Thai bank leaders almost simultaneously announced cuts to “transfer and bill payment” fees from their digital channels. Thankfully, our citizens have finally been freed from fees after having waited for a long time.

This is one of the biggest disruptions so far in the entire industry. Banks, once upon a time our “Sleeping Partners”, had started to cut off small parts of their bodies. According to the Bank of Thailand, fee income from transfers and payments amounted to about Bt24 billion or 13 per cent of their net income.

The question is “How can they survive in such a cut-throat environment?”

One major solution is cost reduction.

Obviously, the cost of less-utilised assets should be eliminated. If the number of digital channels such as mobile and Internet banking increase, the number of physical channels such as branches and ATMs should be downsized or relocated to another area that can generate increased revenues while containing operating expenses.

A bank’s physical channels should be viewed as similar to real estate. As in the orthodox real estate playbooks, the three key success factors in this business are: Location, Location, and Location. In the real estate game, the odds of winning over customers will be high if branches and ATMs are in the prime area as high traffic, so they can charge fees from enabling transactions. However, the cost of renting always keeps increasing over time. Even though banks try to optimise branches, ATM locations, number of staff and so on, it remains difficult for them to maintain their profitability in this channel.

In the digital world, Jeff Bezos, Amazon’s CEO and founder, once said that the three key success factors are: Technology, Technology, and Technology. This has proved to be true because digital technology follows Moore’s Law, which suggests that technology will be doubled every 18 months. As a result, an inverse to renting, the cost of acquiring new technology will become cheaper and the servicing speed will become much faster.

On top of that, digital channels are much easier to scale up. Banks just need to install infrastructure on some sites or purchase cloud services, whereas in contrast they have to deal with laborious work to prepare and maintain physical channels. ATM sellers, and ATM cash management businesses might feel gloomy when they sell a lower number of ATMs. The next issue is the staffing related to such assets. There will be job cuts. Another approach is to change job responsibilities. Staff working in cash and branch operations could be assigned to the new roles, including to improve customer experience.

Another solution is revenue generation. This seems counterintuitive at the beginning of fee cuts. How could fee cuts generate more revenue? It is a so-called deposit-led strategy. Banks acquire a customer’s deposit first, then follow with other products to serve the customer’s needs.

Banks cut fees to attract existing customer to use bank services more, and acquire new deposit customers from other banks. The customer base will grow first. After that, banks will better understand customers because of greater information. Of course, the most informative one is financial transactions. Over billions of inward transfers, outward transfers, and even bill payments will be stored on their database – a Big Data environment.

Then, banks can analyse the big data with an army of data scientists, data engineers. Thanks to Moore’s law, with the advanced machine learning techniques, proper technology infrastructure, and business collaboration, banks can extract the convoluted patterns of customer behaviours so that they can offer the right products or services to the right customers, given their risk appetites. If customers accept the products, banks will be expected to generate revenues under acceptable risk from following the strategy.

For example, TMB has been using this strategy by acquiring new customers – both retail and SMEs – through deposit accounts with no transfer fees. For retail customers, TMB can offer financial products, such as mutual funds and insurance products, based on customers’ needs.

This lets the bank know how they operate their businesses. What are their risks, so that the bank can offer the right products, right loan amount under their acceptable debt serviceability to the SME customers?

Definitely, the winners in this fee battle are customers.

Contributed by Panawat Innurak, senior data scientist at TMB Analytics. He can be reached at Panawat.Inn@tmbbank.com

Views expressed in this article are those of the author and not necessarily of TMB Bank or its executives.

CTUM’s president Maung Maung said the centre would be open daily to provide female workers with knowledge essential to improving productivity in their profession. He expected the centre to play a key role in fulfilling the needs of Myanmar’s female workers.

“It is like a meeting point for women to share experiences and to be empowered to get involved,” he said.

“Before opening this centre, we tried to find out what the problems of women workers are and how we can help to bridge the gap. They have problems such as a lack of labour rights knowledge and basic health knowledge, which leads to a high turnover and lower productivity at work.”

Maung Maung said it took about one year to establish the centre with the support of the German Federal Ministry for Economic Cooperation and Development, through German development agency GIZ. The centre will be free of charge for all women, with 24-hour hotline support and pre-arranged legal counselling services. Training about labour laws and skills development will be conducted soon. In addition to sharing knowledge of laws related to the protection of women, women health and gender violence, the centre will provide legal counselling for individuals to help them solve labour rights issues and other women- related issues.

Maung Maung said the organisation is planning to open additional women’s centres in New Dagon and Mingaladon townships of Yangon region as well as in Mandalay and Bago regions.

Once opened, the centres could make a major contribution to CTUM’s core activities, including supporting workers to establish unions according to national labour laws, building capacity of trade unions leaders and members, addressing issues of gender equality, gender-based violence and forced labour, and contributing to the policy-making process.

Established in July 2015, CTUM represents 745 registered trade unions in nine different sectors, and has a membership of over 65,000 workers in Myanmar. In cooperation with different donor organisations and international trade unions, the organisation works for the rights of workers and to build the capacity of trade unions. Khaing Zar Aung, president of Industrial Workers Federation Myanmar, said the centre would play a key role in improving Myanmar women’s legal and general knowledge.

