Kasikornbank (KBank), the country's third-largest bank by assets, expects the decline in fee-based income to continue into next year because of the waiver of digital transaction fees.
The bank plans to increase non-interest income in 2019, said president Kattiya Indaravijaya, which it will outline in a new business plan next month.
The digital transaction fee waiver implemented in March dealt a blow to the bottom line of the country's largest mobile banking provider this year.
Shortly after digital transaction fees were scrapped, the bank slashed the non-interest income growth target this year to a contraction of 6-8% from its earlier projection of flat growth.
Ms Kattiya said the bank has searched for new income sources to offset the transaction fee waiver, particularly from the digital platform after rolling out new functions for its mobile banking app, K Plus, under upgraded artificial intelligence (AI).
Digital personal lending should become a key income contributor over the long term, she said. With the digital platform and AI technology, the bank expects growth in personal loans to outpace that of traditional unsecured loan products.
Ms Kattiya said the bank recorded new digital lending of 1.9 billion baht for the first eight months of the year. With K Plus's new function, new personal loans through the app are estimated to reach 3 billion baht by year-end.
"The digital lending approval rate has increased to double digits, compared with a minimal rate in the initial stage," Ms Kattiya said.
For this, more time is needed to develop machine learning in order to offer financial services to customers with accuracy. The bank must further develop AI familiarity among customers, especially in loan demand and debt payment ability.
The ceiling rate charged in digital lending is equal to the personal loan interest rate ceiling under the Bank of Thailand of 28%.
K Plus has 9.4 million users, for whom the bank has an innovative technology development budget of 4 billion baht per year. A further 1.3 billion baht a year is allocated for digital stability.
"The budgets reflect the bank's clear business direction to go digital," Ms Kattiya said. "The service features both financial and lifestyle transactions, but we also pay attention to security and stability of the digital service."
K Plus's cumulative transactions reached 3.63 billion for the first nine months this year, up from 3.05 billion in 2017 and 1.65 billion the previous year.
Peak transactions via the mobile banking app are at 4,000 per second. The bank aims to raise the limit to 10,000 transactions this month and to 50,000 transactions by next year.
KBANK shares closed Friday on the Stock Exchange of Thailand at 209 baht, unchanged, in trade worth 1.4 billion baht.