While Thailand currently boasts the highest level of formal financial usage in the South East Asian region, current high levels of financial inclusion and access do not necessarily translate into availability of all financial services across all income groups. Featuring a diverse regulatory environment that covers everything from pawnshops to savings groups, Thailand’s main area for access improvement lies within the provision of appropriate, relevant insurance and credit products for different groups working within the informal market.
Though there are already high levels of financial access in Thailand, there are many factors that will shape the future nature of financial provision for lower-income households. These include:
An Included Market with Room for Improvement
Thailand’s financial sector inhabits a regulatory and policy environment that was greatly affected by the 1997 Asian financial crisis. The crisis forced the Ministry of Finance and Bank of Thailand to place the emphasis for commercial bank operations on stability and soundness rather than expanding into higher-risk low-income markets, a decision that reinforced the approach of state-provided financial services for the majority of the Thai population. In the absence of any external interventions, the market in Thailand is likely to continue developing as it has in the recent past. With heavy reliance on state infrastructure, the risk of stagnation and limited innovation is high, as well as the limited drive to steer business models away from unsustainability. The cost of service to the client by the private sector is also likely to remain high for the foreseeable future given the high cost of payment services referred above. Any interventions therefore need to focus on the sustainability of current models, as well as how to lower costs by leveraging the mobile networks, improve quality of services, and ensure faster inclusion for all.
The 2013 FinScope survey revealed that 74% of Thailand’s adult population has a bank account, while an additional 23% use other formal financial services and a further 1% utilize only informal products. This leaves just 1% of the Thai adult population that is not using financial services of any type. Despite high levels of formal access to financial services, however, substantial pockets of unmet demand remain, especially in regards to the utilization of formal credit products, insurance, and mobile money transfers.
Notwithstanding Thailand’s impressive record for some forms of formal financial inclusion, there are still challenges that remain in achieving increased and innovative solutions for financial access. At a macro level, the situation is evolving, and the following will require concerted effort at a policy and implementation level to encourage financial inclusion:
At a MESO level, key barriers include:
At a micro level, there exist several barriers to financial inclusion including:
From a customer perspective, barriers include:
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