Core-Banking Systems are fairly standard. Different global regions and countries, have different options in their systems. In an article, I’d like to explore the differences between modules (functionalities) and integration that are common in different countries. Switzerland vs EU vs Eastern Europe vs South Eastern Asia vs Africa. How are the functionalities adapted to the population’s needs, what practices are widely accepted which may be unimaginable in other places. What functionalities could be interesting for our system, and vice-versa?
It goes further than just Online Banking and mobile apps.
Thai System
- PromptPay:
- Description: PromptPay is a real-time interbank transfer system in Thailand that simplifies fund transfers. Users can link their mobile phone numbers or Citizen ID numbers to their bank accounts and use them to send and receive money.
- Advantages: It eliminates the need to remember and share lengthy bank account numbers, making transactions more convenient and efficient.
- QR Code Payments:
- Description: QR code payments involve scanning a Quick Response (QR) code to initiate a payment. Thai businesses, including street vendors, commonly use QR codes to accept payments.
- Advantages: QR code payments are quick and secure, and they can be used for various purposes, such as paying bills, making in-store purchases, and transferring money to friends and family.
- Mobile Wallets:
- Description: Mobile wallet services like AliPay and WeChat Pay are popular among tourists and residents in Thailand. Users can link their bank accounts or load funds into these wallets to make payments.
- Advantages: Mobile wallets offer convenience, especially for international travelers, as they can use their preferred payment method from their home country.
Cross-Border Remittances:- Description: Some Thai banks offer specialized services for cross-border remittances. These services can provide competitive exchange rates and lower fees for sending money abroad.
- Advantages: They cater to the significant population of Thai migrant workers and help them send money to their families more affordably and efficiently.
- Banking for the Unbanked:
- Description: Thai banks have initiatives to reach the unbanked and underbanked populations through mobile banking and low-cost account options. These initiatives aim to provide financial services to those who traditionally had limited access.
- Advantages: Financial inclusion efforts help bring more people into the formal financial system, offering them a secure place to save money and access credit.
- ATM Features:
- Description: ATMs in Thailand often offer a range of services beyond cash withdrawals, including bill payments, mobile top-ups, and insurance purchases.
- Advantages: These additional features make ATMs more versatile and can save customers time by allowing them to complete multiple transactions in one place.
- Microfinance and Peer-to-Peer Lending Platforms:
- Description: Thailand has seen the emergence of microfinance institutions and peer-to-peer lending platforms that cater to small businesses and individuals seeking loans or investment opportunities.
- Advantages: These platforms provide access to financial services and credit for individuals and small enterprises that may not meet traditional bank criteria.
- Digital Banking Innovations:
- Description: Thailand has witnessed the growth of digital banks and fintech startups that offer innovative financial products and services, such as digital-only savings accounts and investment platforms.
- Advantages: Digital banks often provide user-friendly interfaces, lower fees, and innovative features that appeal to tech-savvy customers.
- Government Initiatives:
- Description: Thailand’s government-led initiatives, like Thailand 4.0, focus on modernizing the financial sector through digitalization and promoting the adoption of digital payments.
- Advantages: Such initiatives drive economic growth, reduce cash dependency, and encourage the use of digital financial services.
- Customized Investment Products:
- Description: Some Thai banks offer investment products tailored to retail customers’ preferences, such as gold accounts and structured products with unique risk-return profiles.
- Advantages: These products allow customers to diversify their investment portfolios and potentially access assets like gold, which may have cultural significance.
Key Differences:
- Regulatory Environment: Differences in banking regulations can significantly impact the services offered. Some countries have more stringent regulations around digital transactions, data privacy, or financial product offerings.
- Mobile Banking Adoption: The extent to which mobile banking is embraced can be a critical factor. Some countries have a high penetration of smartphones and advanced mobile banking apps, leading to more convenient services for users.
- Financial Inclusion Initiatives: Explore initiatives aimed at financial inclusion, such as providing banking services to rural or low-income populations. Some countries have innovative programs to ensure access to banking for all citizens.
- Cybersecurity Measures: Banking systems’ resilience against cyber threats is crucial. Differences in cybersecurity measures and incidents can showcase the technological robustness of each system.
- Digital Wallets and Payment Systems: Besides traditional banking, assess the popularity and functionality of digital wallets and payment systems. Some countries have advanced systems that allow for seamless transactions both online and offline.
- Open Banking and Fintech Integration: Switzerland has been relatively conservative in embracing open banking. The country has a strong banking privacy tradition, and while there’s an interest in fintech, the regulatory landscape has been cautious about data sharing.
Other Countries to Explore:
- Sweden: Sweden is known for its highly advanced and almost entirely cashless society. Mobile payments and digital transactions are widespread, making it an interesting case study.
- Cashless Society:
- Advantage: Sweden is one of the most cashless societies in the world. The widespread adoption of digital payments and mobile banking apps allows for convenient and quick transactions. People rely heavily on mobile payment apps and electronic transactions. Businesses often prefer electronic payments, reducing the risks associated with handling cash. This has also led to increased transparency in financial transactions.
- Swish:
- Swish is a popular mobile app used for person-to-person and person-to-business transactions. It allows users to send money instantly using just a mobile number. It’s commonly used for splitting bills, paying for goods and services, and even making donations. The ease of use has made it a preferred method for many transactions.
- Digital IDs and BankIds:
- BankID is extensively used for various online services beyond banking, such as signing contracts, accessing government services, and verifying identities. It has increased the efficiency of online processes and reduced the need for physical paperwork.
