The “SCBX Mothership” Journey Transformation to a Tech Company
“SCBX is a customer-centric technology firm down to its very DNA. SCBX is more than simply an intermediary; it's also a platform that will provide access to global financial markets. If we can make our services affordable to more people and answer their questions about the world and the environment, we'll earn their respect and get closer to our objective of being The Most Admired Company.”
Special Interview: Arthid Nanthawithaya, Chief Executive Officer, SCB X Public Company Limited
Back on September 22, 2021, “Siam Commercial Bank” made headlines when it unveiled a significant restructuring plan under its “Mothership” strategy. The process entailed transforming the SCBX Group from a bank into a holding company.
The SCBX Group’s financial technology business and platform have been steadily progressing over the course of 2022, in step with the restructuring plan and in line with the company’s announced goals and objectives. More than ten new subsidiaries and investments were established as a result of these shifts, with a primary focus on cutting-edge technologies such as blockchain and digital assets and other technologies with high growth potential. “SCBX” has evolved into a full-fledged mothership in the present day.
If all goes according to plan during the business transformation process, the mothership can shift into a new landscape. With a vision of becoming “A Regional Financial Technology Company,” our mission is to build a market valuation of a trillion baht during the next three to five years and a customer base of up to 200 million individuals.
SCB X PCL CEO Arthid Nanthawithaya told Money and Banking in an exclusive interview that the company’s recent transformation into a technology firm reflects the new DNA of SCBX which is “daring to take new challenges.” Repeating the old legacies will not lead to a shift in results. To compete for future customers more effectively, a company should adopt some of the technology firm’s DNA and attract talented employees with technological capabilities.
“It’s obviously accepted that the integration of technology into new business models will result in better productivity that can outperform more conventional approaches. This strategy will help companies endure, adapting to the world’s fast pace of technological advancement. As our company’s leader, I realized that we would be unprepared for the future if we didn’t establish a key foundation and start creating new infrastructure today. What we have initiated may not be completed in the next five years, but it can be continued in the future.”
Capturing three global trends Create Climate Tech
Arthid elaborated by saying that now the restructuring is complete, SCBX hopes to be the best business enterprise possible despite the world’s unprecedented changes. SCBX embraced three trends that will soon become universal norms into its strategy:
1. Income inequality: SCBX employs a number of different business models, including those involved in digital banking, platform development, and the provision of financial services, all with the intention of fostering financial inclusion. We can harness technology to provide those who do not have access to banking services or who have low incomes with access to banking services so that they can start businesses or earn a living with reduced expenses.
“What SCBX is attempting to do begins with a desire to provide access to financial services to those who have never had before, in addition to our existing expertise in serving the middle class, affluent groups, and enterprises.”
2. Disruptive Technologies: Due to the rapid evolution of technology, several forms of technology have been introduced into the realm of finance, such as the introduction of blockchain in the financial sector. There are two main aspects to the change. On one hand, we have the evolution of the financial industry, and on the other, we have the disruptive innovations that threaten it. This is especially true for digital assets, which are viewed as speculation rather than technology evolution for business.
“Acting as a go-between is the cornerstone of the financial services industry. But the development of blockchain technology will eliminate the need for middlemen in the financial sector, whether in exchanges or lending. By getting rid of the need for middlemen, Blockchain technology can make it easier to build a tech infrastructure that is better than the traditional system and meets all of the technological needs of users.”
3. Environmental Concerns: Environmental trend is inevitable. All industries around the world are seeking ways to achieve the goal of Net Zero carbon emissions. SCBX also has a goal for this subject with a view that environmental issues will contribute to both opportunities and threats to a business.
“Small and medium-sized enterprises (SMEs) in large corporations’ supply chains will be impacted by the latter’s efforts in their decarbonization; thus, these businesses will be required to move faster to adapt. There will be a proliferation of new start-ups dedicated to environmental technology. SCBX’s mission is to become a global solution provider for financial infrastructure and related technology to enable practical implementation.”
Arthid continued by stating that providing access to financial services and protecting the environment will be two interrelated primary directions. SCBX aspires to be a financial platform to support the business transition, in addition to working as an investor, to alternative technology for the adaptability of this very trend. It will advance via the “Robinhood” food delivery platform, which is evolving into a Super App and transforming into a logistics platform in the near future. It has already been granted a license by the Department of Land Transport. In the future, the fleets listed on the Robinhood platform will be electric vehicles, including motorcycles. Individuals who wish to start a career will be able to rent and operate electric vehicles on the platform to earn income and pay the rental on a subscription basis. Using this approach, they are not required to a loan to own their vehicles.
“With Robinhood, renting an electric vehicle to earn money will be more cost-effective than buying one. They don’t need to pay for maintenance and won’t have to fret over the depreciation of their vehicle’s value in a long run. At first, Robinhood did not anticipate the project would become as popular as it has. At this point, Robinhood will help small people to access a career and income through the Sharing Economy while it also can serve as a ClimateTech in reaction to environmental trends.”
Arthid noted that this shift is part of SCBX Group’s ambition to expand into the ClimateTech business, which is unquestionably an upcoming trend. SCBX has already invested USD 100 million in Rise, an ESG-related fund managed in cooperation with TPG, one of the world’s largest fund managers, to explore the issue of ESG (Environmental, social, and governance (ESG) investing). SCBX intends to use this venture as a learning opportunity. It will yield both knowledge and profit with the hope that the expertise gained through this will be applied to the enterprise.
