The bank is the first major player in Thailand to apply blockchain to enhance supply chain transactions.
Krungsri is leveraging on the knowledge from its Japanese parent, Mitsubishi UFJ Financial Group (MUFG), as well as new technologies to rapidly grow its commercial customer base in Thailand. The bank pioneered the use of decentralised ledger technology to significantly increase the speed, transparency and accountability of supply chain transactions and expand capital access to cash-short SMEs.
It has been six years since MUFG acquired 76.88% of the Thai bank, and since then, it has wasted no time in transferring knowledge, skills and all-important market access to its local subsidiary.
By banking on emerging technologies, Krungsri hopes to sustain robust asset growth figures in its commercial banking business.
The bank aims to achieve its loan and deposit growth target of 6-8% under its Medium-Term Business Plan for 2018-2020 from the average 7.5% loan growth and 5% deposit growth in 2015-2017.
In an exclusive interview with Asian Banking & Finance, Pornsanong Tuchinda, head of commercial banking at Krungsri, outlines the bank’s efforts to stay ahead of corporate financing trends through the relentless exploration of emerging technologies in an effort to enhance productivity and efficiency to create more value for its corporate customers.
What are the most pertinent issues in Thailand’s commercial banking landscape and how is Krungsri Bank positioning itself as the preferred partner for corporates in the country?
Like the overall financial services sector, Thailand’s commercial banking has been very competitive - financial technology and innovation are changing the way that banks do business. Commercial loans expanded well last year, especially from large corporates and SMEs, due toimproved economic conditions, according to the Bank of Thailand.
For 2019, overall financing through bank loans is likely to grow in line with economic growth, supported by domestic demand, rising infrastructure investments and the Eastern Economic Corridor (EEC) related projects.
For Krungsri commercial banking, which serves large corporates and SMEs, we focus on differentiating our products and services, including enhancing digital platforms to serve the different needs of customers in various industries at different growth stage.
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We aim to become customers’ thought partner by providing them not only single traditional products and services, but also comprehensive financial solutions to help them grow their businesses. Besides, as a member of MUFG, we can leverage MUFG’s global networks and wide product suites, which can bring lots of opportunities to our customers.
What digital strategies is Krungsri deploying to retain commercial customers? What particular initiatives does the bank have around this area?
Krungsri has implemented several initiatives to adopt digitalisation to improve the efficiency and enhance flexibility for commercial customers. Krungsri became the first in Thailand to apply blockchain technology to supply chain solutions. Not only does the technology increase speed, transparency and accountability of supply chain transactions, but it also provides accessibility for smaller SMEs to financial services.
For instance, Krungsri was entrusted by Siam City Cement to pilot the Krungsri Supply Chain on blockchain to expedite transactions. Krungsri was also mandated by the PTT Public Company Limited LPG Cooking Gas with the development of Krungsri Cashless Chain for PTT LPG Cooking Gas, marking the first truly business-to-business cashless solution for their entire trading community. Going forward, Krungsri looks forward to bringing new technologies to serve and enhance the operating efficiency of commercial customers.
How does a homegrown bank contend against global players that have a market-leading position in the commercial banking scene?
Synergy between Krungsri and MUFG greatly enhances our competitive advantage against global players. The combined resources of Krungsri and MUFG provide access to world-class financial solutions to all customer groups, facilitating offshore business expansions, joint ventures, business matching and new markets.
In 2018, the Krungsri-MUFG partnership won over the $148m (AUD210m) refinancing facility of the Boco Rock Wind Farm project in June 2018 where MUFG acted as the sole underwriter. This was MUFG’s first underwriting deal for the EGCO Group abroad. In 2019, we will continue our drive to promote sustainable growth via holistic financial solutions, accentuating our local expertise with the global MUFG network to help our clients expand locally and overseas. Our ability to customise total solutions from the wide array of products, digital platforms, commercial advisory along with the ever-adapting internal process will eventually establish us as customers’ main operating bank that meets their needs.
What are your goals to achieve further growth in the commercial banking segment over the next three years?
Under the medium-term business plan 2018-2020, we aim to gain top tier perception from both stakeholders, moving beyond a loan office to become a thought partner for corporate customers and a main operating bank for SME customers. It’s a long-term commitment. That is why we focus on providing total financial solutions and continue enhancing digital platforms to achieve sustainable growth.
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