Siam Commercial Bank Pcl, Thailand’s largest commercial bank in terms of total assets, is reportedly preparing to spin off its Fintech branches as the institution attempts to monetize its efforts into tech investment, at a time when its earnings from traditional lending have been relatively low.
Earlier this week, SCB announced the launch of Thailand’s first Robo-Advisor using AI (Artificial Intelligence) to manage investment portfolios. The Robo-Advisor will help investors select top-of-the-league funds and manage investment portfolios correlated with prevailing market conditions and risk appetites. According to SCB, the service comes with an automatic investment portfolio adjustment feature to ensure the right mix of securities in the portfolio using a 24/7 analytic system. Users may start using the service this just a 3,000-baht (about USD $100) initial investment. The bank predicts it will add 100,000 new accounts through this new digital platform by 2020.
“In this digital platform era, we believe that all customers should have access to professional investment portfolio management from both specialists and AI. The Robo-Advisor has been designed to eliminate the limitations of portfolio investment service, such as the requirement to invest a large amount in order to get advisory or portfolio management services,” said SCB Securities CEO Kampol Jantavibool.
As Thailand’s third-largest lender by total assets, Siam Commercial Bank’s management believes one of its Fintech divisions could become a “unicorn,” or a private firm with a market cap of at least $1 billion. This, according to Orapong Thien-Ngern, co-president of Siam Commercial, who recently noted:
“We will spin off some of them to allow them more freedom and independence, including raising their own funds from other investors.”
Thien-Ngern didn’t mention which Fintech branches would be spinning off, however, the institution’s primary tech division includes Digital Ventures Co., which main invests in new ventures, and National ITMX Co., a payments solutions provider.
“Thai banking like most other countries is a sunsetting industry, as existing lenders and new players are competing for limited pools of customers. Venture capital and technology investments will be the key survival strategies for SCB in attracting new customers and boosting earnings.”
Siam’s management says the bank will need substantial investments in areas including artificial intelligence (AI), in order to enhance its data and transaction processing capabilities. The exact amount of capital required is currently under consideration and will have to be approved by Siam’s board of directors.
Siam Commercial and other domestic banks have been increasingly investing in financial technology in order to remain competitive as Fintech firms continue to introduce innovative solutions. Siam’s return on equity has reportedly dropped from around 20% in 2014 to only 11% during Q3 2019.
Orapong is also the CEO of Digital Ventures, which has budgeted $100 million for investing in Fintech-related initiatives. The division has made strategic investments in various startups including Pagaya, an AI-enhanced asset management firm, and San Francisco-based Fintech, Ripple Labs.
CEO at Siam Commercial, Arthid Nanthawithaya, stated (earlier this year) that he intends to transform the bank into a tech firm, and the company has completed a long-term capital spending program, which is reportedly worth around $1.3 billion and mainly focuses on artificial intelligence (AI), online platforms and various other technologies.