Kasikornbank (KBank), the country's largest mobile banking service by users, set an ambitious digital loan target of 30 billion baht this year, though it managed to lend less than 5 billion in the first three months.
The bank expects to more than double its digital lending to 10 billion baht this quarter to put the full-year target in reach, said senior executive vice-president Wirawat Panthawangkun.
Improvements in the digital system, particularly the accuracy of targeting customer loan demand, is expected to help the bank achieve this quarter's target, he said.
Of the total 30-billion-baht digital loan target, 10 billion is expected to be from individuals and 20 billion for small and medium-sized enterprises (SMEs).
"The asset quality from targeted digital loans is significantly better than traditional personal and SME loans," said Mr Wirawat.
Digital lending has great opportunities for growth in the long run, especially with improved accuracy of borrowers' loan demand, he said.
Mr Wirawat said the bank, in collaboration with Grab Thailand, has extended 300-400 million baht to Grab taxi drivers after the service was rolled out late last year.
Loans outstanding remain minimal because of the small credit line and its feature of short-term loans with maturities of three, six and 12 months. However, the advantage of short-term loans is they have quicker cycles than long-term ones.
A steady income stream from Grab taxi drivers is the main factor mulled by the bank when it extends loans, he said.
Digital loan interest differs from that of traditional lending as the former analyses borrowers' behaviour to consider their creditworthiness, while the latter uses revenue and a collateral value-based model. Digital loans can offer interest rates as low as 10% per year compared with 28% charged by traditional personal loans.
KBank's digital loan growth target was not significant this year. It aims for digital lending to make up 3-4% of the bank's total retail loan portfolio in 2019.
The bank's retail loans outstanding amounted to 488 billion baht at the end of last year.
KBANK shares closed Tuesday on the SET at 191 baht, up one baht, in trade worth 610 million baht.
