KBank's digital push focuses on startups
Newly forged partnerships with Grab and Line will help reach small merchants and expand financial services
Kasikornbank (KBank) plans to turn its focus to adding more startups to its digital banking roster to increase user activities and income, while searching for new business opportunities after teaming up with three online platform giants: Grab, Line and Facebook.
The bank believes its three major app partners should help it leap forward in digital banking as it continues to expand cooperation with local and overseas startups, co-president Patchara Samalapa said in an exclusive interview with the Bangkok Post.
The country's largest mobile banking service provider, with 11 million users, has joined hands with 18 startup partners to provide financial solutions to small and medium-sized enterprises (SMEs) under the K-SME Digibiz programme through the online-to-offline (O2O) platform. Small merchants and online shopping are the key targets.
KBank and Grab Thailand have jointly developed GrabPay Wallet, which was launched on July 10. Apart from the wallet, the bank provides digital lending to 4,000 Grab car and bike taxi drivers. Response from customers who are offered the online loan by the bank is high, with 80% of them applying for the loan, and the bank has extended 70 million baht to this group.
The bank recently set up a new subsidiary, Kasikorn Line Co Ltd, and it plans to offer digital lending through Line early next year after the central bank granted the company a licence. Line users in Thailand number 45 million.
The management team of Kasikorn Line has already been installed and the announcement will be made soon, Mr Patchara said.
KBank last year announced a cooperation with Facebook, focusing on social commerce -- the use of social networking as a channel to sell products and services.
The bank is in the process of setting up another subsidiary, Kasikorn Global Payment, to engage in social commerce.
Although the bank launched social commerce through Facebook a while ago, the progress of the business operation is quite slow because of a host of legal details, Mr Patchara said, adding that the bank needs to clear such obstacles before the plan comes to fruition.
There is growth opportunity for personal loans, with 31.3 million potential borrowers for such loans nationwide, of which 1.9% have been tapped by banks and 0.3% have been KBank borrowers.
More value data needed
Although digital banking, particularly payments, has made great strides, improvements in valuable data are still needed to aid new business expansion, Mr Patchara said.
The surge in digital payment transactions is mainly contributed by consumer-to-consumer (C2C) business.
"Digital payment provides more convenience to individual consumers, but it does not create sufficient value data for the bank to turn it into new business opportunities," Mr Patchara said.
The existing database of C2C digital payments is not enough to accurately pinpoint the bank offering digital loans to the right customers who have loan demand.
The conversion rate of digital lending via K Plus, KBank's mobile banking app, remains low at about 4% of total approached customers.
"We don't set a specific conversion rate, what we only know is that it needs to be improved," Mr Patchara said. "Encouraging merchant payment via the digital platform is a key strategy to create a value database to help raise accuracy in data analytics."
Strictly online not a fit
Pure digital banking has not sat well with the Thai market because the O2O process and staff are still crucial to completing loan extension deals, Mr Patchara said.
"It isn't easy to transform the bank to pure digital services," he said. "We cannot complete all digital loan deals without sales. They must follow up the process to close the deals. Even the advanced market, China, has not gone purely digital."
Although the bank continues to shut down brick-and-mortar branches, closing about 200 over the past few years, the number of employees has not declined significantly.
KBank has restructured its branch business over the past two years under the one-team project, which integrates retail and SME teams. Internal operations have also changed from centralisation to decentralisation and empowering branch staff.
The bank has replaced the key performance index (KPI) based on a location or a province with individual staff to reduce employee pressure. The new KPI system has paid off, as seen by improving customer satisfaction, service quality, sales and profitability, but further monitoring of the result is needed.
Mr Patchara said the bank aims to increase the number of new customers by 5 million, with 800,000 since the beginning of this year, over the next three years. Products, business strategies, both physical and digital channels, and the partnership model will contribute to the bank's new customers.
KBank acquires new clients from both wallet-sharing with other banks and new-to-bank customers -- mainly university students, first-jobbers, the elderly and the unbanked.
"All people have financial demands," Mr Patchara said. "Now we pay attention to database rather than segmentation, helping the bank to serve the right demands of customers."