RETAIL BANKING | Roxanne Uy, Thailand

KBANK president Predee Daochai speaks of digitisation and overseas partnerships

He is leading partnerships between KasikornBank and ASEAN countries plus China, Japan, and Korea.

The weak operating environment and limited prospects for economic growth remain major dilemmas for Thai banks, including Kasikornbank. However, analysts expect that the investment-led economic recovery will accelerate in 2016, and the recovery will drive stronger earnings for the bank this year.

We met and spoke with Mr Predee Daochai, Kasikornbank’s president and director, to gain more first-hand information on the current status of the Thai banking system, as well as how Kasikornbank is coping with the challenges in the banking sector.

ABF: What are the latest trends and challenges in Thailand’s banking sector?
We see four major trends. The first is we foresee more trade agreements will be made between countries.

The second trend is technological innovation - customers want to be able to do their banking anytime, anywhere. They are expecting better and faster services. We have been preparing ourselves to deal with all those issues and thinking about how we will transform Kasikornbank into a more digital organization.

The third trend is the aging society in Thailand. By 2022, more than 20% of the population will be aged 60 and above. We have to prepare ourselves for this demographic shift.

Lastly, urbanization and regionalization is a major trend. In the past, most of our income came from Bangkok. But now, other provinces show more potential than Bangkok itself because the other provinces are growing faster.

A main challenge for the banking sector is the slow recovery of Thailand’s economy brought about by the slow recovery in exports, sluggish domestic consumption, and weak investment sentiment. These factors will affect business loans and loan-related fees because loan growth will be sluggish.

In 2015, the year-on-year loan growth for the whole system reached 6-7% at most, compared to 2014 when loan growth was 9-10%. Banks also have to pay more attention to asset quality and interest rates. During the current slowdown, banks may have to set aside extra reserves to reflect the loan dynamism in this cycle. The interest rate movement could be a delicate issue. If interest rates go up, the higher interest rates will impact some customer segments, including SMEs. I think the authorities will be very careful in terms of raising interest rates.

Another challenge is the tougher liquidity requirement. Banks have to maintain a certain liquidity ratio and a certain capital requirement. Thai banks may have sufficient capital to meet all those requirements this year. But looking forward, banks may require more capital, taking into account their expansion plans.

ABF: What do you consider as your biggest achievement so far as president of KBank?
As the president, I am responsible for the organization’s overall performance. We are a successful, leading financial conglomerate in Thailand. In order to maintain our position, we must constantly come up with winning business strategies.

In 2015, we have been quite successful in maintaining good asset quality and achieving our revenue targets. One other major achievement came in 2015. We finished what we call the K-Transformation (KT) project. We made significant system improvements in July 2015, and the improvements created a better digital system for the entire bank. Moving forward, IT support will help us have quicker times to market for a number of products. We will be able to deliver better, faster services to business and retail customers.

ABF: What three goals are you focused on?
We have a very clear, customer-centric strategy for the bank. We have been doing this for years and all the people in the bank know this. From this strategy, we have three goals. The first goal is to become the main bank for customers through strong brand positioning.

The second goal is to become a leader in digital banking and transaction banking services. By using our customer-centric strategy, we have clear product solutions, plus we have branding, marketing, and service quality.

Lastly, we want to be an AEC + 3 bank, covering ASEAN, plus China, Japan and Korea.

ABF: What are your current initiatives in terms of partnering with other overseas banks?
We work in partnership with overseas banks, say, in Japan. Currently, we have MoUs with almost 30 banks in Japan - one prefecture, one bank. When their customers come to Bangkok, we take care of them. The Japanese banks also have their staff with us here in Bangkok, working with us. We then provide the foreign clients with services like lending.

Recently we initiated what we called the Bangkok Declaration. Thirty-five banks came here to join the declaration. We discussed issues such as information sharing, banking product services, customer referral, cross-border payments, and business matching.

In China we take a somewhat different approach than the partnership model. In China, we have four branches, one each in Hong Kong, Shenzhen, Chengdu and a sub-branch in Longgang; plus three representative offices, one each in Shanghai, Beijing, and Kun Ming. All these branches and representative offices support our China strategy. For example, Chinese firms may wish to invest in Thailand as foreign direct investment. KBank can service their needs with a full spectrum of services.

If you want us to do an interview with a top executive in your bank, whether new appointee or not, please contact Roxanne Uy at roxanne@charltonmediamail.com.

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