Opening Remarks
BOT's Policy Direction on FinTech Development
Bangkok FinTech Fair 2018: SME and Consumer Financial Solutions
Dr. Veerathai Santiprabhob
Governor of the Bank of Thailand
Monday 19 March 2018
Bank of Thailand Learning Center
Distinguished guests
Ladies and gentlemen
Swasdee krub,
A very good morning to you all. Welcome to the inaugural Bangkok FinTech
Fair and welcome to the Bank of Thailand Learning Center. This Learning
Center was first opened to the public in December of last year.
It is not only Bangkok's newest learning center and public library but also
an open space for individuals and entrepreneurs to collaborate and
exchange ideas. So, it is fitting that our very first Bangkok FinTech Fair is
held at this venue.
Over the next two days, we will be joined by some of the top minds from
Thailand's fintech and financial industry as well as regional and global
leaders in financial innovation. The main discussion panels will present
various issues surrounding fintech ecosystem with the focus on SME
financial solutions, retail payments, and technology infrastructure; the
cybersecurity room, which is in the library, will underscore the importance
of cyber-awareness and highlight key security issues, ranging from emerging
threats to defensive strategies; and the technology talk room and various
presentation booths all over the venue will showcase some of the latest
technologies and initiatives Thailand's fintech and financial industries are
working on.
Ladies and gentlemen,
On the program, this morning I am supposed to talk about Bank of
Thailand's policy direction on fintech development. Before I do so, I would
like to take a step back and focus on three key words, which I believe are
imperative for formulating financial sector policy for Thailand and the
region as a whole. These three key words are productivity, immunity, and
inclusivity.
First, an emphasis must be placed on productivity as uplifting
productivity is a critical requirement for long term growth of an economy.
For one, at current stage, many countries in our region are facing structural
transformation of aging workforce. Shrinking workforce can dampen long
term growth prospect. We must become more productive in order to
increase output level and improve standard of living of our people.
Productivity is also needed to boost competitiveness of businesses as
expanding global trade network and emergence of large e-business platforms have
introduced new competitors into our business landscape. Moreover, roles of
banks could be challenged as sharing financial platforms gain prominence
in the modern economy, and new fintech firms offer financial products
unbundled from the long standing value chain of banking. Without
meaningful adjustment-that is improving productivity, long term growth
potential of an economy could deteriorate.
Second, immunity becomes imperative in the current global economic
landscape. We are living in the time of changes, where outcomes can be
abrupt, unpredictable, and volatile. Amidst the fallout from the Global
Financial Crisis of 2008, where unconventional monetary policies flushed
global financial market with excess liquidity, we are now entering the cycle
where major central banks have started normalizing their monetary policies.
Along the normalization path, one should expect to see market corrections
and volatile asset prices. On top of this, rising US trade protectionism has
raised concerns over global trade, investment, and production, and further
measures could be retaliated. Global warming and geopolitical risks also
increase in many regions of the world. Besides, rapidly changing technology
could be disruptive for incumbents in many industries and also bring new
forms of risks, ranging from cyber threats to strategic risks of existing
business models. All these uncertainties necessitate that building sufficient
immunity becomes a key consideration in any financial sector policy.
Third is the notion of inclusivity. We need to understand that any
financial sector policy without consideration for inclusivity cannot be
sustained. This is especially important for Thailand and many countries in
our region where income and wealth inequality is one of the most pressing
social and economic issues. Any policy or action that does not pay
attention to the issue of inequality can threaten long-term social and
economic stability, as those with higher capital can more easily reap
benefits from economic growth and new technology, leaving those without
access to new technology or know-how further behind. Eventually,
inequality in income, wealth, and opportunity can raise social polarization,
resulting in political gridlocks as seen in many countries.
Ultimately, policies that make improvements in all of these three key
imperatives can uplift the real economy and standard of living of people
as a whole. Productive financial sector allows for more efficient resource
allocation among different segments of the economy. Maintaining a
resilience financial system allows for smooth functioning of the financial
markets and keeps systemic risks at bay. And, an inclusive financial system
ensures that 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,
Amidst the rapidly changing technology, fintech can be and must be an
instrumental driver of financial sector policy to fulfill the three key
imperatives of productivity, immunity, and inclusivity.
On productivity front, fintech can enhance efficiency in financial
services. Rise of new electronic payment ecosystem can enable more
efficient transfer of funds and significantly lower transaction costs for
customers. Adoption of fintech platforms will allow banks to scale down
on the high cost brick-and-mortar delivery model and shift to less costly
and more efficient digital services. Lending process can be made much
more efficient through usage of transactional data from e-commerce and
payment platforms, and banks' business model could change from
collateral-based lending to information-based lending. Meanwhile,
blockchain has advanced technology behind many aspects of the financial
services, especially back-office operations and fund transfers. All of these
help lower cost of financial transactions and improve ease of doing business
for banks and customers, thereby improving productivity of the economy
as a whole.
On immunity front, prudent application of fintech can help banks and
businesses improve their risk management. With the vast amount of data
available such as those from new payment ecosystem and digital
transactions, banks can better analyze business conditions and make more
accurate forecast of customers' credit demand and credit risks, resulting in
improved risk management model. Additionally, emergence of new data
will unlock new hedging products, especially in the insurance industry.
Furthermore, advancements in technologies like artificial intelligence,
biometrics, and blockchains can help safeguard financial information,
improve identity verification, and reduce the number and magnitude of
financial frauds. These developments will contribute to safer environment
for both service providers and customers.
On inclusivity front, expanding fintech universe and advent of new and
diverse platforms can improve financial access of customers,
especially those who have been underserved by the current financial
system. As different individuals have different levels of affordability and
financial requirements, the ever-expanding fintech universe can offer
wideranging choices and solutions needed to fulfill their different needs.
Digitization of financial services and emergence of new platforms can
improve financial services through online access and smartphone
applications, which benefit customers both in cities and in remote areas.
Fintech applications will also help with cross-border transactions for small
businesses and enable fast and cheap remittance transfers for immigrant
workers, thus creating opportunities and improving the quality of life of
many whom might have been underserved. Meanwhile, information-based
lending can help small businesses without adequate collateral gain access
to funding at a fair price. All of these solutions lead to lower cost of financial
services, greater financial access, and greater opportunity for the public.
Ultimately, "fintech" can help unlock massive potential of our people and
businesses and be a powerful tool for Thailand and developing countries
to improve on productivity, immunity, and inclusivity of the financial system
as well as for the whole economy.
Ladies and gentlemen,
The theme of our very first Bangkok FinTech Fair focuses on SMEs and
consumers, because these two groups face various challenges and can
benefit greatly from the adoption of fintech. For Thailand, SMEs
represent the majority of firms and make up over 80 percent of total
employment. Many SMEs struggle to gain access to finance and payment
services, which, on one hand, can be attributed to poor financial health
due to loss of competitiveness. On the other hand, many SMEs lack the
financial management skills and collateral needed for funding, and their
cost of finance remains high. Meanwhile, the Thai public is facing big hurdles
of low long-term savings and high household debts, with Thailand having
household debt to GDP ratio amongst the highest in the region. Many
households lack access to efficient and low-cost financial services, be it the
deposit, payment, insurance or loan products. These people need to be
better served by our financial system to be able to unlock their potential,
improve standard of living, and ensure their financial security as they age.
Despite many challenges, I am delighted that exciting developments and
initiatives are taking place in Thailand and around the region using fintech
to address these problems. Allow me to highlight some of these initiatives.
We have:

