Digital disruption to affect Thai banks, employment

COMMERCIAL banks in Thailand are set to close down their branches and reduce the number of staff in a bid to lower operating expense as they gear up to invest more in digital technology to avoid digital disruption effects.

A number of Thai banks have already come out and outlined their plans to reduce the number of branches and staff, among them the Siam Commercial Bank (SCB), causing some concerns among their staff whose labor union came out and reacted negatively against the bank’s plan.

SCB says it is shifting to digital banking to improve its services in wealth management, payment and transaction banking, and lending as part of a reorganization to cut business costs by up to 30 per cent by 2020.

Under its business plan, the bank will reduce the number of its traditional branches from 1,153 nationwide to 400, and also cut the number of workers from 27,000 to 15,000 by that year, the bank’s president and chief executive officer Arthid Nanthawithaya announced.

While the number of traditional branches will be reduced, it will open a new branch model working as a business center and investment center, seeking to strengthen its relationships with customers, especially personal and small and medium-sized enterprises (SMEs) account holders.

Mr. Arthid said the bank had no plans to lay off excess staff in the branches and in other departments as usually the number of resignations from the bank averages 3,000 a year. “This means we do not have any program to lay off staff. With this pattern of natural attrition, we will be able to reduce our staff numbers to match our target of 15,000 in 2020,” he said.

Two days after the bank announced its plan last week, Siam Commercial Bank Labor Union issued its special declaration demanding explanation as to what has happened to the bank which would lead to unfair treatment to the staff.

The declaration asked labor union members and staff to gather at the Ratchayothi Head Office during lunch break from 12 noon till 12.45 pm every day until they get satisfactory answer from the management as to the cut of special bonus, the new salary structure and the possible layoff pressure through voluntary retirement scheme.

Last year, SCB reported a decline in net profit by 9.4 per cent against 2016 to 43.2 billion baht.

Meanwhile, Bank of Thailand Governor Veerathai Santiprabhob said the central bank would soon announce regulation on the appointment of banking agents to replace bank branches which are to be shut down under the restructuring plan.

He also urged banks to have relief measures for staff who are to be affected from the shutdown, and scaling down of workforce while staff need to adapt to new tech challenges.

The central bank reported that at the end of last year, a total of 230 bank branches were shut down.

Two other banks which have announced branch plans are CIMB Thai and Krung Thai banks.

CIMB said in late 2016 it would trim its number of branches from 165 to be in the region of 80-100

Krung Thai Bank recently announced the bank would spend over 10 billion baht on information technological development under its restructuring plan with target to scale down the existing 24,000 employees by 30% within five years.

No new staff would be recruited while the bank would introduce early retirement program every year.


Top: Siam Commercial Bank Head Office. Photo: Facebook Siam Commercial Bank


By Kowit Sanandang