Robust in Thailand and Number-One in ASEAN
Mr. Predee Daochai, KBank President, said that the Thai banking sector has had to adjust to rapid changes in the economic and business environment, in particular consumer behavior and technologies, as evidenced by steady growth in digital transactions, given that the mobile internet penetration rate in Thailand is at 82 percent, while 74 percent of all Thais conduct financial transactions via mobile banking, and 48.5 percent shop online.
In that context, the Thai banking sector is pressing ahead to become an efficient financial intermediary through cooperation to build an essential and pioneering element of Thailand's financial infrastructure, namely PromptPay, which currently has 46.5 million registered IDs and 4.5 million transactions per day. QR code payment standards have also been introduced, and QR code is being used by 3 million merchants. The capacity of ITMX (Interbank Transaction Management and Exchange System) has been expanded to accommodate up to 1,000 interbank transactions per second, and member banks have agreed to double its capacity at their respective institutions by 2019. A project promoting payments through the use of debit cards instead of cash has helped increase the number of debit cards to 59 million. A total of 700,000 EDC devices have been installed at various stores nationwide. Twenty-three organizations, members of the TB-CERT project designed to build the stability and security of the banking IT system, have exchanged data and conducted cyber threat exercises regularly.
Within the next two years, Thais will be able to use new financial services from local banks as a result of their cooperation in financial infrastructure, as follows:
An upgrade of the PromptPay Project from providing Thai standard-based QR code service only in-country towards the Thai standard-based QR code service in CLMV+3, aimed at allowing payers having mobile banking applications of all Thai banks to make payments abroad. The Business Scan Customer (B Scan C) service will also be introduced to offer greater convenience for consumers in making payments via mobile phone.
The Thailand Blockchain Community Initiative Project has begun offering Letter of Guarantee service. A total of 22 Thai and international financial institutions, plus seven business and state enterprise sectors, have joined this project. It is expected that such transactions will reach approximately 40,000 items and increase sharply beyond that point, as more agencies are set to join. In addition, blockchain technology will be used to introduce the E-Transcript service so as to offer confidence and convenience to students and new university graduates, plus job seekers and organizations wanting to recruit employees.
The National Digital ID (NDID) Project, which is designed to allow individuals to confirm their identity online, will allow consumers to open bank accounts anywhere, anytime, without having to go to a bank branch. Online loan applications, loans and securities trading account opening, plus white-label ATMs will help banks manage their costs more efficiently, reinforcing the Thai banking system's position at the forefront of ASEAN.
Mr. Predee added that Thai banks have cooperated to bring the systems and services of Thai financial institutions to a position of leadership within ASEAN. Many Thai financial services are at the same standard as those of leading countries. The efforts undertaken by Thai banks are intended to offer maximum benefit to the customers, who are thus able to make quick adjustment towards the digital era on a large scale, and promote Thailand's entrance to the digital era in a stable and sustainable manner.
Capitalizing on Big Data to Offer Personalized Services; Aiming for Baht 30 Billion of Data-Driven Lending
Ms. Kattiya Indaravijaya, KBank President, said amid technological advancements and customers' increasing preference for digital channels, the volume of related data has hugely increased. In addition, customers' diverse lifestyles require more specifically targeted products and services. With unremitting effort, KBank is enhancing our analytics potential in order to convert data into insights, so as to gain in-depth understanding of customers' requirements and offer exclusive services to satisfy individual desires, as follows:
Creating frictionless, anywhere, anytime experiences: Nowadays, customers spend more time in the digital world, especially on social media platforms. KBank will engage in taking care of our customers and catering to their particular lifestyles in the digital realm. We are prepared to offer frictionless, anywhere, anytime payment services, blending the latest technologies with our data analytics potential for the hassle-free life of our customers, for example, facial recognition for account opening without visiting a Bank branch, voice-activated payment with no need to carry a wallet, and funds withdrawal without an ATM card or mobile phone.
Offering personalized services to all: Given our customer insights, we can offer more individualized services and expand our customer base, enabling us to access unbanked and underbanked customers who have minimal bank transactions or lack evidence of steady income.
Providing streamlined and automated services that use less paper: In becoming a full Data-Driven Bank, KBank can cut operating costs and expand customer services more rapidly and widely. Customers will also have a reduced burden of documentation, with enhanced security.