Accounting service applications for SMEs and start-ups on cloud
platforms
 Online mortgage refinance portals that help select the best
refinancing option for mortgage clients

Real-time and low cost cross-border money transfer and remittance
platforms

Biometric verifications for e-KYC to facilitate remote access to
financial services

Machine learning using alternative data such as social media for
credit scoring
 Real-time invoice financing through common supply chain platform
 Standardized QR Code for e-payments, which has reached nearly 1
million merchants within six months after exiting from the Bank of
Thailand's Regulatory Sandbox; and last but not least

PromptPay, a real-time payment infrastructure that has facilitated
electronic payments for over 39 million registered IDs in Thailand
These are just some of the solutions available for SMEs and consumers in
our market.
To this end, I believe that over the next two days we will get to see many
more exciting products and projects that can inspire innovation; broaden
our understanding of the current technology landscape; and help set the
policy agenda for strengthening Thailand's and our region's fintech
ecosystems, especially to serve SMEs and consumers. Seeing the extensive
works put on by our staff and partners and many prominent leaders and
individuals in attendance this morning make me certain that we are on the
path towards fulfilling our goals.
Ladies and gentlemen,
To attain the overall improvement in productivity, immunity, and
inclusivity, the Bank of Thailand is committed to supporting adoption of
financial technology by financial institutions and promoting fintech
innovation while ensuring that key risks can be contained. Throughout the
next two days I look forward to personally interacting with all participants,
to learn and find ways we can collaborate for the benefits of the Thai and
regional financial industries and our fintech ecosystems.
Thank you very much for participating in our very first Bangkok FinTech Fair.
I wish you all a successful and fruitful event.
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