Chartsiri Sophonpanich: Modernising Thai banking

Thailand’s banking sector is paving the way for a cashless society without losing the Thai fun-loving spirit of “sanuk”.

Chartsiri Sophonpanich of Bangkok Bank writes for FinanceAsia's 20th anniversary edition on the overhaul Thai banking has faced in the past two decades.

Thailand’s banking landscape has gone through a major transformation during the past two decades. While most people know of the 1997-98 financial crisis which engulfed the region -- known in Thailand as the “Tom Yum Gung” crisis -- the seeds of change were planted even before that.

In the mid-1990s a number of foreign lenders entered the Thai market and provided cheap foreign currency loans to local companies. This was actually one of the root causes of the crisis, because many companies borrowed in US dollars and, when the baht plummeted, they could no longer service their loans.

At the time of the crisis, the Thai banking sector was rather traditional. It was very much relationship-based, and mainly focused on corporate customers. Although ATMs, credit cards and home loans were available, the consumer banking revolution had yet to take place, and digital channels such as internet and mobile banking were unknown.

Back then, I was relatively new to the presidency of the bank, having been in the job for less than three years. It was therefore a formative experience and I learnt many valuable lessons which helped to shape my thinking and management style, including how to turn difficulties into opportunities.

Although the crisis was a very tough time for banks, it also spurred much-needed change. For example, Bangkok Bank accelerated plans for organizational and operational restructuring.

We overhauled our risk management and governance systems and sharpened our customer focus, shifted processing to operational centres, set up new business units for key customer segments, and opened new micro branches to suit modern customer lifestyles.

Technology was also a key focus as we replaced our core banking and general ledger systems and built new platforms for digital banking channels and services.


The early years of the new millennium were an exciting and dynamic time in Thailand. The staid image of Thai banking was transformed with innovative new products and marketing campaigns, often reflecting the Thai fun-loving spirit of “sanuk”.

The ownership structure of Thai banks was also changed, pushed by financial liberalization under the Bank of Thailand (BOT). All banks had to recapitalize, which brought in outside investors. Foreign banks took majority shareholdings in some of the smaller Thai banks, and several rebranded.

Meanwhile small- and medium-sized enterprises (SMEs) attracted growing interest from banks, which were keen to expand their customer base. SMEs had been badly hurt by the crisis and Bangkok Bank introduced new programmes to help them improve their competitiveness, such as training in business planning, study trips and opportunities for networking. We also provided support for the agricultural sector, as we saw the need for farmers to adopt modern technologies.

More recently we and other banks have focused on issues such as sustainability, internationalisation and digitization.

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Banks have also been working closely with the Stock Exchange of Thailand, Securities Exchange Commission, and Institute of Directors to encourage better standards of corporate governance. This has paid dividends as Thailand now leads the region in this area – last year 23 Thai-listed companies were among 50 Asean companies which achieved the highest Asean Corporate Governance scorecard ranking and two Thai companies were ranked in the top five. Meanwhile the BOT, banks and government agencies are seeking to encourage greater financial inclusiveness with various programmes to support financial access to households, SMEs and micro-enterprises.

Thailand is now a middle-income society and the market is maturing, so Thai companies are establishing production facilities offshore and tapping new regional markets. Thai banks have also been expanding regional operations to ensure customers have the support they need. The start of the Asean Economic Community (AEC) at the end of 2015 provided further impetus.


Thailand’s domestic market is also shifting. Social media and digital technologies are increasingly popular and more and more people are turning to online transaction options, such as our mobile banking application, Bualuang mBanking. Many banks are researching new streamlined payment systems for e-commerce and m-commerce, and using big data analytics to provide more accurate offers and campaigns in real-time.

As we move into the digital era, the Thai government has developed the National e-Payment programme which covers mobile devices, the internet, payment cards and even the national ID card. All ATM and debit cards issued by banks must have embedded electronic chips and Thailand has established a local payment network to encourage the use of e-payment systems. 

Key benefits include high security standards, added convenience and low transaction costs, as consumers will be able to use e-payments even for very small purchases. Such moves will accelerate Thailand’s progress towards a cashless society.

The past two decades have been a period of dynamic change for Thai banking. The next 20 years will surely be even more transformational and we plan to be ready for it. FA

Chartsiri Sophonpanich has been president of Bangkok Bank since 1994 and a director since 1992

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