Customer data privacy is most important for KBank, and all employees must strictly adhere to this principle. Data for analytics cannot identify the customers, and no data will be shared without the customers' consent.
To achieve data-driven services that are beyond expectation, KBank has made preparations in four aspects:
Data: Data is available for all departments' analytics in their development of products and services that perfectly match customers' requirements;
Technologies: We have prepared ourselves in terms of technologies to support exponential business expansion;
Personnel: Staff is key to creating business value based on data. Data analytics potential has been enhanced organization-wide, including more than 500 employees who have been trained in Business Analytics and 284 employees in Machine Learning Analytics; and
Data-driven culture: To create a data-driven culture, we have blended human intelligence with technologies to become an 'Augmented Intelligence' with the aim of achieving Cognitive Banking status. With regard to operating processes, KBank has undertaken internal restructuring for greater efficiency in customer services. The restructuring involves into three functions: the service and sales function aimed at responding to the demands of each customer based on the 'Segment of One' concept; the strategy function that focuses on leveraging data for the benefit of KBank; and the product function that strives to offer the most responsive services.
In 2019, KBank aims for Baht 30 billion of data-driven lending, and to earn data-driven income at not less than 50 percent of total income.
Targeting Income from International Business to Grow More Than Eightfold in Three Years via the 'Augmented Economy'
Mr. Pipit Aneaknithi, KBank President, said that uncertainty is today's certainty amid developments such as the emerging international trade war and digital disruption which has shaped a new trend of consumption. All of these challenges are shaking up the business scene and forcing companies to adjust for survival in the Augmented Economy era, driven by technology which seamlessly blends the offline and virtual worlds. Every industry needs to combine its skills and embrace digital technology to reach out to customers.
In the era of augmented economy, KBank has embraced a new business paradigm to keep up with any changes and leapfrog our growth. KBank is prepared to propel Thai companies into the international economic scene and flawlessly connect trading transactions from upstream to individual customers, based on three concepts:
Beyond Frontiers is to see the opportunities in regional markets, especially in the CCLMVI countries (China, Cambodia, Lao PDR, Myanmar, Vietnam and Indonesia), all of which have GDPs that are poised to record steady growth. It is expected that by 2030, the CCLMVI countries will have a combined GDP of USD28.64 trillion, 41 times larger than the Thai economy, with a total population 28 times larger than that of Thailand.
Beyond Banking is KBank's target to be there for customers anytime, anywhere and via any channel, to ensure customer convenience.
Beyond Competition is the formation of new partnerships with fintechs and startups across varied countries and industries to upgrade KBank's services and enhance the competitiveness of Thai companies, in order to equip them for the CCLMVI market in the new economic era.
KVision has been established by KBank to explore technologies and invest in fintechs or startups, with over Baht 8 billion of investment. KVision has established innovation labs in five countries – Thailand, Israel, China, Indonesia and Vietnam – to scout innovations, tech partners and tech talents to support KBank's operations in CCLMVI, while finding technologies to add value and thus help Thai companies compete in the new borderless market.
This year, KBank will connect our customers with consumers in CCLMVI by employing three key strategies: 1) Local Partnership & Insight KBank joins hands with our partners in these emerging countries and shares valuable knowledge gained from our business channels and our presence in every country, so that our customers gain a true understanding of how to do business in each respective country; 2) Cross-Border Value Chain Solution KBank plans to launch such solutions in Lao PDR and Cambodia, starting with the introduction of digital systems to facilitate convenience in payment transactions between buyers and sellers, and enhance the effectiveness of data storage; 3) Single Regional Payment Platform KBank will make life convenient for our consumers in the region and reach out to them via our platforms. KBank has begun such digitalization projects under "QR KBank", an online wallet, for customers in Vientiane in Lao PDR to allow them to conveniently access financial services without using cash, in line with the Lao government's cashless policy. The pilot project has been launched at Nongchan Market or Talat Khuadin. KBank aims for around 2 million transactions worth over LAK36 billion, or around Baht 115 million, to be transacted via "QR KBank" in 2019, marking the beginning of a Single Regional Payment Platform. The initiative will also allow KBank to understand the behavior of digital spenders in Lao PDR. KBank plans to expand our services and connect our platforms throughout the CCLMVI countries in the future.
