KBank looking at mid-income range
Kasikornbank (KBank) has expanded into the middle-income segment to penetrate a new customer base for bancassurance and mutual fund business, aiming to rev up fee-based income next year.
As fee-based income growth is poised to decline amid intense market competition and regulatory factors, KBank projects next year's non-interest income to contract by a range of 5-17%.
The bank plans to search for new business opportunities to contribute to fee-based income, particularly bancassurance and mutual fund services in the mass market segment, said co-president Kattiya Indaravijaya.
KBank offers bancassurance and mutual fund products to middle-income clients who have a minimum income of 15,000 baht per month, with a smaller ticket size for product sales, as a pilot project.
Affluent customers, whose earnings start from 150,000 baht a month, are still the key segment for complicated financial services.
"After offering the products to middle-income customers for a while, the bank received a warm welcome from this client segment. With a smaller ticket size of up to 5,000 baht per product purchase, this allows the middle class to have greater access to financial products," said Ms Kattiya.
A large chunk of middle-income customers are new to bancassurance and mutual funds, though they have deposit accounts with the bank.
Initially the bank did not set a specific target to grow its financial services business from the middle class. But popularity led the bank to focus on generating fee-based income from bancassurance and mutual funds for this market segment.
She said the bank will not see a significant impact from the Bank of Thailand's next phase of market conduct focused on justified fee charges for next year, which will start with small and medium-sized enterprises.
KBank has calculated fees for all financial products and services reasonably under the central bank's regulation, and the bank is confident it can justify fees if a regulator examines them, said Ms Kattiya. Proper fee charges will be the central bank's focus in 2020, giving financial institutions time to comply with the guidelines before making random inspections starting in mid-2020.
Separately, KBank yesterday partnered with Chulalongkorn University, the National Electronics and Computer Technology Center and Kasikorn Business Technology Group to conduct research on natural language processing, a branch of artificial intelligence.