Commercial banks are set to lose over 9 billion baht in electronic transaction fees this year amid rife competition to draw more customers with the free online transactions.
According to the latest research by Kasikorn Bank Research Center, intense competition that saw local commercial banks foregoing transaction fees on bill payments and other electronic transactions will result in approximately 9 billion baht in loss of income for the entire year.
The centre’s deputy managing director Ms Thanyaluck Watcharachai-Suraphon said that the exemption of fees on electronic transaction fees will have a short-term affect on profits although banks will lose 9 billion baht from fees alone.
However, she said as for next year, the situation will have to be ascertained once again as despite losing fees income from electronic transactions, banks still have earnings from other sources such as insurance brokerage fees, credit card fees, currency exchange and interest from investments.
But she warned banks to cut overheads in other areas in order to offset the loss of income.
In the long-run she said that banks will profit from the move as they will be gaining new customers.
Ms Thanyaluck said further that electronic bank transactions will account for 50% of all bank transaction within 10 years.
At present this is at 30%, she said, adding the increase can be attributed to the dramatic increase in electronic transactions over mobile banking services in the past 5 years.
Electronic transactions over conventional electronic mediums have grown by 100%.
In 2017 commercial banks made a net profit of 174 billion baht and of these, 190 billion were from fees alone, she said.