Mr. Pipit summed up by noting that KBank aims to increase income from international business by more than eightfold within the next three years. Amid the challenges presented by the Augmented Economy and the tremendous untapped potential of CCLMVI markets, KBank is ready to advance with digital platforms reaching out to customers in each country and helping us understand their needs, while connecting regional payment systems to lead Thai businesses beyond borders and for a shared prosperity.
Acquiring New Customers, Targeting Retail Business Growth at 9-12 Percent
Mr. Patchara Samalapa, President, said that numerous challenges, i.e., economic trends, competition and the emergence of disruptive technologies, especially the highly competitive environment of the digital banking business have led to fee waivers for digital transactions. However, these challenges come with opportunities wherein businesses have been brought closer through cross-border connectivity. Our 2019 mission is to move KBank forward with healthy growth through:
Integration with platform providers for customer base expansion: Aspiring to be the Customers' Life Platform of Choice – the most preferred platform that can meet the needs of all customer groups in every aspect of their lives – we will integrate with our business partners to deliver a frictionless customer experience through KBank's own platform via K PLUS and linkage with other platforms for social networking, chatting, shopping, travelling, and more. With this move, we can build a 360-degree customer view and thus gain customer insights.
Seeking new revenue streams: We will prioritize extending personal loan to generate greater income to KBank. Presently, KBank holds a share of 7 percent of the Thai personal loan market, in which there are around 31.3 million borrowers. We aim to make gains in this segment, and are targeting a 16-percent share. Integration with leading platform providers gives us quality insights into customers. This gives us the ability to analyze their loan demand and debt servicing ability, and to offer them loan via digital channels. Thus we can create new revenue streams to offset the decreasing non-interest income as a result of fee waivers for digital transactions and the slowing insurance business.
Maximizing cost efficiency: We will focus on portfolio adjustment to gain higher returns on assets, especially through a streamlined debt collection process and setting aside an allowance for impairment loss on loans that is appropriate for loan growth.
Mr. Patchara said that KBank will prioritize business growth by broadening the customer base and creating new revenue streams with the support of data analytics for cost reduction and service personalization. Through our integrated workforce and business partnerships, we are confident that KBank will be able to achieve its 2019 financial targets. These include 5-7 percent overall loan growth, comprising corporate business loan at 3-5 percent, SME business loan at 2-4 percent, and retail business loan at 9-12 percent. Meanwhile, net interest margin (NIM) is projected to equal 3.3-3.5 percent, non-interest income growth at -5 to -7 percent, and gross NPLs to total loans at 3.3-3.7 percent. We are ready to take on the competition while maintaining continuous growth.
Baht 5 Billion Earmarked for IT Investment, Boosting KBTG as Top IT Company
Mr. Ruangroj Poonpol, Chairman of KASIKORN BUSINESS-TECHNOLOGY GROUP (KBTG), emphasized that he would continue KBTG's mission to push KBank towards the goal of providing the most-responsive services via advanced channels. An Augmented Intelligence (AI) innovation, which integrates artificial intelligence with KBank personnel having valuable experience, knowledge and insights on business and customer desires, has been adopted to drive the organization.
Cognitive Banking is a combination of staff experience and artificial intelligence to deliver to customers valued services that are: Highly Intelligent, Highly Adaptive and Highly Personalized. Achievement of the Cognitive Banking status will enable KBank's digital services to step beyond being only a mobile banking platform.
KBTG is also guided by a vision of Inclusive Innovation, meaning that "Good innovations create value for all". Therefore, our services have been designed to enhance the potential of all customer segments, including adoption of technologies for cost reduction so that everyone can gain access to our services, and application of data to increase our service coverage. In this regard, a new type of credit is offered via digital channels for underbanked individuals who are presently unable to receive bank financing due to their lack of qualifications, such as insufficient transactions or inconsistent income.
In the belief that business partnership is crucial in this era of disruption, KBTG has continually worked with various partners, both startups and leading organizations, via three cooperative innovations, namely Open Banking API linking KBank services to partners in a convenient and safe manner; K PLUS Business Platform redefining K PLUS from a mobile banking application to a sophisticated platform for our partners' service digitalization; and Innovation Sandbox for experimenting with innovative ideas of startup partners, economically and rapidly.
Mr. Ruangroj concluded that all visions will be realized with KBTG's technological and staff potential. In 2019, a budget of over Baht 5 billion is earmarked for KBTG's investment in innovations, technologies and personnel with the purpose to become the best technology company in Southeast Asia and one of the world's technology hubs within 2022.