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Siam Commercial Bank Braces for Competition Against China’s Alipay and WeChat Pay

 

BANGKOK — Siam Commercial Bank sent shockwaves through Thailand’s banking industry in March when it said it would scrap nearly all fees for money transfers and bill payments conducted on its mobile banking app.

Less than two hours after the announcement, Krung Thai Bank, another major Thai lender, sent out a hastily prepared press release detailing similar cuts. By the end of the day, the remaining two of the big four banks — Bangkok Bank and Kasikornbank — had also followed suit.

“The speed that they followed us was quite a surprise,” Arak Sutivong, Siam Commercial Bank’s chief strategy officer, told the Nikkei Asian Review. “Other banks probably would have wanted to wait a little more until they saw customers’ behaviors [were shifting toward mobile banking], but we wanted to accelerate the change.”

The reason: As financial institutions rush toward digital services, they are eager to collect data on their customers for growth, and Siam Commercial Bank wants to be at the forefront of that initiative.

The other driver behind its push for transformation is the threat posed by Chinese digital payment systems, led by internet conglomerates Alibaba Group Holding and Tencent Holdings, which is increasing along with the stampede of mainland Chinese tourists traveling to Thailand. While these integrated services — e-payments, retail, ride-sharing, lending and social media — primarily serve customers from China, they could eventually cater to Thai customers.

A customer uses an ATM at an unmanned branch of Siam Commercial Bank in Bangkok, which is working to expand its customer base. (Photo by Yukako Ono)

The recent moves by Siam Commercial Bank, the country’s third-largest bank by assets, and others to reinvent themselves show just how determined they are to stay in the digitization race. As smartphone penetration in Thailand expands, the value of monthly bank transactions through mobile phones has also grown, reaching 1.049 trillion baht ($32.64 billion) in December, a near sevenfold increase from three years earlier, according to the central bank.

The rise of nonbank players in mobile payments is also putting pressure on conventional financial institutions to speed up their shift to digital services. Siam Commercial Bank has made it clear that it wants to take the lead in the competition.

Earlier this year, the bank’s president and CEO, Arthid Nanthawithaya, stunned rivals by announcing plans to slash the number of branches by two-thirds to 400 from 1,200 in three years, and to nearly halve the number of employees to 15,000 from 27,000.

Siam Commercial Bank is replacing some of its traditional retail branches with unmanned outlets called SCB Express, such as this one at a mall in Bangkok. (Photo by Yukako Ono)

Among the four big banks, Siam Commercial Bank boasted the largest workforce at the end of last year. Half of its staff were stationed at branches with an average of 10 employees per branch. Arthid promised there would be no layoffs, saying the annual organic attrition rate is 3,000 and that branch employees would be trained to provide more value-added services to clients.

“Our staff will no longer be humans processing documents,” Arthid said at the January announcement. “They will be relationship managers who help enhance the customers’ capability of their business execution and wealth management.”

Traditional retail branches will be replaced with business-investment centers and wealth-management consultation offices, as well as a new unmanned outlet called SCB Express. The new format will house machines that allow clients to pay bills, deposit checks and open accounts without the help of tellers. Pilot outlets are now being set up — with plans to open as many as 200 by the end of the year.

“We think that stand-alone branches are likely to disappear in the future anyway,” Arak, the chief strategy officer, told Nikkei. Already, over-the-counter transactions account for less than 10% of the overall retail transaction volume, he said, as more people are using ATMs and mobile banking.

Moreover, traditional stand-alone branches, which at Siam Commercial Bank account for roughly half of the total, are becoming less attractive compared with those operating in shopping malls, which have longer hours and are open on holidays. “We have to give people reasons to move from physical branches to mobile,” Arak said, adding that if there are fewer branches, customers will have to turn to their smartphones.

The removal of transaction fees for mobile banking will put the bank on par with non-bank players, which provide those services at no charge.

The motivation behind Siam Commercial Bank’s aggressive push for digitization goes beyond cost-cutting and healthier profit margins. It wants to accumulate customer data, such as spending habits, through mobile banking to tap into a new customer base.

Along with the plan to shutter branches, CEO Arthid mapped out a strategy to strengthen financing to consumers and small enterprises, or so-called unsecured lending. That type of lending is considered high risk, compared with loans to large or midsize companies, but carry higher margins.

However, by utilizing client data, the bank’s risk can be mitigated. It plans to offer tailor-made loan products to cater to a wider range of customers’ needs and repayment capabilities.

“Instead of talking face to face over the counter to understand their needs, we learn from their behavior,” Arak told Nikkei. The company’s mobile banking app, SCB Easy, has roughly 6.5 million users, while Kasikornbank’s K Plus boasts more than 8 million. Both banks hope to reach 10 million this year.

Organic growth for Thailand’s big banks had been limited over the past several years, especially as companies pulled back on investments and individuals have refrained from buying homes and automobiles amid a slow economic recovery. Total lending of the four big banks grew just 4% last year, and a rise in nonperforming loans has forced banks to tighten screening for new lending.

Also, the aging society weighs heavy on the country’s future economic growth. “If we continue with the traditional way of doing things, the loan growth will only be stable and eventually decline,” Arthid said in January.

Behind the bank’s drastic transformation is the rising threat of nonbank players.

“It’s a real concern for us,” Arak said. He is most wary of Chinese digital platform players in the Thai mobile payment market. Alibaba’s Alipay and Tencent’s Wechat Pay are already available at most convenience stores, retailers and many restaurants to cater to the millions of Chinese tourists that visit Thailand every year.

“These companies come with the whole eco-system,” Arak said, referring to their diverse services of online chat, shopping and consumer lending. “They engage with customers on many fronts … and that is why it is important for us to build customer engagement, too,” he said, while noting that Thailand’s banking regulations pose many restrictions on full-fledged banks from diversifying.

But that is changing as the central bank moves toward deregulation. It recently allowed banks to operate e-marketplaces, which means that mobile banking apps can become an online platform for retailers to sell merchandise and services to the banks’ clients.

Siam Commercial Bank was the first to respond. Through a partnership with SF Group, a major cinema operator, movie tickets are available on its SCB Easy app. “We try to reimagine and redefine ourselves as more of a digital platform company,” Arak said.

Diversification into services that require high financial expertise will also be important. In March, the bank announced a joint venture with Swiss private bank Julius Baer. Previously, high net-worth individuals chose to manage their assets offshore because Thai banks lacked “sophisticated” offerings, Arak said. “Julius Baer brings along the global capability.”

Siam Commercial Bank is the oldest lender in Thailand and was established by a member of the royal family in 1907. The royal links remain strong with the Crown Property Bureau, the entity that manages the monarchy’s assets, holding an 18.14% stake. Last year, the bureau transferred part of its shares to King Maha Vajiralongkorn Bodindradebayavarangkun, who assumed the throne in 2016. The king personally controls a 3.33% stake.

So far, the market has responded negatively to the ongoing transformation. Since the beginning of the year, the bank’s shares have slumped 12% compared with a 1.3% decline for the benchmark Stock Exchange of Thailand index.

The hefty $1.2 billion to $1.5 billion investment earmarked for digital banking upgrades over three years will weigh on the bank’s profit. In the first quarter of 2018, net profit declined 4.6% from a year earlier.

By Yukako Ono
Nikkei Asian Review

 

 

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PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

Pepsi

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

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Old National Bank And Infosys Broaden Their Strategic Partnership.

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Old National Bank And Infosys Broaden Their Strategic Partnership.

Infosys

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

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American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

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American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

water

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

water

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP

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