Fintech is paying off for SCB

Written by Kapronasia || September 11 2023

Thailand’s Siam Commercial Bank (SCB) is among the most fintech-forward commercial banks in Asia. What makes SCB's digital finance strategy successful is that it leverages all the advantages of incumbency while using technology to develop products for the digital age.

SCB had a solid second quarter, recording net profit of 11.9 billion baht ($332.6 million), the highest among any financial group in Thailand and up 18.1% year-on-year from strong top-line growth, effective cost control and prudent risk management. For the first half of 2023, net profit increased 13.8% on an annual basis to 22.9 billion baht (US$640 million).

The solid performance this year follows an outstanding 2022, during which its earnings per share of 15.95 baht was the highest in Thailand’s commercial banking system, and the bank’s overall net profit was 53.63 billion baht, an increase of almost 52% over 2021. For that, Siam Commercial Bank (SCB) was named Bank of the Year 2023 by Money and Banking magazine.

In addition to brisk growth in net interest income, SCB has been buoyed by profits from the sale of subsidiaries and business transfers in line with the group's SCBX restructuring plan. The bank has lofty digitalization ambitions. It aims to become the leading digital bank in Thailand for wealth management. It also intends to eventually conduct 90% of all transactions through digital channels.

In addition to what seems to be a sound overall digitalization strategy, SCB made a pivotal decision last year when it scrapped a planned acquisition of the Thai crypto exchange Bitkub. An established commercial bank like SCB does not need to make a big risky bet on crypto when there are other, far less treacherous opportunities in digital finance. 

For instance, SCB last year announced a US$100 million strategic investment in the fast growing Indonesian fintech Akulaku. The company’s digital credit business recorded US$2.2 billion in loan disbursements to over 6 million users in 2021, twice as much as in 2020. Akaluku, whose other backers include Ant Group and Japan's MUFG, also has a digital banking arm called Bank Neo Commerce. 

While Akulaku will give SCB a foothold in Indonesia, it is also aiming to partner with fintech players at home. For instance, in June, SCB inked a strategic partnership in June with the South Korean digibanking sensation Kakao that will see the ascendant digital lender launch in Thailand – its first international market. We expect SCB’s knowledge of the Thai market and vast resources there will help Kakao Bank to get off to a fast start once receiving the green light from the Bank of Thailand.

Finally, while it is very early days for a digital baht, SCB is playing a key role in the digital baht retail pilot, working with the Bank of Ayudhya (Krungsri) and 2C2P Thailand to develop a CBDC application. The pilot is currently limited to 10,000 individuals, which includes both users and merchants across all the payment providers, with around 3,000 employees from the SCB group. If and when Thailand goes forward with a digital baht, we can expect SCB to be one of the leading players developing related infrastructure and products among the kingdom’s commercial banks.