Predicting the future is a tough task and in an industry that’s changing as fast as financial services, that’s even harder, but as we look ahead through 2019, there are some cues we can take from the focus of banks, insurers and asset managers in Thailand and elsewhere in Asia Pacific to revamp their technology for smoother integration with tech giants.

The year ahead should also see financial firms making more use of big data to launch entirely new products and develop more tailored pricing, as well as increase their efforts on digital solutions for small- and medium-sized enterprises (SMEs) and corporate banking. This list is by no means exhaustive, but hopefully it’s a good start to get people excited about 2019. So, here are some of the top trends to keep an eye on this year:

1 Technology upgrades for better integration with digital giants

For established banks and insurers, it’s important to upgrade and elevate their enterprise technology and expertise to the same level of digital sophistication of Internet giants and platform players such as Line in Thailand and Japan, Alibaba in China or Flipkart in India. That will help them achieve breakthrough, more integrated financial services products. Nowadays, for example, you have leading insurance players in India, Singapore and other countries in Asia Pacific selling a number of protection products through e-commerce sites, ride-hailing apps or online travel companies. Banks in Thailand are also partnering with digital giants to make sure they are an integral part of their customers’ daily life. The question every bank and insurance chief information officer should now be asking is: how can I make sure we have the right technology and culture in place so that we can integrate our products and services and be nimble enough to partner with the big tech/digital players?

2 Enhanced pricing with digital tools and wider use of big data

Digitisation will need to move from optimising the overall customer experience to product design, and be more central in developing sophisticated pricing models. Financial services firms should make more use of Big Data for the purpose of pricing, especially for segments where structured data availability is very limited, and particularly where pricing is limited. Having that ready would help banks and insurers develop and offer structured bundled products: think having your car insurance, along with home insurance and a savings account as one offering. In Thailand, for example, we already have insurance companies using tools such as internet of things devices to collect more data in order to provide custom pricing, a trend that should become more prevalent as the technology and know-how around Big Data analytics gets more widespread.

3 Think small to make it big

There will be a greater focus on small- and medium-sized enterprises (SMEs) in Thailand and other Southeast Asian markets in the coming year, given the macro outlook for greater protectionism and rising nationalism around the world. Financial services firms should heed that call and focus on offering more banking and insurance products to SMEs. But in order to better service that segment they’ll have to use more Big Data for the purpose of underwriting policies, for example. They should also use digital channels for smarter and more efficient distribution of financial products to SMEs, which has been lacking in most countries in the region.

4 Direct-to-consumer links to improve governance pitfalls

In a world with increased scrutiny of conduct by financial service providers, insurance companies and wealth management firms will have to focus on building a more direct relationship with their customers. This would replace an over-reliance on commission-based relationships via agents, as these can be prone to poorer or weaker governance. Digital will be the fastest, most efficient way for financial firms to do that, given the prevalence of smartphones and other devices at the hands of millions of people in the region. Companies will likely begin to sell services and products through their apps directly to consumers, bypassing the middlemen and creating a more agile and efficient business.

5 The evolution of human-assisted “roboadvice”

Fully automated wealth management services and “roboadvice” tools have been all the rage the past years. We will see a much greater level of simplification and digitisation in the area of wealth management, with an increased focus and greater maturity in the area of robo-assisted manual advisers. This hybrid model will combine bid data that financial firms have been building and optimising the past years, with new analytics tools that human advisers can use to create smarter, more nimble and personalised solutions with the human touch that customers want.

Contributed by NONTAWAT POOMCHUSRI, country managing director and head of financial services practice, Accenture in Thailand

The research, which surveyed 2,200 IT decision makers from both public and private organisations with 250-plus employees in 18 countries and 11 industries, provides a comprehensive understanding of the state of data protection and the maturity of data protection strategies.

Specifically, the index uncovered an increase in the average amount of data managed – from 1.45 petabytes (PB) in 2016 to 9.70PB in 2018 – and a high awareness of the value of data.

In fact, 92 per cent of respondents see the potential value of data and 36 per cent are already monetising their data. While this acknowledgement is positive, most respondents are struggling to properly protect their data.

Siri said that this year, Thailand was preparing to push legal amendments and get rid of obstacles to attain a higher WEF rank. Thailand was ranked 54th last year.

