Finance & digital

Enhancing financial inclusion of older urban poor in Thailand

Enhancing financial inclusion older thai

Thailand is an interesting case study about financial and digital inclusion of people over 60 years of age. Financial Inclusion does not seem to be an issue in the Kingdom. According to Global Findex, 78.1% of Thai households have at least a deposit account with a financial institution.

For comparison, the average level for upper middle-income group in other countries is 70.5%.

Thailand ranks fifth in the top quartile in financial inclusion in the Asia Pacific Region, along with advanced markets such as South Korea and Singapore. Among Southeast Asian countries (ASEAN) Thailand ranked third after Singapore (96.4%) and Malaysia (80.7%) (Global Findex 2015).

And yet, if we look at non account-holders in the country, more than half of them are older than 55 years old. Moreover, the use of mobile phones is still limited and only 21.2% of people over 55 years of age regularly use the internet.

This results in an alarming 7% Digital Financial Inclusion rate for the elderly in Thailand. Are senior Thais at risk of being excluded from the benefits of a increasingly digital society?

Thailand’s aging society

Thailand expresses gratitude and respect for the older generation every year on April 13, National Elderly Day. But the elderly are still one of the financially vulnerable groups in the Kingdom.

In Thailand, anybody who crosses the 60 years of age threshold is identified as “elderly”. More than 20% of the Kingdom’s 71,6 million people are currently aged over 60. Once citizens turn 60, they are eligible for a monthly state subsidy of 600 baht. This subsidy rises after every decade, with those aged 90, or more, eligible for a payment of 1,000 baht every month.

Unfortunately, this financial aid is hardly enough to cover living expenses. And with inflation now soaring, cash-strapped elderly Thais are in even more trouble, especially those living in urban areas.

Many Thais are forced to continue working after retirement, even if they suffer from age-related health problems, because they have no savings. Moreover, job opportunities are limited.

A 2021 survey conducted among Bangkokians aged 60-64 showed that a fifth of respondents continued to work unofficially after retirement. The survey was conducted by Mahidol University’s Institute for Population and Social Research.

Can FinTech help?

Financial transactions remain essential in the daily lives of the elderly. They receive income from different sources and need convenient and affordable instruments to make payments and, possibly, save some money.

In Thailand, as in many other countries in the world, fintech and digital players are addressing the unbanked, offering them innovative financial services. But the access to these services is hindered by the lack of digital skills, or of the money necessary to purchase a device or an internet subscription.

The enduring digital divide is widening the gap between the rich and poor, as well as between urban and rural areas. And, of course, between younger and older people.

In Thailand, one of the biggest challenges for the elderly who wish to use digital financial services is their limited use of the internet and mobile phones. Only 21.2% of elderly Thais use the internet because of their lack of skills. Not because the have no interest in digital services.

Their preference for feature phones shows their low awareness of the benefits of smartphones in their daily life and financial well-being. And their difficulty in saving the money necessary to purchase one of the newest mobile devices.

The Thai Government has been boosting the promotion of mobile internet access among the elderly, emphasizing the role of ICT and digital technology to improve financial inclusion.

And yet, any roadmap to a greater internet access and a wider smartphone use, so to improve the access to mobile money and banking services, must take into account the importance of working on financial and digital literacy.

There is no other way to guarantee that digital innovation does not exclude whole sectors of society, particularly in aging societies, such as the elderly rural population, low-income households, elderly women, and remote communities.

And the Kingdom of Thailand has already been moving in this direction.

Thailand's path to inclusive growth

In recent years, Thailand has increased its adoption of ICT and the introduction of various fintech products, helping to improve overall financial inclusion.

The standardized Thai QR Code for Payment Transactions officially introduced in early 2019 and extensively used during the pandemic is a big step toward financial inclusion.

Such economy-wide innovations can, without doubt, improve financial inclusion among the elderly. However more custom-made products and services for this particular group are still needed.

The Kingdom has already settled down ICT courses to help “grandpas and grandmas” study the new hi-tech features in the banking sector.

That’s why a few days ago the Prime Minister Srettha Thavisin, during the announcement of the newest national digital e-wallet programme, suggested the necessity of forming public-private partnerships among all levels to enhance the future financial environment in old age.