7-Eleven outlets across Asia have begun offering banking services. In Thailand, a pilot program starting October 31 will enable 20 million customers of Government Savings Bank to deposit and withdraw funds at more than 10,000 convenient stores across the country.

Customers will be able to use the bank’s mobile app to authorize transactions which could then be fulfilled at the counter, explained Chatchai Payuhanaveechai, the president and CEO of the bank.

Deposits of up to 30,000 baht will be possible around the clock, while withdrawals of up to 5,000 baht per transaction or 20,000 baht per day will be limited to 8am to 10pm. Customers will pay a 15-baht fee for every transaction, which will be offered via 7-Eleven’s subsidiary Counter Service.

New regulations

Convenience store banking appeared earlier this year in Thailand as a way for commercial banks to reduce spending on branches and personnel. Thailand’s third-largest lender Siam Commercial Bank said in May that it will cut the number of branches to one-third over the next three years.

Government Savings Bank’s Chatchai said that the bank “won’t close branches but we also won’t open new ones.”

Korsak Chairasmisak, president of CP All, the operator of 7-Eleven convenience stores in Thailand, said the company has been preparing for the introduction of banking services as banks are shutting down more branches.

CP All’s chief executive Tanin Buranamanit told the Nikkei Asian Review in July that the company has been planning on expanding the scope of financial services which had so far only included bill payments for utilities and cellphones.

Following a central bank regulatory amendment in March 2018 that allows convenience stores to offer banking services, 7 Eleven has been seeking to become an agent for one or more commercial banks. Under the Bank of Thailand’s revised guidelines, commercial banks can appoint any juristic person, a legal term that includes corporations, to act as their representative and handle transactions such as deposits, withdrawals and cash and check transfers.

One demographic in particular that will enjoy the introduction of banking services into convenience stores is consumers in rural areas.

“Collaborating with 7-Eleven on our banking services will make it more convenient for our customers in the countryside,” said Chatchai. He noted that CP All had about 6,000 branches of 7-Eleven outside the capital, about six times the bank’s 1,070 branches nationwide.

With 10,268 stores as of the end of 2017, 7-Eleven is by far the largest convenience store chain in Thailand, attracting an average of 11.8 million customers each day. Thailand is the firm’s second largest market in the world, after Japan.

CP All plans to expand further with a focus on locations outside the Bangkok metropolitan area, and intends to open more than 700 stores each year to reach 13,000 by 2021.

Chatchai said he hopes the initiative will attract 10 million more customers to his bank in the next two years.

7-Eleven, a Japanese-owned American international chain of convenience stores, has aggressively expanded store networks across Southeast Asia after obtaining the US-originating brand and later giving local business abroad the right to operate stores.

In Southeast Asia, the number of 7-Eleven outlets, including Malaysia, the Philippines, Singapore and Vietnam, had increased to a total of 14,699 at the end of June 2017, accounting for nearly one-fourth of the global total, compared with 19,588 stores in Japan.

Besides banking services, operators of 7-Eleven branches across the region have been expanding into other services including parcel collection in Singapore. Earlier this week, Dairy Farm Singapore (DFSG), Singapore’s largest retail group, and NETS, the country’s largest payments network, began a pilot project to bring WeChat Pay to retail outlets, starting with 7-Eleven and Guardian.

Convenience store banking

Other jurisdictions across Southeast Asia too are looking to leverage convenience stores’ extensive networks to provide financial services to people residing in the countryside.

Like the Bank of Thailand, the Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, began last year to allow banks to tap “cash agents” such as convenience stores and pharmacies to bring their services to poor and rural areas.

The agents, with prior authorization from the BSP, can facilitate deposits, withdrawals, fund transfers and bills payment.

In Japan, local banks including Shimane Bank and Joyo Bank are increasing turning to convenience stores to help ease the burden of operating their own ATMs. Instead, these are installing ATMs of Seven Bank, an affiliate of Seven & i Holdings, which operates ATMs in 7-Eleven stores.

In June 2017, Shinsei Bank completely stopped operating its own proprietary ATM system and replaced them with Seven Bank machines.

According to an executive at a top Japanese bank, a single machine at a major Japanese bank costs about 3 million yen (US$27,000), while a no-frills machine at a convenience store, which does not print transactions in bankbooks or handle coins, costs less than two million yen (US$18,000).

Featured image: 7-Eleven, Pexels.com.