The improvement in ranking is a result of the WEF view that Thailand has energy stability without emitting too much greenhouse gas, he said, pointing out that Thailand has earned compliments for more use of renewable energy as the country’s main energy.

Thailand has a plan to increase the use of renewable energy to 35 per cent of total energy used in the next 20 years from the current 14 per cent, Siri said. Besides, the country is moving towards power production from solar rooftops on residential units, the so-called people-sector solar power for the first time.

Meanwhile, Thailand needs more development of energy human resources, particularly the 10,000-watt people-sector solar policy in the next 20 years and the future use of electric vehicles (EVs).

“Such ranking is based on Thailand’s Power Development Plan [PDP]. If PDP 2018 is included, it is believed the ranking would be higher, with its drive for clean energy, particularly people-sector solar,” Siri said.

Siri expressed confidence that the new government would continue the new round of petroleum (concessions) for more petroleum production capacity that can offer lower prices compared to imports.

Given the increase in gas production with cheaper prices, the country has energy stability. The Energy Ministry is preparing a new round of auctions of exploration and production of petroleum in the Gulf of Thailand within this June under production sharing contract (PSC), he said.

Panata Sangsriroujana, deputy governor of Electricity Generating Authority of Thailand (Egat), said the authority is awaiting the current or new Cabinet’s approval of the draft amendment to the Electricity Generating Authority of Thailand Act, which will allow Egat to proceed with fuel procurement. Earlier, Egat played a role in production and transmission system management.

Chaiwat Kovavisarach, chief executive officer of Bangchak Corporation, expressed no concerns about the energy policy as Thailand imports most of is energy whose prices follow global markets and that could affect consumers, while expecting the energy policy to follow the liberal-market mechanism.

Poonpat Leesombatpiboon, chief of the Energy Ministry’s International Energy Cooperation Division, said the higher rank came from the country’s energy stability and people’s access to energy, energy in response to the country’s economic expansion and development, and the energy system’s responsibility for the environment or reduction in greenhouse gas emissions and system initiative on shaping the future of energy.

After this, Thailand will require amendments of rules and regulations that hinder the country’s energy development, and preparation of energy human resources for more modern technologies, he said.

Wuttikorn Stithit, the vice president of PTT, said the company is joining hands to enhance the country’s energy stability through procurement of liquefied natural gas (LNG) and infrastructure development for LNG imports.

PTT is awaiting improvement of the ministry’s gas plan, which will revise the amount of LNG to be procured to match demand, set to rise to 53 per cent in the new PDP, he said.

Besides, an Asean study cooperation will be conducted for LNG terminals in the future and now Thailand, Singapore, Malaysia and Indonesia have already constructed LNG terminals.

 The country is ranked 42 in the 2019 US Chamber IP Index among the 50 economies surveyed.

“The biggest setback for Thailand is the lack of patent agents. This means that generally, the quality of patent applications in the country are not satisfactory,” said Orakanoke Phanraksa, senior IP consultant for the National Science and Technology Development Agency (NSTDA)’s Technology Management Centre, Technology Licensing Office.

“Furthermore, there often is a mismatch between the knowledge and understanding of licensing between scientists, patent agents and manufacturers,” she told the press last week.

Orakanoke called on the government to earmark a larger budget for the training of patent agents.

The proposed legislation on technology transfer will help advance the commercialisation of IP assets in Thailand. It has been submitted to the State Council for approval after being passed by the Cabinet.

“Currently, government-funded IP assets are jointly owned by relevant government agencies and research parties. Under the proposal, research institutions such as universities can fully own the IP asset, making the commercialisation process much faster,” she explained.

Also, she said, the new government should continue promoting the country’s IP ecosystem.

Ellen Szymanski, executive director of the US Chamber of Commerce’s Global Innovative Policy Centre (GIPC), concurred with Orakanoke. “We encourage the incoming government to continue the public sector’s sustained efforts to further develop the IP ecosystem in Thailand. Continued efforts from the government are what foreign investors see as most important when investing in a country’s IP assets,” she said.

The GIPC’s 2019 IP Index shows continuous improvement in Thailand’s IP framework, scoring 32.22 per cent in its seventh edition in February from 31.37 per cent in the sixth edition.

The index examines IP policies across eight categories of indicators in order to provide a snapshot of the strength of an economy’s legal and regulatory framework on intellectual property.