- Open Banking and Fintech Integration:
- Sweden has embraced open banking, allowing third-party financial services providers to access bank data (with user consent) and create innovative financial solutions. Consumers have access to a variety of financial tools, budgeting apps, investment platforms, and loan services, enhancing their financial management options.
ATMs and Bank Branches:- ATMs are primarily used for emergencies, as most transactions occur digitally. Bank branches offer services like mortgage consultations and financial advice, catering to more complex financial needs.
- Robust Consumer Protections:
- Swedish banking laws provide strong consumer protections, ensuring secure transactions and data privacy. Consumers have confidence in digital transactions due to the robust legal framework. Trust in online banking and payment systems is high, encouraging further adoption.
- Cashless Society:
- Estonia: Estonia is renowned for its advanced digital infrastructure, including its digital identity system. The country’s approach to digital governance and banking services could provide valuable insights.
- Digital IDs and e-Residency:
- Estonia offers digital IDs to its citizens and residents, allowing secure access to various online services, including banking. Additionally, Estonia’s e-Residency program allows non-residents to access Estonian services and even open businesses online. Digital IDs and e-Residency have made it incredibly convenient for people to manage their finances and conduct business activities online.
- X-Road:
- X-Road is a decentralized data exchange platform that enables secure data sharing between government agencies, banks, and other organizations. X-Road ensures seamless and secure data exchange, enhancing the efficiency of banking operations and enabling faster and more accurate customer verification processes.
- Mobile Banking and Payment Apps:
- Estonia has a high adoption rate of mobile banking apps, allowing users to perform various banking tasks, including transfers, bill payments, and account management, on their smartphones.
- Open Banking and Fintech Integration:
- Estonia has embraced open banking principles, allowing third-party providers to access banking data (with user consent) and develop innovative financial services. Fintech startups have flourished, offering diverse services such as budgeting apps, investment platforms, and peer-to-peer lending. This has expanded the range of financial products available to consumers, encouraging competition and innovation in the banking sector.
- Efficient Digital Services:
- Estonian banks offer a wide range of online services, from account opening to loan applications, all accessible through digital channels.
- Digital IDs and e-Residency:
- South Korea: South Korea has a robust mobile banking system with widespread adoption of mobile payment apps and innovative services. It offers a glimpse into a highly tech-savvy banking ecosystem.
- Mobile Banking and Payment Apps:
- South Korea has a widespread adoption of mobile banking apps and payment solutions. Various apps allow users to perform tasks like money transfers, bill payments, and even offline payments at stores using smartphones. People rely heavily on their smartphones for banking and payments.
- Digital Wallets and Contactless Payments:
- Digital wallet services like Samsung Pay, KakaoPay, and Naver Pay allow users to store multiple credit/debit cards and make contactless payments using their smartphones.
- Online Banking Services:
- South Korean banks provide comprehensive online banking services have made banking accessible 24/7. People can handle their finances, pay bills, and monitor transactions at their convenience, reducing the need to visit physical bank branches.
- QR Code Payments:
- QR code-based payments are widely used, allowing customers to scan QR codes to make payments for goods and services.
- Virtual Banking and Fintech Integration:
- South Korea has embraced virtual banking, allowing digital-only banks to operate without physical branches. Additionally, fintech integration is prevalent, with various startups offering innovative financial products and services.
- Biometric Authentication:
- Biometric authentication methods such as fingerprint and facial recognition are widely used for mobile banking app access and transactions. People find it easier to access their accounts and authorize transactions using their biometric data.
- Mobile Banking and Payment Apps:
- India: India’s banking landscape has undergone significant changes with the introduction of initiatives like Unified Payments Interface (UPI) and Aadhaar-based services, promoting digital transactions and financial inclusion.
- Unified Payments Interface (UPI):
- UPI is a real-time payment system that enables instant fund transfers between bank accounts using smartphones. It allows users to send and receive money 24/7, making transactions seamless and convenient. People commonly use UPI apps for various transactions, including bill payments, online shopping, and splitting expenses, leading to a significant reduction in cash transactions.
- Aadhaar-Enabled Payments:
- Aadhaar, a biometric identification system, is linked to bank accounts, allowing for Aadhaar-enabled payment services. These services enable people to make transactions using their Aadhaar number and biometric authentication. Aadhaar-enabled payments have improved financial access for rural and low-income populations. It has made banking services more inclusive and enabled easy authentication for various financial transactions.
- Mobile Wallets:
- Mobile wallet services like Paytm, PhonePe, and Google Pay allow users to store money digitally and make payments, mobile recharges, and bill payments.
- Jan Dhan Yojana (Financial Inclusion Initiative):
- The Pradhan Mantri Jan Dhan Yojana (PMJDY) is a government initiative to ensure financial inclusion by providing every household with access to a bank account, insurance, and a debit card.
- Digital Lending Platforms:
- Digital lending platforms leverage technology to provide quick and hassle-free loans to individuals and businesses, often using alternative credit scoring methods. These platforms have made credit more accessible, especially to individuals who might not have a credit history. It has spurred entrepreneurship and economic growth by providing financial support to small businesses and entrepreneurs.
- Micro ATM and Business Correspondents:
- Micro ATMs and business correspondents act as banking touchpoints in rural and underserved areas, allowing people to perform basic banking transactions in their localities. These services have brought banking closer to rural communities, reducing the need to travel long distances to access banking services. It has enhanced financial inclusion and improved financial literacy.
- Unified Payments Interface (UPI):
Core-platforms
- Kasikorn:
- Infosys Finacle core banking platform
- SCB
- Misys (now Finastra) core banking platform
- Bangkok Bank
- Misys (now Finastra) core banking platform
- Post Finance
- Avaloq Banking Suite
- N26
- Proprietary
- Flowbank
- Proprietary