BANGKOK — In the past year alone, 7-Eleven has wooed consumers with cashless payments and wowed them with draft beer machines – though the latter was killed before the foam settled.
Coming soon to the ubiquitous convenience store chain that millions rely on for midnight snacks, utility payments and caffeine doses? Cash deposits and withdrawals, say regulators. It’s a move an economist described as the natural next step in the evolution of financial services as banks scale down branches and personnel.
Word that 7-Eleven could start offering banking services surfaced a week ago when senior Bank of Thailand official Daranee Saeju said an upcoming regulatory change would clear the way for the convenience stores to launch deposit and withdrawal services.
That happened Tuesday with an arcane rule change enacted by the central bank. The Bank of Thailand announced it would authorize commercial banks to assign private companies – like 7-Eleven franchises – to provide services on their behalf.
The new rule, which goes into effect next month, would allow 7-Eleven to operate as an authorized banking agent. Finance Ministry Secretary Somchai Sajjapongse said allowing 7-Eleven to get into banking would expand access to financial services.
He said any businesses that wish to apply for banking agent licenses would have to comply with relevant banking conditions and regulations.
Somboon Chitphentom, Bank of Thailand deputy governor, said the new regulation would cap a person’s withdrawals and deposits at 20,000 baht per day.
And the commercial banks are interested, according to Thakorn Piyapan, an executive at Bank of Ayudhya.
“We are studying it right now,” Thakorn said, adding that the idea had been floated for some time.
He said his bank is deliberating matters such as where and at how many branches the service should be offered, and whether it’s worth the investment at all.
Thanee Limpanarom, a spokesman for 7-Eleven owner CP All, declined to comment on the speculation other than to say it was up to the central bank.
“I have no comment or information about this. Everything is up to the Bank of Thailand,” Thanee said.
One Retail Ring to Sell Them All?
Some welcomed news of banking coming to the nation’s most ubiquitous retail channel – CP All hopes to open its 10,000th store this year – with unease.
CP All is a massive conglomerate with holdings in agriculture, telecommunications, finance, education and more. The powerful family which owns it all is ranked the fourth richest in Asia by Forbes.
“This is it, the true power-grabber of this country. They slowly creep into our everyday life,” user Peacheii wrote in thread about the news on the popular Pantip webboard.
“With each day passing by, it’s really becoming a monopoly, all-consuming business. This is not something we should overlook,” user Dansivilai wrote in the thread. “Just imagine this for fun: If all 7-Elevens just close for seven days, the entire country would fall into chaos.”
An economist at the Thai Chamber of Commerce University said CP All would not gain much if it adds banking services. The Bank of Thailand would never allow a deal that would destabilize the financial sector or tip the balance of power, he said.
“They must have thought it through that there would be no problem,” Thanavath said. “There won’t be any negative impact to the system.”
Instead he likened it to the consolidation of functions in other technologies.
“Watches now can do many things, from measuring our body temperature and number of paces. Their primary function is gone … people use mobile phones to tell time instead,” Thanavath, who heads an economy forecast department, said in an interview. “I’d like to call it a change of era for a business.”
Ultimately, he said it depends on consumers’ appetite for convenience.
Banks in Retreat
The timing comes as financial institutions are downsizing.
During 2017, 223 commercial bank branches were closed. Siam Commercial Bank, the nation’s oldest private bank, announced last month it will reduce staffing by nearly half, from 27,000 to 15,000 employees.
Thanavath said it’s common sense for entities such as 7-Eleven to step in and pick up the slack. In the near future, he believes people will only walk into banks for major transactions.
“There’s no need for counters,” Thanavath said. “It reduces the cost of having so many branches. It’s like asking someone to work on the banks’ behalf.”
But Thakorn, the Bank of Ayudhya executive, said there are also downsides for the firm to weigh.
Assigning 7-Elevens as banking agents will reduce the need to maintain branches or transport money to remote locations such as small islands, but he questioned the wisdom of adding a service that is already met by the ATMs outside nearly every 7-Eleven store.
“We will have to consider what our customers really want,” Thakorn said.