Krungthai Bank (KTB) aims to cut its cost-to-income ratio in the next three years as the digital platform helps save costs, its head says.
A suitable ratio for the bank is 45-50%, said president Payong Srivanich.
The current cost-to-income ratio at the country's fourth largest bank by assets is 46-47%.
Under the digital platform, operational expenses should decrease as cost cuts outstrip falling income. A PwC survey found that for every 1 million baht worth of reduced fee-based income, banks' operating costs decline by 4-5 million baht.
Mr Payong said the digital platform poses an opportunity to acquire new customers at lower cost.
Maintaining the existing customer base and encouraging active financial transactions are key factors in achieving higher income. Out of 5 million users of the mobile banking app, Krungthai Next, 80% are active users following the app's launch five months ago.
The goal is to expand the user base to 10 million by the end of the year and maintain an active user ratio of at least 80%.
"Pricing with no fees charged is not our key strategy to keep customers on the digital platform," Mr Payong said. "Some clients are willing to pay reasonable prices if they receive satisfactory services."
He said traditional banking services will continue to be disrupted and see lower margins in the next three years.
Yesterday KTB introduced Innovation Lab, which will support technology development for payments, universities, government, mass transit and healthcare.
Innovation development in the lab covers four core areas, spanning from business innovation, data innovation, product and process innovation, to IT innovation.
The bank has an IT budget of 19 billion baht this year, rising significantly from 9 billion last year.
Mr Payong said the bank's loan rate depends on many factors, including the loan-to-deposit (LTD) ratio, and the bank will seriously consider changing rates when the LTD is 97-98%.
The bank's current LTD ratio is 92%.