Carbon dated transactions

When customers at a downtown branch of Thailand’s fifth-largest bank take a deposit or withdrawal slip, they take a sheet of carbon paper too – it means they can write their own receipt. It’s no surprise then, that Bank of Ayudhaya (BAY) customers were taken aback by the August launch of the bank’s first foray into online retail banking.

Executive vice president Charlotte Donavanik believes the bank’s conservative image could be an asset when it comes to enticing the more cautious customers online: "Customers are thinking, if we’re doing it online, it must be alright."

A soft launch in June, pitched at Bangkok’s Assumption University, attracted some 2,000 account applicants. The bank’s target for 2001 is 20,000, to be drawn substantially from the bank’s three million depositors, spread across 417 branches.

Thailand currently has around 100,000 online customers, split between four other banks. It is a small market – one that analysts aren’t certain it’s worth pursuing in the current difficult banking environment. "Shifting to retail online banking is fairly inconsequential to a bank’s overall operations here," says SG Securities Asia analyst Andrew Stotz. "Computer penetration rates are tiny, so spending is potentially a massive waste of money. It is possible, though, that it could help on the corporate side."

The bank does have this base covered too. In fact, the bank plans to spend Bt3.5 billion over the next three years on 27 individual IT projects, falling under five categories: e- business, branch automation, developing a centralised clearing system, core banking, and developing a data warehouse. Accenture finished a two-month review of the master plan in August, while Pricewaterhouse Coopers has provided the framework for overall IT security.

"This year is definitely a turning point for us," says Donavanik. "In the past, with traditional banking, we could plan and cope with our existing systems."

The regional economic crisis changed all that. It has taken a while, however, for the competitive implications to be felt, she says, as banks have been compelled to focus on solving more pressing problems, such as non-performing loans. "Competition really only started in 2000," she says, "so we are not far behind."

The sharpest focus is currently on the e-business category, within which seven projects fall:

* E-banking;

* E-trade, an electronic B2B trading system that allows corporations to conduct trade via the Internet, launched in April;

* E-payment, a gateway for B2C transactions, launching Q4 this year;

* Cash management, aimed at corporates;

* E-ATMs;

* Mobile banking, to be launched in October in conjunction with DTAC and AIS in Q4; and

* E-information, provided via their new corporate website www.krungsri.com, to be launched this month (September).

Senior vice president and vice president of IT development Suvichai Lovichit was brought on board in October 2000 to overhaul the bank’s IT strategy. "We looked at the existing system, what the competition was doing, and what future technology would be," he says. His team identified what the bank wanted to achieve and what users required; from there, they bought packages mostly off-the-shelf to match their needs, such as BroadVision applications.

The various working groups involved in the projects are comprised of a mix of business and IT staff, weighted towards the former to ensure results are exactly what users require. The six-member IT steering committee, which prioritises and reviews progress of the projects, includes just one IT manager.

Good communication between IT and business staff has been vital to the process, says Donavanik. "It’s a must for us that IT and business [managers] work together. The IT people should understand users’ back office requirements, and at the front end, they need to understand our products, our marketing strategies, our target groups."

By the same token, she says, business managers need to understand what IT is capable of providing – and not providing.

As the projects have rolled out, the lesson for management has been one in flexibility. Senior vice president and manager of the IT operations department, Werachat Wahawisan, says the schedule for completion of projects has changed as their true degree of difficulty has become apparent.

For instance, getting corporate customer services online has been a particular challenge. "Banking for our corporate customers was a priority. But when we explored what we needed to do to transfer our services online, it became quite difficult… It’s taken more time not only to develop the software itself, but to establish the business processes to handle [corporate] functions."

It’s too early to measure any project successes, but improved productivity and management of information are key objectives. While some staff cutbacks are part of the bank’s overall restructuring process, staff are not being made redundant as a result of IT changes. Instead, staff freed from their daily duties will be retrained as salespeople, charged with increasing the bank’s customer base and selling revenue-generating products.

While analysts agree on the importance of Thai banks investing in IT – chiefly to improve their efficiency, implement better risk management, and increase their revenue – they are reluctant to comment specifically on BAY’s overall plans alone.

"It’s easy to talk about plans – banks have to say that they will upgrade their systems," says one. "In terms of implementation, however, it’s a different thing. Once they seriously launch, then we’ll take a look at what it means."

So the jury is still out. In the meantime, at the very least, BAY’s conservative image is enjoying a remarkable makeover.

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