How can banks still thrive as fintech meets 5G?

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Digital banking in Thailand has taken a big leap forward in recent years. Approximately 20,000 urban banked respondents in 15 Asia-Pacific markets, the share of Thai customers using digital banking tools at least once monthly jumped from 36 percent in 2017 to 90 percent in 2021. One of Southeast Asia’s most advanced financial markets is Thailand. Leading banks have recently taken things a step further by streamlining branch operations, introducing a wide variety of mobile payment options, and even establishing virtual banks. Consumers have embraced these developments, especially as they’ve migrated to mobile QR payments for in-person purchases and sought out remote business transactions. But if banks want to succeed, they must take further action. Deep learning and other data analytics advancements are being used by both huge e-commerce platforms and fintech startups to meet clients’ needs precisely and specifically. 

The emergence of “super apps” that provide several services through a single interface forces banks to change. Traditional banks in Thailand need to diversify their financial offerings through their own applications and cooperative partner networks. Banks can increase the appeal of their platform and improve consumer interactions by collaborating with various groups. By extending service coverage to remote areas and fusing offline and online consumer experiences, the rollout of 5G will increase prospects for customer interaction. The main benefits of 5G, such as its quick speed and low latency, would enable AI-driven entities to quickly provide highly customized messages and promotions.

In addition to giving banks ways to reach more clients, 5G technology also gives virtual banks, fintechs, and e-commerce platforms the ability to compete with established banking institutions. Entities strong in AI and machine learning could have a big advantage with 5G. According to McKinsey’s analysis, adoption of fintech tools and e-wallets will significantly increase, from 11% in 2017 to 51% in 2021. Although 53% of Thai consumers are hesitant to transfer to virtual banks due to their great loyalty to traditional banks, shifting technical landscapes and alluring products from virtual banks driven by AI may change this attitude.

The future roles of traditional banks must be deliberately defined. They may choose to position themselves as comprehensive omnichannel banks, create their own digital ecosystems, or work with other ecosystems. Others may choose to help fintechs by providing banking-as-a-service, allowing fintechs to handle client interactions, while some may decide to take the lead in integrated financial services.

Analysis

What I found what most interesting was how traditional Thai banks must make important strategic choices. They can develop into fully functional digital entities, create new digital ecosystems, or integrate into already existing ones. They can also provide backend services to financial firms. The digital banking scene will be completely changed by the introduction of 5G technology. Real-time transactions and richer client interactions will be made possible by faster and more dependable connectivity, which will improve online banking experiences. Although most Thai consumers today show great allegiance to traditional banking institutions and are not considering switching to virtual banks, this may change in the future. Virtual banks may see a shift in customer loyalty as they provide better user experiences and more affordable alternatives.


Seip, Harry. “How Can Banks Still Thrive as Fintech Meets 5G?” McKinsey & Company, www.mckinsey.com/featured-insights/future-of-asia/countries-and-regions/southeast-asia/southeast-asia-perspectives/how-can-banks-still-thrive-as-fintech-meets-5g. Accessed 31 Aug. 2023.