Krungthai Bank (KTB) is gearing up for S-curve growth in the virtual banking and wealth tech sectors over the next five years.
According to Payong Srivanich, the bank's chief executive, the third-largest lender in the industry will focus on virtual banking under its five-year business strategy for 2023-27.
For its virtual banking business, the bank plans to target primarily underserved customers on the digital platforms of the bank and its partners.
Initially, the bank plans to partner with Advanced Info Service (AIS), the country's largest telecommunication firm, to apply for a virtual banking licence from the Bank of Thailand.
The digital platforms of the two partners have a combined 80 million users, 40 million of which are users of Pao Tang, a mobile app developed by KTB to serve the government's welfare and economic stimulus measures. AIS's total customer base stands at around 46 million.
According to Mr Payong, KTB and AIS have been preparing to apply for the new virtual banking licence and the partners are ready to do so once the regulator opens the application process.
KTB and AIS would collaborate to develop a new digital platform offering financial services under the virtual banking licence.
However, the partners have not yet finalised the types of financial services offered on the virtual banking platform as they are waiting for the central bank's official regulation.
"Under the collaboration, KTB and AIS would inject money into the new banking entity complying with the central bank's requirement. However, we have not finalised the stakeholding of each," he said.
According to the central bank, the regulator requires a minimum registered capital of 5 billion baht for a virtual bank.
Krungthai bank's logo is seen at Money Expo 2022. Mr Payong stated that the bank and AIS have been preparing to apply for the new virtual banking licence and the partners are ready to do so once the regulator opens the application process. Nutthawat Wicheanbut
Mr Payong said KTB also offers digital loans on its mobile banking app, Krungthai NEXT.
The bank booked digital loans worth 5 billion baht in 2022 and aims to grow the volume by 8-10 billion baht in 2023. At the same time, the bank plans to offer digital loans on the Pao Tang app this year.
In the wealth tech sector, KTB intends to create a digital platform for wealth customers through a partnership strategy.
The bank will concentrate primarily on mass affluent clients, specifically Krungthai ICONIC, with assets under management ranging from 2 million baht to 10 million baht.
Krungthai ICONIC was rebranded from the previous Krungthai Precious.
Under the five-year plan, KTB aims to enhance profitability and increase its return on equity to over 10% from the current rate of 9%.
In addition to seeking additional revenue from virtual banking and wealth tech, the bank intends to reduce the revenue recognition period for bad asset management, including non-performing loans and non-performing assets, from an average of 15 years to seven years.
Mr Payong said the bank is studying the possibility of forming a joint venture asset management company (JV-AMC) to improve the efficiency of managing bad assets.
KTB has engaged in discussions with various potential partners to establish the JV-AMC, which is expected to be completed this year.