The bank is also poised to reduce its traditional branches from 1,153 to 400 between 2018 and 2020, said chief executive Arthid Nanthawithaya.
SCB does not plan to lay off workers, said Mr Arthid, adding 3,000 employees, on average, resign annually.
Thailand’s second-largest lender by assets has been gradually closing its traditional outlets, while rotating and offering a training programme for branch staff, he said. The bank still recruits new employees to fill needs in some areas.
SCB’s move is further intended to strengthen the organisation in the long-run, said Mr Arthid.
“In the digital age, size does not matter. We will be smaller as a physical organisation, but larger in customer experiences,” he said.
The bank plans to close 99 traditional branches this year and open a new branch model called Express – an automated branch with a handful of employees. Between 150-200 Express outlets are targeted to be opened by year-end, up from 15 at present.
“I have worked at SCB for more than 10 years in the retail division. I was shocked to learn about the downsizing programme. Management did not at any point indicate that a massive layoff was in sight. We have been given little to no guidance as to which staff are more vulnerable moving forward,” said a bank analyst who requested anonymity.
“The bank is financially healthy, as far as I am concerned, and is adapting well to the digital technologies that are disrupting other players in the industry. I am unsure as to the motivation of the move. More than half of us within three years.
“Banks are hiring less and less, particularly for employees that have grown professionally in the bank, the skills we bring to the table may no longer be needed.”
Another SCB employee said, “I knew this day would come sooner or later. Fortunately, the bank gave a three-year notice, which will allow us to upgrade our skills and adapt to the rapidly changing financial industry. Hopefully three years will be enough to find a new job.”
The bank’s other three branch models have been classified as business centres (three outlets in operation), investment centres (four outlets), and service centres (one outlet).
SCB’s plan follows that of other banks experiencing digital disruption. Earlier, Kasikornbank (KBank) president Predee Daochai said the bank had adjusted its branch services, closing some traditional outlets.
But KBank has no plans to lay off branch staff, but will rather rotate them to other business areas, said Mr Predee.
Digital banking transactions have increased by five times over the past few years, while transactions via traditional branches are still growing, but at a lower rate, he said.
Mr Arthid said SCB needs to adjust its working style, adopt new technology to enhance efficiency and groom its staff by giving them new capabilities and skills under the digital platform.
The bank on Monday (Jan 22) announced its 2018 business strategy, “Going Upside Down”, which focuses on five areas: trimming the bank’s size, high margin lending, digital acquisition, data capabilities and embarking on a new business model.
SCB has been adopting data analytics in preparation for high yield loan offerings, particularly unsecured and small-sized enterprise lending, he said.
The digital banking platform will gradually reduce the bank's fee-based income by 20% over the next three years, said Mr Arthid. But this platform will also simultaneously reduce operating expenses, he said.
Declining fee-based income will be compensated by higher interest income, so the bank expects to maintain profitability in the long run, he said. At present, fee-based income represents 30% of total revenue.
The bank has announced its financial target for this year, aiming for a cost-to-income ratio in a range of 42-45%, in line with 43.9% last year. The bank has also set a technology investment budget worth B40 billion, covering three years from mid-2016.
SCB expects a net interest margin of 3.1-3.3% in 2018 and targets non-interest income growth of up to 5%.
The bank projects total loan growth at 6-8% this year and plans to cap gross non-performing loans at 3%, with a coverage ratio of 130%.
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