Of the 50 countries surveyed, Thailand ranks 42 with top-ranked economies in Asia being Japan, Singapore, South Korea and Taiwan, according to the GIPC official.

“Thailand has performed well in the systemic efficiency category, indicating that government agencies have been cooperating well on IP issues. However, it needs further improvement in the area of IP assets commercialisation,” Szymanski stated.

“Local businesses that embrace strong IP protection are more likely to attract more venture capital, foreign and private sector investments,” she continued.

“In the next three to five years, I see Thailand’s IP framework continuing to improve, given that the public sector continues the reform of IP regulations to improve the ease of doing business.”

However, long-term pressure will still be weighing down the bourse with global economic slowdown and a likely decline in the growth of Thai listed companies’ earnings, they added.

Pattera Dilokrungthirapop, chief executive officer of DBS Vickers Securities (Thailand), said the poll results will influence decisions on Thai stock investment, particularly for foreign investors, adding that several global funds have a policy to only invest in countries with an elected government.

On Friday, the SET Index rose 0.75 per cent or 12.29 points to 1,646.29, ending the past week with a daily turnover of Bt46.486 billion, with external factors replacing the general election as the main consideration of stock investors.

The SET Index is expected to advance after the election on two issues: market price to earnings ratio (P/E ratio) and Thai listed companies’ earnings.

The Thai stock market’s P/E ratio has remained at 14.8 times, thanks to listed companies’ sound fundamentals and financial stability, though it has not risen due to companies’ low profit growth, Pattera said.

DBS Vickers Securities (Thailand) has forecast its profit growth at 8 per cent this year and 6 per cent for next year.

“Growth is expected in companies’ profits this year, but will still be lagging behind their peers in other countries. Risks and negative factors have driven out foreign capital as the Thai stock market awaits the new administration’s policies,” Pattera said.

Montree Sornpaisarn, chief executive officer of Maybank Kim Eng Securities (Thailand), said regardless of which party leads the new government, its economic policies should not go against the principles of economics as Thailand has learned a lesson from price mechanisms, such as price guarantees for agricultural products.

The wage policy will also have an impact on the Thai bourse, he said, pointing to the financial difficulties small businesses will face from an increase in labour cost.

However, he said, he does not see much impact from populist policies, though warned that the proposal to impose tax on capital gains from stock trading calls for prudence. He also said that he agrees with the government’s promotion of long-term equity funds as a means to generate savings for retirement through investment.

“Investors expect the stock market to warm up with the election results. In previous elections, the index rose, no matter which side won. It does not follow an ideal, but requires certainty,” he added.

Pornthep Jubandhu, senior vice president of SCB Securities, predicted a market rise in the week after the elections, since the majority will have voted in the winning party. However, the index may fall over policy issues.

There is not much difference in the policies of competing parties and the private sector seems to have accepted the proposal to increase the daily minimum wage from Bt300 to about Bt400.

However, this may force some business to shut down, he said.

Kavee Chukitkasem, deputy managing director of Kasikorn Securities, said if a government is formed immediately after the elections, the stock market could rise for a month with expected returns of 4 per cent as foreign investors have been waiting for a clear outcome and a smooth government transition.

He believes foreign investors will become more interested in Thai stocks, especially in banking, financing, property, retail, medical institutions and advertising.

However, the SET Index may fall by 4 per cent and go on a downward slope for up to six months if a new government is not formed immediately and if there is unrest. In this case, investors may opt for safe options with recurring income such as power plants, communication and property funds, he said.

The global economic slowdown and low earnings of listed companies have dampened investment sentiment this year, he said.

Imports in February totalled US$17.51 billion, down 10 per cent from the same month last year. resulting in a trade surplus of US$4.03 billion.

In baht term, exports in February amounted to Bt678.5 billion, up 5.5 per cent from the same month last year. Import in February totalled Bt558.77 billion, dropping 10.4 per cent from the same month last year, resulting in a trade surplus of Bt119.73 billion for the month, the reports said.

In the first months of this year, Thailand’s export growth 0.16 per cent, the ministry said.

For Thailand, as of the end of 2018, had the largest bond market among Asean member economies with $385.0 billion in paper outstanding. This was 2.5 per cent higher than at the end of September and 10.3 per cent more than at the end of 2017 in local currency terms.