LH Bank is introducing digital personal loans targeting younger customers, aiming for growth to 35% of the personal loan portfolio in five years.
The loans are dubbed Happy Cash and feature on the bank's mobile app, LHB You.
The younger generation is the bank's key target for the product, with interest rates starting from 5.55% for the first three months. Thereafter, the interest rates return to market rates.
On average, the bank charges 18.9% per year for personal loans. The central bank allows a ceiling rate of 25% per year for personal loans.
Kelvin Foo, chief retail banking officer of LH Bank, said the bank has offered personal loans through offline channels for a while, with this upgrade designed for the digital era.
The digital loan service should better respond to customer needs and their changing financial lifestyle, in particular the younger generation, he said.
As a result, the bank set an ambitious loan growth target, said Mr Foo.
LH Bank, a small lender, aims to expand its personal loan portfolio to 10 billion baht by 2027, of which 3.5 billion is projected to be digital loans.
For Happy Cash, the bank set a maximum loan limit of 1.5 million baht per customer, with no personal guarantee or collateral required.
He said the bank plans to expand the number of users on the LHB You app to 1 million by 2027 from around 200,000 at present.
Trusted partnerships, distinctive product features and reasonable pricing are the key strategies to facilitate expansion of the mobile banking business, said Mr Foo.
"Wealth clients are our key customer base and the bank has been transitioning them to the LHB You app, offering full services for financial transactions," he said.
"In addition, we want to grow the new generation customer base."
Suwannee Jatsadasak, assistant governor for supervision at the Bank of Thailand, said consumers can better access financial services in line with digital development.
Greater competition in digital loans from both banks and non-banks has improved the inclusivity of the financial system, said Ms Suwannee.
According to the central bank's data, digital personal loans outstanding tallied 7.7 billion baht in the second quarter this year, with 2.7 million borrowers compared with 2.5 million borrowers in the first quarter.
On average, the loan amount per borrower was 3,000 baht in the second quarter, a slight increase from 2,900 baht in the previous quarter.
The regulator has granted nine licences to digital personal loan service providers, of which six are in operation, while the rest are adjusting their business models in line with post-Covid economic circumstances, she said.