Excellencies,
Distinguished guests,
Ladies and gentlemen,
Swasdee krub,
First of all, I would like to take this opportunity to thank the leaders of the
Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) and
the organizers for the opportunity to speak at this very important forum.
I believe the ACMECS and the Bank of Thailand share a common goal, a goal of
promoting economic and financial developments to ensure sustainable well-being
of our people. Certainly, our region has immense potential from growth
perspectives, with abundant natural resources to population primed to embrace
new economic opportunities. Just as important is the development of our
financial systems to unlock the potential of our people and support growing
intraregional trade and investment. A well-functioning financial system is a critical
foundation for us to achieve our common goal.
To establish suitable financial environment, financial development policies
in the ACMECS region must focus on three key words of productivity, immunity,
and inclusivity. Productive financial sector enables efficient resource allocation
critical for raising the productivity of the economy as a whole. Maintaining a
resilient financial system allows for smooth functioning of the financial market,
improves risk management, and keeps systemic risk at bay. And, an inclusive
financial system ensures that the benefits from economic growth can be shared
fairly across the whole society, fostering stable social and economic environment
conducive for sustainable growth.
Ladies and gentlemen,
Policymakers must take on the challenges of developing our financial
systems with a great sense of urgency. Thus far we have seen integration of the
ACMECS economies on various fronts-through economic connectivity in trade
and investment and through people-to-people connectivity in migration of labor
and tourism. Yet, financial connectivity in our region lags behind developments in
other sectors and should be prioritized so that it does not hinder further
economic integration.
Fortunately, today we have the opportunity to leapfrog development in
our financial systems and regional financial connectivity because of rapid
advancement in technology. Not at any point in history have powerful
technologies been so affordable and accessible. For instance, the costs of
industrial robots and smartphones are now 30 times and 50 times cheaper than
those with similar features just ten years ago. Moreover, there are a diverse and
extensive number of software applications as well as know-hows available to
satisfy businesses and consumers; many of which can be accessed online and
obtained free-of-charge. All of these have allowed for greater adoption of mobile
devices as well as emergence of new financial technology platforms.
Looking around our region, there are many exciting developments taking
place that can enhance our financial systems and strengthen their productivity,
inclusivity, and immunity. For instance:
a. Emergence of faster-pay infrastructures and mobile financial services
within our region like the FAST payment and Wing in Cambodia, Wave
Money in Myanmar, or PromptPay here in Thailand have helped reduce
the cost of financial services for financial institutions and the public at
large. For Thailand, the PromptPay infrastructure has helped cut down
cost of retail fund transfer so much so that most financial institutions
now offer online transfers free-of-charge. These infrastructures are
critical foundations for which new add-on services can be built upon to
support growing e-commerce activities in our region.
b. In addition, we have seen firms experimenting with using alternative
online data and machine learning for credit scoring model. A credit
scoring model created from data of payment receipts should help
financial institutions better assess credit risks while ensure that
borrowers, especially small enterprises, gain funding at a fair price.
c. Another initiative undergoing testing here in Thailand is the use of
blockchain for cross-border financial transactions. This technology
should make cross-border payments more secure, more efficient, and
more affordable to businesses and a larger population in the near
future.
Ladies and gentlemen,
All of these are just some examples of the developments happening in our
financial landscape. What is more important is that we must recognize that
financial technology is a powerful tool for us to improve on productivity,
immunity, and inclusivity. Efficiency in financial services is enhanced, as new
payment ecosystem can enable more efficient transfer of funds and significantly
lower transactions costs for consumers. It also allows financial institutions to
scale-down on the high cost brick-and-mortar model and shift to less costly and
more efficient digital services. Meanwhile, resilience is strengthened when financial
institutions use payment or online data to better analyze and forecast credit
demand and credit risks. Additionally, advancement of technology like biometrics
and blockchains can help safeguard financial information and reduce the number
and magnitude of fraudulent activities. Finally, financial inclusion is improved as
digitization of financial services and platforms allow access through online or
smartphone, which can benefit consumers both in cities and in remote areas.
Moreover, the ever-expanding universe of new financial services means there are
a number of choices and solutions available to fulfill different needs, especially
those currently underserved.
Ladies and gentlemen,
As financial technology can help unlock massive potential of our people, it
is now up to us, the leaders and policymakers, to play an important role of "the
catalysts," to pave way for greater adoption of financial technology. On this point,
I believe there are at least four key areas that catalysts like us must act together:
First, we must encourage common standards of technologies or platforms
to avoid market fragmentation. Having common standards would improve
competition and innovation, as they allow easy access for all players, especially
small innovative players. A good example of the common standards is the
Standardized QR Code for electronic payment here in Thailand, where banks and
non-banks can apply the common standard to their applications. The result of
which was the remarkable speed of adoption of QR code for payment; in less
than one year since its launch, QR code payment is accepted by over 2 million
merchants all over Thailand. More importantly, financial institutions within the
region have already taken advantage of the interoperability of the QR code by
applying the common standard in their applications for cross-border transactions
with their partners. We are certain there will be many similar partnerships in the
future.
Second, we must establish basic and open digital financial infrastructure so
that further innovation can emerge to serve a wider range of consumers. Open
infrastructure enables service providers to build value-added services on top at
low cost. For instance, e-payment services were created based on our PromptPay
infrastructure, such as bill payment and request-to-pay features. These, in turn,
have helped facilitate e-payments for merchants and consumers and improved
the overall e-commerce business landscape. Even charitable organizations are
able to take advantage of the open-platform with e-donation. Meanwhile, the
adoption of electronic payment through a common infrastructure can further
create the data essential for information-based lending or for banks to improve on
their risk models.
Third, we must facilitate greater convergence of rules and regulations within
our region to make sure that existing regulations do not impede advancement of
financial connectivity. Efforts are being made in this area. ASEAN central banks are
working on initiatives under the ASEAN Banking Integration Framework to make
banking regulations more cohesive, aiming at achieving greater consistency with
international best practice.
Meanwhile, aiming to enhance connectivity, since June of last year the
Bank of Thailand has undertaken Foreign Exchange Regulation Reform to relax
rules on foreign exchange controls and make foreign exchange-related
transactions more digital, flexible, and accessible. To give a few examples, foreign
exchange transaction forms were completely abolished, which should reduce
document-related burden for the private sector; the working scopes of money
changers and money transfer agents are expanded so that they can better
facilitate retail cross-border transactions; and commercial banks can now provide
direct Thai Baht loan to non-resident companies established in the Greater
Mekong Sub-region (GMS). These efforts will improve connectivity as well as ease
of doing business in our region.
Fourth, we must foster greater cooperation on cyber security to ensure
resilience of our financial systems. Arising with new forms of financial technology
is our increased reliance on data transmitting devices and data usage; these come
with greater risks of cyber threat. And, globally the number of threat incidents
have been rising. Cyber security should be one, if not, the top priority for catalysts
like us going forward.
Ladies and gentlemen,
The Bank of Thailand looks forward to working closely with other central
banks, government agencies and, very importantly, private sector participants in
the ACMECS region to support adoption of financial technology to promote
economic and financial developments. With the affordability and availability of
many powerful financial technologies, there is no better time for us to improve on
our productivity, immunity, and inclusivity so that we can ensure sustainable
improvement in the standard of living our people. I am certain the contributions
from the ACMECS leaders present here today will go a long way towards fulfilling
our common goal. Thank you very much for your kind attention.