Thai Credit Retail Bank (TCRB) launched an API-driven open banking platform on AWS, help their customers on digitalization, and create new opportunities for business partners alike.
When Thai Credit Retail Bank (TCRB) launched micro finance segment product from scratch just over five years ago, there was no commercial bank focusing on micro finance, Thailand’s fastest growing segment, so it was a sector that has been under serviced while offering abundant opportunities.
At launch TCRB wiped the slate clean to create a fresh business model, hiring a new team and built small branches that allowed them to get as close as possible to their potential customers. This strategy worked well since most TCRB’s customers were the traditional ‘Mom & Pop’ shops, almost all of whom are clustered at local ‘wet’ markets under the same roof.
All of these things seemed to point to a successful business strategy, however it also included manually intensive work processes that were not digitalized due to customer behaviour, a preference for cash and the bank’s new business model. At the time TCRB also dreamt of digitizing its customers, 99% of whom used cash exclusively. Obviously, that meant no Electronic Data Capture (EDC) as access to mobile banking was non-existent in this context.
When TCRB started their ‘Nano loan’ scheme they began with just a few in house application programs and a custom built vendor field collection application. After just a few months their loan product resonated very well in the market, yet there was a problem. The systems were unable to cope with rapid growth, causing system performance issues, especially during month end reporting periods when they tried to close out as many loan applications as possible.
It became obvious that changes were needed as TCRB grew rapidly and the infrastructure needed to support growth and keep up with a fast changing business environment needed to be quickly developed and put in place.
Their business expectations were not that complicated, but instead rather unique. What was most important was an ability to change or modify the system and not let it become archaic with limitations. So it was then that their IT team came up with a ‘Wrap and Digitize’ approach which actually has worked for both short term and long term needs.
It let them build a scalable, elastic platform while maintaining bank-grade security. TCRB used a combination of AWS services including Amazon RDS, AWS CloudWatch, and AWS Lambda together with serverless technology to power internet banking micro-services and support systems. The serverless AWS architecture let the company drive a highly elastic solution that offers low maintenance and running costs, while allowing TCRB meet its unique business needs.
Christopher Chan, Assistant Managing Director for Information Technology, TCRB said, “When we looked at our prior platform, we had an old core banking system with application interfaces that were not well organized, while our web application portfolio required consolidation and modernization.
“We realized this was a significant gap to bridge. Finally, after considering investment and complexity, we opted for what we referred to as a ‘Wrap and Digitize’ strategy. This means we wrap new functionality around our existing legacy technologies as we upgrade to ensure they can host our product engine, in addition to middle and back of office functions. We then surround them with an agile delivering layer to expose the bank’s products and services to our customers and partners and in the process create an open banking platform.”
To achieve this digital journey, it was necessary to adjust the TCRB organization and development processes, splitting the organizations into two different groups in maximizing their strengths.
Mr Chan, added, “The teams taking care of the legacy platform operate in ‘Marathon Mode’, where they project manage the development on a longer cycle, but it ensures a sturdy, stable and reliable engine. While the teams taking care of the frontend channels, operate in ‘Sprint Mode’, where they adopt agile development, practice DevOps, work on shorter development and learning cycles to deliver products and services packaged with an impressive customer experience.”
First TCRB launched its Micro Pay e-Wallet just when Thailand adopted Promptpay as a national digitization agenda, which provided a large opportunity to start the digitization process across TCRB micro segments. It was untested at the time and the company was unsure how the market would adopt the product as its customers were not really digitally savvy at the time, and cash culture is hard to change.
However this proved opportunistic as consumer behaviour was undergoing dramatic changes because of the ongoing COVID-19 pandemic.
Mr Roy Agustinus Gunara, Managing Director, Thai Credit Retail Bank Public Company Limited, said, “During COVID-19, the product received great acceptance and we added about 10,000 customers per month with the completion of Know Your Customer (KYC) compliance that let us begin digitizing our customers.
“The wrap and digitize concepts were the foundation of our open banking platform, allowing customers to connect Micro Pay e-Wallet with their revolving loan account in the bank seamlessly. So all our Micro Pay customers can now access their revolving loan from the same wallet and manage their balance online.”
TCRB is now building its own mobile banking application on a micro services platform with the launch expected later in 2021. It is also expanding its open banking platform by adding more micro services to support a partnership program with digital channels that enables it to connect and collaborate with external parties through API layers.
In the end the positive impact for customers has exceeded the bank’s expectations. Customers have started to adopt its e-wallet and transactions are growing every day. More than half of TCRB’s existing customers is now using Micro Pay, allowing them to access the loan online and manage their balance, payments and withdrawals. So by leveraging the AWS cloud TCRB gives customers access to new financial products and services while actually digitizing them as well.
When TCRB opened, they found 60% of their customers had borrowed money from informal lenders, including loan sharks, who in turn added more financial burden and debt to their already difficult lives. TCRB’s customers were in fact using the loans to service existing debt and pay off other loans. Many were single mothers, or grandparents, who worked daily to make ends meet, and they were paying off their loans for over 10 years and without reducing their balance because of high interest rates.
Niraja Gokhale, Industry Specialist Financial Services, Asia, AWS drew on his experience growing up in India. “I was fortunate enough to see the positive impact of small co-operative banks and micro-finance up close. My father was an early investor in a small bank founded by close friends and relatives in 1970s. Over the next 20 years, the bank flourished from 1,000 to over 200,000 customers, and grew from one branch to 23 bricks and mortar branches and collected US$ 200 million in deposits.
“Every year, as a new branch opened in a remote suburb or a village, I was able to witness the ceremonial loan disbursements during the inauguration function. As a woman entrepreneur proudly took first steps towards financial independence or a farmer got his first opportunity to free himself from loan sharks, I ended up appreciating how financial inclusion can change human lives for the better. As per the Asian Development Bank (ADB), addressing the financial needs of the micro and SME segments can increase the GDP in ASEAN economies by between 9% to 14 %. These numbers underscore the importance of Small and Midsize Businesses (SMBs), credit unions and MFIs in the greater ASEAN region,” she added.
To take advantage of emerging business opportunities in ASEAN – SMBs, credit unions and MFIs can use AWS to leverage the cloud by starting with the top business priority, defining an adoption strategy that aligns with the business objectives, iterating quickly and use the right tools for the job. Gokhale noted that AWS training and certification resources can come in handy to kickstart that journey whether it is an entrepreneur builder experimenting with new online resources or an executive keen to train and upskill company staff using AWS enterprise resources.
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