Journey to become a Tech Company
According to Arthid, once the SCBX group has a firm grasp on the direction of the changing world regarding the three global trends articulated earlier, and the enterprise has completed its transformation to overcome various obstacles, the next step will be to transition toward becoming a tech company through a devised three-phase strategy within the next 5 years.
The first part of the plan is the development of the needed infrastructure, which will take around one to two years and involve initiatives to develop the enterprise’s technological capabilities. A “CoE – Center of Excellence” has been already established to serve as the nerve center for technological advancement within SCBX Group, with a particular emphasis on three technologies relevant to the banking system: Cloud Computing, AI, and Cybersecurity.
While cybersecurity is a key concern, the SCBX group’s primary objective will be to operate its business on the cloud. Cyber threats may become as significant as credit risks in the future; therefore, the SCBX Group has established a Center of Excellence to consolidate its technology infrastructure and make it available to all SCBX subsidiaries.
“There are currently multiple enterprises within the SCBX Group, and that number is expected to grow. Newly established companies may not be prepared to make their own technology investments. With the support of the Center of Excellence, technological capacities can be expanded, and security can be strengthened. In addition, The group’s subsidiaries are all integrated. It’s possible that cyber-attacks won’t be aimed at the Bank directly, but rather at other subsidiaries whose networks are more prone to attack. Our commitment is to place the highest safeguard over cybersecurity for the SCBX group.
Experimentation is crucial for any technology organization, according to Arthid. Nevertheless, regulators may be wary of experimenting with novel issues. New experiments must reassure regulators that damage will be contained. The SCBX Group aims to establish an innovation lab abroad and partner with international universities that have in-depth research works to bring what it has learned to apply with the business, especially the subject under SCBX interest.
The second phase of the plan entails generating growth by optimizing the newly developed capabilities from the previous phase to further synergize the expansion of other businesses within the SCBX Group. The second stage of the journey will last three to four years.
SCBX group companies can be classified into three generations, with GEN 1 comprising mostly of banking service providers, namely:
- Siam Commercial Bank
- SCB Asset Management Co., Ltd.
- SCB Julius Bear Securities Co., Ltd. (wealth management)
- SCB Protect Co., Ltd. (insurance)
Consumer loans and digital financial services are the two mainstays of the GEN 2 business sector.
- CardX (credit card and personal loan business)
- AutoX (title loans and secured loans)
- AlphaX (a joint venture between Millennium Group Corporation (Asia) engaging in the hire purchase and leasing of luxury vehicles)
- SCB Abacus (a developer of the Money Thunder app using AI technology to approve loans)
- MONIX (a joint venture operating digital lending from its FINNIX application)
GEN 3 companies offer IT platforms and services:
- InnovestX Securities Co., Ltd. (with its Super App for integrated investing services just released, the company aims to go public within three years)
- SCB 10X (a flagship technology investment company)
- Robinhood (a lifestyle platform with an aspiration to becoming a Super App)
- Digital Ventures (a financial innovation development company)
- TokenX (an ICO portal and tokenization solution provider)
- SCB TechX (a technology consulting firm for platform and solution development)
- DataX (a data analytics company)
“SCBX is a customer-centric technology firm down to its very DNA. SCBX is more than simply an intermediary; it’s also a platform that will provide access to global financial markets. If we can make our services affordable to more people and answer their questions about the world and the environment, we’ll earn their respect and get closer to our objective of being The Most Admired Enterprise.”
The third and last phase of SCBX’s five-year strategy is the realization of real value, which will occur in the fifth year. At this stage, each business within the group should be able to operate independently. Each company should conduct business with stability and prudence, investing in what they believe will do well, particularly customer-centric endeavors, to maintain a solid business.
However, if each business in the SCBX group can confidently take bold steps forward until they confront new technology disruptions or threats, they’ll have a well-designed technology infrastructure in place to address those challenges.
“The five-year goals of the three-phase strategy is for SCBX to become a regional technology company with a market capitalization of one trillion baht and 200-million customer base, whereby allowing businesses in the group to raise funds, join IPOs, or transform into unicorn-level platforms.”
“Digital Assets” can’t be ignored. Making plans to establish market mechanisms
Arthid further stressed that digital assets are another area where SCBX would keep toiling. Despite the fact that digital assets are still somewhat of a concern for most people, they have become increasingly popular around the world, hence SCBX has no plans to abandon the industry.
Bringing digital assets to the capital market, however, necessitates the development of two additional markets: the primary market, which is an ICO Portal that will serve to issue assets, similar to an initial public offering (IPO) in the stock market, and a secondary market that is comparable to the trading of shares of listed companies. The primary and secondary markets are interconnected. If the trading exchange lacks liquidity, it will be unable to establish an offering price. Furthermore, the capital market demands the services of a custodian and broker.
SCBX is currently developing a capital market layer for digital assets, with TokenX licensed as an ICO Portal and InnovestX licensed as a broker and exchange. It has also invested in the Fireblocks cryptocurrency custody platform.
“Proceeding with digital assets will necessitate a period of preparation. Adding more partners and making more acquisitions are also on the table. The future of Thailand’s digital assets won’t be able to take off until the infrastructure is ready. Two years from now, if it turns out that digital assets are not a good fit for Thailand, SCBX will have to follow the rules and may branch out into other countries. There is room for variation in strategy.”
