 16 Millions

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Greater Mekong subregion Population

Population : 240 Millions

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However, Lack of financial inclusion

would limit income distribution and hence sustainable growth for GMS

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Copyright © 2016 Accenture. All rights reserved.

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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

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Financial Inclusion Overview in EAP and Selected Economies -2012 (% + 15 Age)

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Financial inclusion create the real

value and generic growth for the

World economic.

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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

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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”

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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

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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

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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

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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

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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


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

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New innovations enabled by technology are reducing risks,

improving efficiencies and service in the microfinance space


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

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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

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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

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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

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Banks need to adjust themselves

from their traditional business models

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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.

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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

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KBank has been a leader in creating meaningful innovation to our market

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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

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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.

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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.

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KBTG’s strengths and core capabilities

Machine Learning

Blockchain

Advanced

Mobile Programming

API

World Class Design

Internet of Things

Cybersecurity e KYC &

Authentication

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KBTG is created to be a platform

for innovation and regional collaboration

driving innovation for financial inclusion in the mekong ... · 1 driving innovation for financial...

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