“Labour rights issues and gender violence issues are common among women workers. This centre is not only for CTUM members, but also to provide suggestions for any individual woman worker on how to address the issues they are facing,” she said.

“They can report to us either by visiting the centre or by calling the hotline service. The centre will advise them about the applicable laws.”

Myanmar women in the garment industry know little about their legal rights and thus may easily fall into a vicious circle of exploitation and debt, Khaing Zar Aung said. The centre will provide a lot of help to such women.

According to the statistics, Myanmar’s textile and garment industry constitutes approximately 530 factories, employing around 500,000 people. Roughly 90 per cent of the employees in the textile and garment industry are young women, most typically between 16 and 27 years old.

“For garment workers to claim their rights, they need to know more about related laws. Awareness of their rights will improve labour conditions in this sector,” Khaing Zar Aung said.

Project Representative Su Tayar Lin sees great potential for the centre thanks to its location and the effective network of CTUM. “We are eager to empower women. We want them to know their rights and understand labour laws. We want to create a much healthier relationship between employers and workers by making them aware of the current labour laws,” she said.

Stephan Buurma, a member of the board of management of Messe Frankfurt Group, said that Thailand’s lighting market reached US$1 billion in 2017 and is expected to grow by between 3 per cent and 10 per cent every year.

“A key characteristic is the increase of LED lighting, a result of government policy and a shift by both the public and the private sectors towards energy saving,” he said.

He said that growth in the global lighting market was aided by a rising population and the trend for urbanisation worldwide.

According to a study by McKinsey & Company, the lighting market worldwide will reach US$130 billion by 2020, with Asia contributing the highest growth.

“Currently, Asia accounts for 35 per cent of the total market share, or around US$45.5 billion, and that is expected to rise to 45 per cent by 2020. One of the key trends is the fast expansion of the LED market,” said Buurma, adding that over the last few years, the traditional lighting market in Thailand has been shrinking.

However, the LED lighting market is scaling up, due to declining prices of LED units, higher energy efficiency, and a growing environmental awareness among Thais.

In addition, the government is actively promoting energy-saving programmes and encouraging the use of LED instead of fluorescent tubes.

“In term of business opportunities, with all of the factors that are driving us to shift to LED, if we take a look closely, Thailand’s LED lighting market currently accounts for only around 18 per cent of the total lighting market share. That means there are still plenty of opportunities in the Thai LED market,” Buurma said.

He said that consumers remain very price sensitive in the Thai LED market. Prices were cited as consumers’ main concern, followed by the luminaries’ efficiency. Most consumers are looking for luminaries with higher efficiency, and warranties of at least three to five years for tube lights in commercial projects. Clients are also asking for LED tube lights with wider beam angles.

“As for product trends in Thailand, smart lighting products, systems and applications are growing in popularity. Consistent with on-site surveys during the 2017 Thailand Lighting Fair, it indicated that the industry was optimistic about smart lighting and smart homes,” Buurma said.

He said that with the continuous penetration of the Internet, future lighting products must be connected with the Internet, which will become an essential trend for smart homes.

“The highest growth potential is seen in household lighting systems that can be controlled by smartphone or tablet applications, as well as smart lighting systems primarily with energy-saving purposes for households, industrial and commercial uses. These will likely be strong performers in the Thai market in the near future,” Buurma said.

Messe Frankfurt New Era Business Media Ltd, with the Provincial Electricity Authority (PEA) and Exhibiz Co Ltd, will host Thailand Lighting Fair 2018 and Thailand Building Fair 2018, from November 8-10 at BITEC in Bangkok’s Bangna district.

The expo is part of Messe Frankfurt’s global Light + Building exhibition brand, which totals 15 fairs around the world. The 2018 edition is expected to feature over 500 booths across 10,000 square metres of exhibition space.

The Thailand Lighting Fair 2018 and Thailand Building Fair 2018 will be held concurrently with Secutech Thailand, a platform that showcases innovations in security, smart homes and fire and safety products. By hosing Thailand Lighting Fair, Thailand Building Fair and Secutech Thailand under one roof, the interconnected lighting, building and safety industries have an unrivalled one-stop sourcing opportunity, the organisers say.

“Thailand is ranked as the 50th largest country in the world in terms of the economy, and is one of the largest economies in the Asean bloc. Substantial growth in the nation’s lighting market is inevitable, and we can discern some very important trends.” Buurma said.

Pakwan Jiamjiroj, general manager of Exhibiz Co Ltd, said that entrepreneurs and manufacturers of lighting products need to adapt their operations to the new era mobilised by digital technology.

“The issue of lighting no longer covers just conventional lighting equipment or light bulbs, but takes in smart devices that work with the lighting system,” she said.

“It also includes any applications that enhance the lighting system to be more efficient and easy to use and maintain for consumers. Their business strategy from now on is to develop products that are able to comply with the fast-changing technology both today and in the future, with energy savings, and ease of use and maintenance.”

China will work hard to import more products that are competitive and needed by Chinese people, Xi told the Boao Forum for Asia annual conference on Tuesday.

