FICO Insights: Nearly 3 in 4 Thais experienced drop in income due to pandemic; Many will switch banks in 2022 to get better deals

BANGKOK–(BUSINESS WIRE)–FICO (NYSE: FICO)

highlights

• 70 percent (nearly 3 in 4) of Thai retail consumers have had a negative impact on their income due to the pandemic

• Amid an uncertain financial climate, the majority of banking customers in Thailand will focus on savings (73 percent) and investment products (66 percent).

• One in five wealthy Thai bankers will consider switching banks in search of the most competitive banking deals

RFI Global post-pandemic consumer banking expectations for 2022 The report, prepared for FICO, confirmed that the pandemic has exacerbated the financial hardship for retail consumers in Thailand, with nearly 3 in 4 experiencing a drop in income. It has also been shown that many are motivated to look for better bank deals and that the propensity to switch lenders has increased year on year.

More information: https://www.fico.com/en/how-banking-expectations-asia-pacific-are-changing-post-pandemic

The disruptive effects of the pandemic have varied across the region.

While a sizeable 23 to 30 percent of New Zealand and Australian respondents experienced a negative impact on their income as a result of the pandemic, that number rose to 40 percent in Singapore and India, 50 percent in Malaysia and 63 percent in Indonesia. Respondents suffered the biggest blow in Thailand, where 70 percent said their income had been cut.

The report revealed that more than 1 in 4 consumers across APAC (27 percent) have deferred loan repayments, with consumers more likely to do so in some countries than others. While almost half of retail banking customers in Thailand (47%) and almost one in three (31%) in India deferred loan repayments due to COVID-19, this was the case in Singapore (12%), Australia (9%) and New Zealand (7 percent).

Despite the uncertain financial climate, the majority of Thai retail clients plan to maintain or increase their investments (66 percent). Most want to maintain or increase their savings (73 percent), and many will consider switching banks this year.

Increasing the intention of customers to switch banking providers

Surprisingly, although the report shows that most customers were very satisfied with their major banking providers, up to 20 percent of responding APAC bank customers said they plan to switch banks in 2022. In contrast, just 10 percent said they would switch banks in 2021.

This increased propensity to switch lenders is highest among the mass wealthy (defined as the high end of the mass market or those with total investable assets of at least THB 3,000,000).

In Thailand, 13 percent of retail banking customers and 8 percent of wealthy mass customers switched in 2021. That will more than double this year for the affluent masses, with 20 percent saying they are very likely to switch. The propensity of retail banking customers dropped slightly to 10 percent, still a respectable proportion of 1 in 10 bank customers.

The top reasons cited by Thai respondents include a change in personal circumstances (28 percent), a desire to consolidate all accounts with another institution (22 percent), a desire to have access to better investment and wealth management products and services (20 percent), as well as incentives from another institution (20 percent).

Financial impact even the richest Thais will feel

Among affluent mass bankers in Thailand, 63 percent experienced a drop in income due to the pandemic, 7 percent less than the broader retail banking market in Thailand. Many (41 percent) of the country’s affluent masses delayed loan repayments as a result, 6 percent fewer than Thailand’s retail banking customers as a whole.

This income disruption has led 37 percent of wealthy Thais to say they intend to cut spending, just as half of Thai retail banking plan to do so.

Across APAC, the affluent masses are more likely to increase their borrowing relative to the broader market (16 percent vs. 8 percent). In Thailand, the mass wealthy are just as likely to increase their borrowing as retail customers (11 and 12 percent, respectively).

The report further revealed that a whopping 78 percent of Thailand’s mass wealthy choose to maintain or increase their levels of investment in banks, which is higher than the country’s overall retail market (66 percent).

Impact of the pandemic on bank intentions

Consumers are changing their banking behavior in response to the financial impact of the pandemic.

Only about 3 in 4 Thai retail customers will either increase or maintain their savings (73 percent). Across the region, sentiment to maintain or increase saving was highest in New Zealand (94 percent) and Indonesia (87 percent).

Despite a year-over-year decline in borrowing plans, APAC retail borrowing still remains higher than pre-pandemic levels as consumers grapple with the ongoing impact of the disruption.

“The pandemic has significantly exacerbated the financial hardship for customers regardless of income class,” said Aashish Sharma, senior director of decision management solutions at FICO in Asia Pacific. “As borrowing and spending habits decline, customers will be looking for ways to grow their wealth and increase their savings. Banks must be able to proactively identify customer needs and tailor their approach to reduce financial anxiety while ensuring their products meet customer affordability and financing needs.”

turn to the digital

Nearly half of respondents in Thailand (44 percent) still consider proximity to branches and ATMs to be the most important criteria for a main banking provider; However, the report emphasized the importance of providing digital services. Up to 72 percent of APAC retail banking customers chose a fintech product over the option to use their banks’ core services. This was highest in Malaysia (94 percent) and lowest in Australia (39 percent). Respondents wanted time and cost savings, ease of use and simpler application processes.

Compared to 2021 and 2019, consumers in APAC are increasingly gravitating toward digital channels at every stage of their job application journey: initial inquiries and research (up 14 percent), follow-up inquiries (up 15 percent), and banking applications (up 15 percent).

How banks can ensure that the customer is at the center of actions and decisions

• Transform operations and data silos through the use of sophisticated analytics technology and centralized management platforms.

• Make data-driven decisions by predicting, analyzing, and optimizing customer interactions in real-time for an event-based, profile-driven approach to relationship management.

• Develop precise insights into optimal interactions and offers that work best for customers

• Build a digital twin (a kind of virtual model used for simulation purposes) to take advantage of this continuous learning and test radically new approaches and strategies in a low-cost and low-risk environment.

• Deliver hyper-personalized offers and customer promotions at scale

“Banks need to understand their customers’ needs at a deeper and more granular level, otherwise they risk losing them to competitors and alternative providers.” said Sharma. “Maintaining customer satisfaction alone is no longer enough; Customer experiences need to be radically improved. Customer centricity will be key to consistently deliver hyper-personalized experiences and retain customers.”

survey methodology

This poll was conducted in 2021 by an independent research firm that adheres to research industry standards. 1012 adults inside Thailand were interviewed, along with 12,885 consumer in Malaysia, Australia, New Zealand, Singapore, Indonesia and India.

Learn more here and www.fico.com.

About FICO

FICO (NYSE: FICO) supports decisions that help people and businesses around the world thrive. Founded in 1956, the company is a pioneer in using predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for companies in financial services, manufacturing, telecommunications, healthcare, retail and many other industries. Businesses in more than 120 countries use FICO solutions to do everything from protecting 2.6 billion payment cards from fraud to helping people get credit and making sure millions of airplanes and rental cars are in the right place at the right time are.

Learn more at www.fico.com.

FICO is a registered trademark of Fair Isaac Corporation in the US and other countries.