FinTech, Financial Literacy, and Consumer Saving and Borrowing:

The Case of Thailand

The Bank of Thailand

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian
Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no
responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.
 Overall financial behavior:
High financial access but also high self-exclusion
Overview of financial access (eleven financial services)

 Savings: the access rate was at 96.9%,

with the usage rate at 80% and the
voluntary self-exclusion was 16.9%
 Borrowing: the access rate was at 95.8%,
with the usage rate at 35.8% and the
voluntary self-exclusion was 60%
 Self-exclusion was at 53.3 % for payments
and 31.4 % for transfers

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 Financial knowledge remains a key challenge
Average score of financial literacy in Thailand compared with the average score of
the participating countries in the OECD survey

80 66  Financial attitude: the average score is remarkably higher

62.9 65.7 than the average score of all participating countries
60
60
 Financial behavior: Thai households were in line with the
40 61 76
48.6 62.2 average score of the participating countries
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 Financial knowledge: remains a major weakness since
0 they scored averagely at 48.6 percent, which is lower than
Financial Financial Financial Financial
literacy knowledge behavior attitude the average score from the participating countries at 65.7
Thailand all countries average percent

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 Thailand FinTech Landscape
2015 2018

According to the World Bank’s analysis of financial technology (Fintech), Thailand is

regarded as an ASEAN country with rapid Fintech development. The number of Fintech
companies rose from 42 in 2015 to 169 in 2018.
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 Feedback loop among FinTech, and
financial knowledge, behavior, and attitude

FinTech

Financial knowledge Financial

behaviour and attitude

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 The BOT’s FinTech Strategy
1. The development of financial infrastructures
 PromptPay
 QR code standard
 National Digital ID

2. Supportive laws and regulations

 The new Payment Act
 Regulatory Sandbox

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 The BOT’s FinTech Strategy
PromptPay
Money Transfer

 The introduction of PromptPay in 2018 led to fierce price competition among the banks
 Within weeks, most banks eliminated retail fund transfer fees for the customers
 Since its launch, the number of IDs linked to bank account via Promptpay rose from
28.3 million IDs in May 2017 to 50 million IDs in May 2019
 Number of electronic payment transactions increased from only 440 million transactions at
the end 2017 to almost 700 million transactions in May 2019
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 The BOT’s FinTech Strategy
QR Code Standard: Payment interoperability

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 The BOT’s FinTech Strategy
QR Code Standard

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 The BOT’s FinTech Strategy
ASEAN payment connectivity
through PromptPay and QR code standard

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 The BOT’s FinTech Strategy
Account opening via e-KYC through National Digital ID
Existing procedure for
account opening National
Account opening ID card
Bank officer verifies customer by eyeballing

or
Going forward
National Passport
ID card
Account opening or

National
ID card
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 The BOT’s FinTech Strategy
National Digital ID (NDID) will reduce credit process to 15 mins, 24/7
1 2 3 4
Load mobile Take selfie to Customer data will
authenticate, fill loan e-KYC verify flow through NDID
banking
application form, through NDID linked with National
application give consent Credit Bureau (NCB)

5 6 7
Customer provide
Loan disbursement
additional
Credit approval through bank
information (e.g. pay
account
slip) by taking photo

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 The BOT’s FinTech Strategy
Regulatory Sandbox
Standardized QR Code Biometrics Blockchain Machine Learning Standardized API

 PromptPay  Facial Recognition  Letter of Guarantee  Alternative Credit Scoring  Standardized API to share
Exited: 11 Testing: 10 Testing: 15  Info. Based Lending data between bank and
Testing: 1 FinTech firm
 Credit/Debit Card  Iris Recognition  Cross-Boarder Payments Testing: 1
Exited: 4 Testing: 10 Testing: 3
Testing: 4

Data as of Febaury 2019

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 Effect of FinTech on financial behavior: Payment
Number of Mobile Banking Application Users

10 mill 10 mill 8 mill 4 mill 2.5 mill 2.5 mill

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 Effect of FinTech on financial behavior: Payment
Proportions of electronic payment methods

 The volume of e-payment per person has doubled over the past 5 years, from 31
transactions/person/year in 2013 to 63 transactions/person/year in 2017
 The share of internet/mobile fund transfers rose from 11% to 36% during the same period

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 Effect of FinTech on financial behavior: Payment
Number of payment instrument per adult population

 The number of mobile banking accounts grew from merely 0.02 account per adult in 2013 to
0.59 account per adult in 2017
 E-money volume and value rose on average by 17.4% and 27.4% per year, respectively
 The greater number reflect that people are becoming more familiar with and increasingly adopting e-payment

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 Effect of FinTech on financial behavior: Payment
PromptPay transactions by date of month and hour

Source: Lamsam et al. (2018)

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 Effect of FinTech on financial behavior:
Savings and borrowings
Saving Borrowing

 TMB launched “Me by TMB”, the digital deposit
account offering high interest rates
 Deposit interest rate: 1.7% on digital channel
compared to 0.5% on non-digital channel
 SCB launched "Clickcash”, end-to-end digital lending
platform for SMEs on Lazada e-marketplace
 The platform leverages AI and machine learning technology
 It takes only 15 minutes for loan approval with an interest
rate as low as 1.59% per month
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 The BOT’s promotion of financial literacy
“ Fin-d we can do! ” project
 The objective was to raise financial awareness and promote good financial discipline among
gen-Y, specifically vocational students and first jobbers
 The project used social platforms as a tool to engage peer-to-peer interaction and offered
friendly activities to motivate desirable behaviors
 Result: saving-to-income ratio of the participated vocational students was higher than those
who did not join

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 The BOT’s promotion of financial literacy
“ Fin-d happy life! ” project
 The project was designed to put greater focus on cultivating prudent financial behaviors and
foster financial immunity and skills
 Result: Loan repayment per month of the participants decreased by 12 percent whereas the
monthly saving increased by 3 percent

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 The BOT’s promotion of financial literacy
 The Bank of Thailand has produced infographic materials to provide knowledge of
digital financial risk control, enabling the public to use digital financial products and
services in a safe and secured manner

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 Experience and lessons learned
1. Self-assessment and benchmarking to set aspired outcome
2. Strategy and coordination are key to the success of policies
3. Building financial literacy is a nurturing process, and needs to be
done along with FinTech policies
4. Understanding customers’ pain points and creating trust are crucial
5. Nudging behavior through right incentives
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Thank you