Digital upskilling is crucial to the future of Thai financial services

Stocks and Financial Services Press Releases Thursday November 12, 2020 15:01
Bangkok--12 Nov--PwC Thailand
CEOs of Thai financial services firms must take proactive steps to improve the digital skills of their employees or risk losing out significantly to non-banks in the near term, PwC Thailand says.

Thai banks could see their market share halved to less than 50% within the next three to five years unless they adjust their business models or partner with non-banks such as tech companies and fintech start-ups.

Vilaiporn Taweelappontong, Lead Consulting Partner and Financial Services Leader for PwC Thailand, said that over the past decade the Thai financial services industry - led by banks and insurance companies - has been at the forefront of investing in technology-led changes to maintain competitiveness during changes brought by digital disruption.

Still, the digital skill levels of their workforces are lagging non-bank entrants and tech startups. This is an urgent task that requires immediate action from CEOs and leaders amid the ongoing pandemic, which has only prompted both clients and employees to shift their behaviour online even more, she said.

"Banks and insurance companies have long been the most committed among their peers in other industries in Thailand when it comes to digital transformation," Vilaiporn said.

"However, rivals like tech companies and non-banks have made headway in snapping market share from these legacy financial services firms, mostly because their workers don't have the skills to properly use the digital technologies that companies have embraced.

"So if banks and insurance companies don't urgently implement upskilling initiatives, gradually people will turn to non-banks such as in the retail segment. The danger here is that banks could see their market share fall to less than half of what it is now within the next three to five years simply because their products and services just don't have the same variety, convenience and meet clients' needs like those by non-banks."

According to a PwC report, The upskilling imperative for financial services firms, part of the 23rd Annual Global CEO Survey, financial services CEOs lag their peers in other industries when it comes to making upskilling efforts.

Only 17% of financial services CEOs said their business has made significant progress in improving employees' and leaders' knowledge of technology, compared to 20% of CEOs across all industries. Just 16% said they have made effective efforts in reducing skills gaps and mismatches, compared to 20% of all CEOs.

Major obstacles

Vilaiporn, who has years of experience working with clients from some of Thailand's leading financial services firms, said that traditional ideas of management combined with tough regulatory challenges have contributed to the delay in digital transformation of some financial services firms.

Another problem is generational differences between legacy banking organisations and FinTech start-ups.
The majority of the workforce at incumbent banks is made up of baby boomers and Generation X, whereas digital disruptors such as tech companies and non-banks come from Generation Y.
Most digital start-up employees are also in the same age group or younger, and so usually they are more comfortable with new technologies, she explained.

"Banks and insurance companies need to work on their workforce modelling across demographics, from the C-Suite down to employees at operational levels," Vilaiporn said. "For one thing, boards must get digital talent in the same room and create an environment that is conducive to experimenting and promoting innovation, the same way tech companies are doing.

"The financial services industry is at a tipping point. But the bigger question is: 'How well prepared are we for the future of this new disrupted world?'"

The key skills that banks, insurance or wealth management firms need include advanced analytics and Artificial Intelligence Markup Language (AIML), said Vilaiporn, adding they would help exploit a treasure trove of client data to develop the right products and services.

Vilaiporn concluded that it's still important for workers in the industry to revolutionise themselves. This means unlearning old ways of thinking and relearning some new skills, so they can thrive in the digital world.

CEOs and C-suite executives of financial services firms should look for partnerships or joint ventures with fintechs or tech companies to reap synergies, while continuing to upskill their current base of full-time employees.


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