“China does not seek a trade surplus. We have a genuine desire to increase imports and achieve a greater balance in international payments under the current account,” he said.

At the forum in front of many international leaders, Xi outlined his mission to build up “a community with a shared future for mankind” that would make Asia and the world peaceful, tranquil, prosperous, open and beautiful. China will adopt policies to promote high-standard liberalisation and facilitation of trade and investment, and explore the opening of free-trade ports with Chinese characteristics, he said.

Opening up is the key success arising from reforms that began under Deng Xiaoping’s leadership in 1978, he said, adding that “over the last four decades, China has significantly unleashed and enhanced productivity”.

In the second opening-up, under Xi’s watch, China would launch a number of measures to broaden its market access, he said.

China will accelerate the opening-up of the insurance industry, ease restrictions on the establishment of foreign financial institutions in China and expand their business scope, as well as open up more areas of cooperation between Chinese and foreign financial markets, he said.

On manufacturing, Xi said China has largely opened up this sector, with a few exceptions on automobiles, ships and aircraft.

“These industries are now in a position to open up. Going forward, we will reduce as soon as possible limits on foreign investment in these industries, and automobiles in particular,” he said.

On the investment side, China would also improve the environment for foreign investors, the president said. “China relied mainly on providing favourable policies for foreign investors in the past, but now we will have to rely more on improving the investment environment,” Xi said.

China will complete the revision of the negative list on foreign investment in the first half of the year and implement across the board a management system based on pre-establishment national treatment and the negative list.

“We will enhance alignment with international economic and trading rules, increase transparency, strengthen property rights protection, uphold the rule of law, encourage competition and oppose monopolies,” Xi said.

In March, China established a slew of new agencies such as the State Administration for Market Regulation as part of a major readjustment of government institutions.

Xi’s new policy was welcomed by leaders attending the forum. Singapore’s Prime Minister Lee Hsien Loong praised Xi’s announcement on the further steps to be taken in opening up the financial sector, protecting intellectual property rights and increasing imports, in order for China to go further in the reform direction. “We look forward to further implementation,” said Lee, who chairs Asean this year.

As a key trade partner of China, Thailand is expected to benefit from the initiatives. Last year, the country’s exports to China amounted to US$29.4 billion, or 12.4 per cent of its total.

Vehicles, one of the import categories flagged for a reduction in tariffs, comprise a top 10 sector for Thai exports to China – worth US$1.2 billion last year. Also in the top 10 list are rubber, machinery, electronic equipment, plastics, wood, organic chemicals and vegetables.

A graduate of Korea University with a BA in Economics, Lee entered the foreign service in 1980 and served in various posts including as the ambassador to Vietnam and the Philippines, the Deputy Minister for Planning and Coordination, secretary to the President for Foreign Affairs, and director-general for Asian and Pacific Affairs.

“Under a new initiative known as the ‘New Southern Policy’, the Korean government aims to elevate its relationship with Asean to the level of that enjoyed by the four major powers around the Korean Peninsula, while expanding its diplomatic sphere. At this critical juncture, I am greatly honoured to take up this position to lead the Asean-Korea Centre and work to strengthen the Asean-Korea partnership. For the next three years, I will make every effort to bring about prosperity between Asean and Korea through mutually beneficial economic cooperation and connect the populations of the two regions by promoting cultural and people-to-people exchanges,” Lee said.

Established in 2009 in Seoul, the Asean-Korea Centre is an intergovernmental organisation with mandates to increase trade volume, accelerate investment flow, invigorate tourism, and enrich cultural and people-to-people exchanges between the Asean bloc and South Korea.

These new findings are consistent with FICO’s report on AI released earlier this year, which predicted that companies would focus on putting AI into operation in 2018. Almost half (48 per cent) of banks believe that the use of AI will help them optimise their collection decisions, while 41 per cent say it will enable them to accurately predict consumer behaviour.

AI-powered analytics can improve automation in collections in many areas, from optimising contact strategy settings to ensuring human agents make the right decisions when restructuring debts or even calculating provision rates at an account level for IFRS 9 compliance.

“AI is in the spotlight in the boardrooms of most banks,” said Dan McConaghy, president of FICO Asia Pacific. “Lenders understand that they need tools that allow them to stop relying on decisions based on gut feelings or out-of-date models, and collections is a key area where AI has the potential to improve business decisions as well as the customer experience.”

AI enhancements for the FICO Customer Communication Services (CCS) solution are being rolled out this year, and will reinforce the significant impact that automation continues to deliver.

Two thirds of banks already using automated collections to contact customers have indicated it leads to faster bill payment. Respondents said the time taken to collect payments was reduced by anywhere from two days to two weeks.

In addition, 81 per cent of respondents believe automated collection leads to higher customer satisfaction. Avoiding the embarrassment of dealing with a person was cited as the key reason (52 per cent), with the convenience of being contacted proactively coming second (31 per cent) and a reminder when they have forgotten a bill coming third (29 per cent). With regard to the 60 days past due segment, 49 per cent of banks said this group of customers had grown the most. This was marginally higher than 41 per cent of banks that witnessed growth in this area in 2016.