This disintermediation of banking services is nothing more than a direct threat to the future profitability and even existence of the traditional retail banks.

Bill Gates (Founder of the Microsoft company) foresaw this as early as 1994, when he stated that “although banking is a necessity, banks are not”. In a study among digital natives, half of the participants indicated that they are willing to use financial services from non-banks. Banks are now competing with literally thousands of companies some giants such as Google, Facebook and Apple but also with many smaller start-up companies that are introducing innovations continually.

Before the banks can even react to all these new entrants, they should first have an overview of the “battlefield”. But how?

A good start is to categorize these companies into four groups. This is what the top 12 venture capital firms in the world did, so it seemed to me like a good example to follow. These are the four groups:

1. Lending

2. Personal finance management

3. Payments technology

4. Blockchain and cryptocurrencies

But just grouping into 4 buckets doesn’t help to assess the potential impact on the current financial system. It won’t show us the potential disruptiveness of these innovations. For this we need a further categorisation across the four groups.

For this categorization I found an article by fintech writer Chris Skinner (www.thefinanser.com) to be very good. It still helps me to this day.

The first categories he calls ‘wrappers’. These financial innovations do not replace or substitute a financial service or product, but wrap themselves around an existing banking service or product.

Examples are Apple Pay, Google Pay, PayPal, iZettle, Wonga, Samsung Pay, Alipay and many more. For example, if a customer pays with Apple Pay by using his mobile phone, the money is still debited from a bank issued debit- or credit card. These companies fall under the personal finance management and payments technology categories mentioned above.

In the short to medium term I don’t think Wrapper-FinTech’s will be a big treat to banks. They are not replacing the ‘rails’ of the banks (that would be very expensive) but they are trying to offer a better customer experience (CX) than the banks. So far banks seem to have been able to keep pace though, with China being the notable exception.

The second category is called the ‘replacers’. These innovations try to replace banks. Most of these innovations sit within the lending group mentioned above. Examples are the P2P lending websites such as RateSetters, Zopa, LendingClub, Prosper, Lufax and many more.

Peer to peer lenders had a great impact when they became mainstream (about 5 years ago) but recently the growth seems to have slowed. In China the regulators have stepped in and in the US there was scandal and fraud.

I do think that replacer-FinTech’s are potentially more ‘dangerous’ than the wrappers, because they can take away a part of the balance sheet of a bank.

The third category is called ‘reformers’. Here the most important and potentially massively disruptive innovation is blockchain and all the cryptocurrencies that run on it. Blockchain and cryptocurrencies have the potential to replace a large part of the banking infrastructure: replacing the rails so to speak. It means that consumers would not need banks anymore to keep or exchange stores of value.

This would obviously massively disrupt banking as we know it. But the likelihood of this happening is also the most uncertain. The technical uncertainty and societal controversy surrounding blockchain and cryptocurrencies means that mainstream adoption is a long way off. Especially the increasing threat of regulators stepping in, is creating a very uncertain future.

Contributed by MARTIJN VAN KEULEN, Head of Digital Channels and User Experience, TMB.

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

He credited the surge to business performance and the divestment of three assets.

“The company disposed of its shares in East Water, GIDEC Co Ltd and Masinloc Power Plant in the Philippines and recognised total gains of Bt14.16 billion,” said Jakgrich.

“Those gains will prepare EGCO Group for expansion, both domestic and overseas, to generate a steady return in the long run.”

Progress has meanwhile been made on three overseas power projects in the pipeline – the Xayaburi and Nam Theun 1 dams in Laos and the San Buenaventura project in the Philippines.

They are scheduled to begin commercial operations in 2019 and 2022.

Jakgrich said EGCO Group is committed to sustainable growth this year and to a “steady and good return” of at least 10 per cent on shareholders’ equity.

He said the company sees great opportunities for expansion overseas markets where it has a strong presence, primarily in the Philippines but also Laos and Indonesia.

The company is also exploring opportunities in other Asia-Pacific countries, especially in renewable energy, to increase its renewable portfolio to 30 per cent by 2026, said Jakgrich.

