Electronic banking hasbeen growing quickly around the world over the past severaldecades, in both developed and developing countries. And, in recentyears, it has seen major take-offs in some emerging markets,quickly becoming the dominant delivery channel used byconsumers.
According to a Bangkok Post article earlier today, electronicbanking transactions (ATM plus online) at most large Thai bankshave risen to around 80-85% of total financial transactions, equalto international levels.
It might be surprising to some that banks in developing countriesmight aggressively migrate to electronic banking, while their laborcosts are significantly lower than those in developed countriessuch as the US and UK. However, even with the lower labor costs,banks in developing countries are still struggling to meetconsumer’s quickly increasing demand for banking services.
Limited physical space in bank branches appears to be oftenoverwhelmed by the number of customers requiring service. It is notuncommon for a consumer to wait in line for at least 30 minutesbefore they can come to the window for simple transaction such as adeposit, and the wait time quickly gets to maddening levels duringpeak time in peak seasons. And, that does not include the time andtrouble getting to and back from the bank locations. So for some ofthe consumers, avoiding a trip to the bank is something they wouldbe happy to pay for if asked.
It certainly helps, in a sense, that banking service penetration indeveloping markets is still relatively low, and many of those witha bank account are younger, better educated, and richer consumers.And it is not just the younger people that use e-banking. Accordingto the article: “The focus is now on customers 20-30 years oldusing these devices, but senior citizens also use internet bankingfrom smartphones as well due to the convenience it provides,” saida local bank official.
To accommodate and further encourage consumer demand for e-banking(especially online and mobile banking) Thai banks are also offeringlower bank transfer fees for online and mobile transactions thanATM transactions. Some banks such as KTB, the country’ssecond-largest bank in terms of asset size, now offers applicationsfor online banking services on iPhones and iPads.
The trend of consumer preference of online-banking over traditionalcounter services might be a way for newer entrants to bettercompete with incumbent players with much bigger location networks.For example, though foreign banks have been allowed to compete withlocal banks in the China market recently, they have struggled toincrease their marginal market share due mainly to a lack of retailbanking channels. And there is no hope for them to compete withmajor local banks with wide-spreading national banks in theforeseeable future. So going “branchless” might be the only way outin those highly competitive markets for foreign banks. Similarsituations might exist in other markets as well.
Read original story here: http://www.bangkokpost.com/business/economics/228936/money-on-the-move
