Government Savings Bank emphasizes its role as a Social Bank, using AI to create a positive impact on society.

Six state-owned banks unveil their strategic plans for 2026, continuing their mission to support government policies. Virtual banks are not competitors; they are preparing to develop technology to cope, moving forward with the use of AI to enhance the capabilities of banks and help people access financial services, while striving for sustainability.

News report from Government Savings Bank. It has been revealed that Thai banks in 2569 are expected to face challenges and risks in several dimensions, including a slowing economy, loan quality issues, and a downward trend in interest rates. This could result in continued contraction in loan portfolio growth and reduced interest income, while banks must remain competitive in terms of deposit interest costs and expenses. This will put pressure on the overall net interest margin (NIM), keeping it low. At the same time, competition within the industry is likely to increase with the entry of new players such as branchless banks or virtual banks, which are expected to begin operations in Thailand in mid-2569.

Furthermore, the banking business faces additional pressure from the country's structural problems, such as household debt, which, although gradually decreasing, remains at a high level; income inequality; uneven recovery in consumption; and various macroeconomic external factors, including trade wars and geopolitical conflicts in several regions. All of these will impact the overall performance of Thai banks in the short term and pose limitations in the long term.

Therefore, 2569 will be a year of prevention and adaptation for Thai banks rather than focusing on rapid quantitative growth. Banks will remain particularly cautious in new loan disbursements, focusing more on asset quality management and cost control.

Meanwhile, non-interest income will significantly compensate for this and play an increasingly important role, including income from investments, fees, and alternative services such as wealth management, bancassurance, and digital financial services.

News reports reveal that for its operations in 2569, the Government Savings Bank will continue its role as a Social Bank, focusing on expanding cooperation with partners and creating a positive impact on society through digital technology and AI. Its key operational strategies are as follows:

1. Strengthening grassroots capabilities and developing the economy.Inclusive Growth through Grassroots Empowerment) To expand equitable access to financial services for all, including those who are unserved, those who cannot access sufficient funding from the formal system, and small and medium-sized enterprises (SMEs) and SME startups.

Last year, the bank developed an innovative financial product, "Credit Building, Opportunity Loan," to help people with no credit history start building credit comprehensively and fairly. It also continuously assists in resolving debt problems for all customer groups to prevent damage to their credit history.

This includes supporting government policies to concretely address household debt problems, especially the "You Fight, We Help" project in two phases, as per the policies of the Ministry of Finance and the Bank of Thailand, to assist individual borrowers and SMEs facing difficulties in repaying debts, enabling them to resume debt payments to their full potential, and to provide opportunities for accessing formal sources of funding.

2. Work towards achieving the goals. NetZero The bank aims to achieve carbon neutrality within the next four years, or by 2030, and to achieve net-zero greenhouse gas emissions by 2050, according to the GSB Net Zero Roadmap.

The bank plans to drive its business operations and organizational management in a responsible and environmentally friendly manner. This includes supporting sustainable financial products and services through ESG Financial Transition loans, utilizing ESG Score criteria in loan approvals, and encouraging entrepreneurs to adopt ESG principles in their business operations.

This includes implementing policies to support businesses on the Positive List to promote and support good and environmentally friendly practices, and avoiding lending or investing in businesses on the Negative List by refraining from/canceling loans to businesses that use fossil fuels. Simultaneously, it involves building collaboration with all stakeholders to drive a low-carbon economy and create a sustainable society.

3. Strengthen financial stability (Financial Strengthening Enhance the organization's financial strength. To ensure the bank maintains a sufficient level of responsible profit to ensure its long-term financial stability.

This involves developing and expanding products and services to generate revenue and enhance competitiveness, improving service channels, generating revenue from new business models through expanded strategic partnerships, and managing asset and liability structures and operating costs to achieve optimal costs and generate returns under appropriate and acceptable risk levels.

4. Enhance innovation and digitalization.Digital & Innovation) Accelerate the upgrading of service delivery and organizational management with modern technology to enhance innovation and digital capabilities, support operational missions, and adapt to the changing environment.

The focus is on leveraging Artificial Intelligence (AI) to improve and enhance various work processes, such as using AI to develop debt tracking processes, create AI-Enhanced Credit Risk Models, improve loan approval and fraud prevention (AI Pre-Fraud Detection), and enhance customer service through intelligent assistants (AI Chatbot for Branches), among others. This is coupled with innovation management to achieve tangible results and become an innovative organization, while also promoting the use of data to support business operations and management (Data Driven Organization).

5. Striving to become a high-performance organization.(Enabler Driven) This is achieved by enhancing infrastructure and upgrading internal management to support change and fully drive the bank's mission. This includes human resource management and development, enhancing digital technology capabilities through collaboration with partners, and managing system and data security. Simultaneously, core business processes will be improved and supported to enhance efficiency, enabling operations in the digital age and aligning with the bank's mission.

“The Government Savings Bank continues to drive its role as a Social Bank through its Dual Missions, using profits from its normal business operations to support social missions. The key objective is to reduce financial inequality and create equitable access to capital, operating with consideration for social, environmental, and governance aspects. This is coupled with creating shared value between business and society to support balanced and sustainable long-term growth.”

Virtual Bank Do not use threats.
But it has accelerated the transformation of banks.

According to a report from the Government Savings Bank, 2569 will mark the beginning of virtual banks playing a significant role in the Thai financial system. This follows a period of preparation involving licenses, technology, and regulatory frameworks. However, in the short term, virtual banks may not be able to significantly gain market share from traditional commercial banks.

However, structurally, the emergence of virtual banks will present a systemic challenge that will change customer behavior, competitive costs, and revenue models of Thai banks in the long term.

1. In terms of price and speed competition, because virtual banks operate on a fully digital infrastructure, eliminating the burden of numerous branches and employees, they can offer more attractive deposit and loan interest rates, lower fees, and faster loan approval processes. Traditional banks therefore face direct pressure on their net interest margin (NIM) and fee income. At the same time, consumer expectations for convenience and speed have increased, causing traditional services that are time-consuming or complex to lose their competitiveness.
2. Virtual banks will create a ripple effect on customer and loan portfolio structures, particularly targeting retail and small and medium-sized enterprises (SMEs) that traditional banks often perceive as having high risk management costs. Virtual banks utilize alternative data and AI to assess creditworthiness and risk, enabling them to reach customer segments that previously lacked access to traditional banking or were served at excessively high costs. The consequence is that traditional banks risk losing some high-quality customers while still having to bear the burden of higher-risk clients. However, the use of alternative data also presents challenges.
3. The inevitable acceleration of cost restructuring and operational model changes for traditional banks is driven by significant constraints on fixed costs associated with branches and large organizational structures. Traditional banks are therefore forced to accelerate investment in technology, reduce process redundancy, and increasingly utilize AI in both back-office and front-office operations, as well as improve risk management. However, this transition requires considerable time, investment, and internal change management capabilities—challenges that virtual banks face to a significantly different degree.

“The emergence of virtual banks is therefore not a direct threat to traditional Thai banks, but rather a signal of a major transition and a driving force for traditional banks to adapt and transform into business partners that leverage technology, customer understanding, and systemic risk management capabilities as strengths in order to maintain their competitiveness in the Thai financial and banking system in the long term.”

Follow and read other columns in the February 2569 Bank Finance Journal, Issue 526, in digital format: https://goo.gl/U6OnIi

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