EXIM THAILAND

HEDGING SERVICE IN PUSH FOR SME TRADE IN CLM

Export-Import Bank of Thailand (EXIM Thailand) has launched a new export risk hedging service to promote Thai export to Cambodia, Laos and Myanmar.

EXIM Thailand President Pisit Serewiwattana has said that Thai exports to neighbouring countries – Cambodia, Laos and Myanmar (CLM) has expanded continually in line with their economic growth and increases in purchasing power, urbanisation and growth in middle class.

However, several Thai exporters, SMEs in particular, are still reluctant to trade more with CLM at the same fast pace as the growth of their economies and demand. EXIM Thailand has thus developed “CLM Trade Insurance” to help Thai SME exporters hedge risk of non-payment by buyers in CLM by offering insurance coverage for exports worth up to Bt1 million per transaction under payment term of not exceeding 90 days.

A distinctive feature of CLM Trade Insurance facility is that Thai SME exporters can take the protection type of their choice at the expense pre-determined by them with insurance premium starting from Bt3,300 per insurance policy and a maximum coverage of 90 per cent of loss amount.

The protection covers such cases as buyer’s bankruptcy, buyer’s non-payment, buyer country’s warfare, riot, revolution, coup d’etat, or prohibition of outward transfer of money.

Customers may apply online around the clock via http://www.exim.go.th. A special 50 per cent discount of insurance premium is also offered for applications submitted by August 2018.

BEST WESTERN

MOU SIGNED FOR BEACH RESORT IN DONG HOI

Best Western Hotels & Resorts has entered yet another exciting destination in Vietnam with the signing of a Memorandum of Understanding (MoU) for a new upscale beach resort in Dong Hoi, on the country’s stunning north-central coast.

Scheduled to open in 2020, Best Western Premier Quang Binh will be an impressive international resort overlooking the East Sea.

Dong Hoi is the capital of Vietnam’s Quang Binh province. It is also the gateway to Phong Nha-Ke Bang National Park, a Unesco World Heritage-listed landscape that houses Son Doong, the world’s largest cave.

“We are excited to bring the Best Western Premier Quang Binh to the beautiful seaside city of Dong Hoi,” said Ron Pohl, Senior Vice President and Chief Operations Officer for Best Western Hotels & Resorts.

“The signing of this exceptional hotel marks the latest phase of our brand’s expansion to premier beach destinations in Vietnam, following the signings of upscale resorts in Cam Ranh, Vung Tau and Phu Quoc.

“Best Western will continue to seek opportunities to bring world-class hospitality to even more parts of Vietnam, further enhancing the country’s blossoming tourism industry.”

BANGKOK

OFFICE RENTALS REACH RECORD HIGH

Grade A Central Business District (CBD) office rentals in Bangkok rose by 3.1 per cent year-on-year to new record highs in the first quarter of 2018, and the trend is expected to continue, according to international property adviser CBRE Research.

Average rents for Grade A buildings in the CBD were just under Bt1,000 per square metre per month and a new record of Bt1,500 was achieved at Gaysorn Tower, CBRE reported.

The total take-up was 65,000 square metres in the first quarter, up 15.1 per cent year on year, led by the completion and owner occupation of the new Bank of Ayudhya Building (Krungsri Ploenchit Tower) on Ploenchit Road and Thai Rath’s new building on Viphavadi Road.

The overall vacancy rate fell to 7.3 per cent and is expected to remain low for the next three to four years.

Around 750,000 square metres of office space is under construction, including the first phases of One Bangkok and The Parq, both on Rama IV Road, with completion dates between now and the end of 2022.

CBRE forecasts that demand will match supply for the next three years.

The direction of the market from 2022 onwards is harder to predict. There are potentially around two million square metres of office space being planned on sites acquired by developers, but construction has not yet started.

“Globally, there is a trend for some companies choosing to acquire office space as a service from co-working space operators rather than commit to lease and incur a capital expense in fitting out,” said Roongrat Veeraparkkaroon, director of advisory and transaction services at CBRE Thailand.

“Co-working space is not just aimed at startups, and co-working space operators will be competing with landlords offering offices on traditional lease terms.”

Despite this disruptive change in the leasing market, CBRE forecasts the net take-up in 2018 will be similar to that of 2017.