Vision 2020: KASIKORNBANK Transforms Business with Technology, Aiming for 178 Billion Baht Increase in Personal Loans

KASIKORNBANK has assembled its management team to announce Vision 2020, outlining its strategic direction to transform the banking business through seamless technology, ensuring a smooth experience for customers, proactively managing risks, and enhancing regional capabilities with world-class technology to provide the best care for customers.

       In 2020, the bank aims for a financial target of total loans to increase by 4-6%, primarily driven by retail loans expected to grow by 9-11% through data-driven analysis for loan approvals. Meanwhile, SME loans are projected to grow by 1-3% and corporate loans are expected to grow by 2-4%. The NIM is expected to slightly decrease to 3.1-3.3% in line with the declining interest rate environment. Non-interest income is projected to decline by -5% to -17% due to the implementation of the new accounting standard TFRS 9, compared to the high base of income from securities sales, and the insurance business remains sluggish. Additionally, the NPL Ratio is expected to rise to 3.6-4.0% due to the still sluggish economic conditions, and the bank is adjusting its NPL management strategy by retaining some NPLs for self-management if long-term repayment is anticipated.

Key Highlights

• Transforming the organizational strategy to empower customers to live and do business to the best of their ability, ready to face the disruption era with capable personnel and a highly agile working model.
• Reinforcing the bank's strength in providing stable and reliable banking services with a proactive risk management culture, maintaining the bank's financial strength, and ensuring security and fraud prevention to international standards, preparing to utilize AI to enhance cybersecurity detection while continuously managing credit risk in social and environmental dimensions.
• Being present wherever customers need, by leveraging deep partnerships to provide seamless services on platforms connecting K PLUS with partner platforms, including redeeming credit card points, purchasing products on K PLUS, adding famous brand membership cards, and increasing personal loans by 178 billion baht.
• Caring for customers in a borderless world with digital technology while seeking partners to connect businesses and meet the needs of the new middle class in the Asian region, revealing plans to apply for the establishment of KAITAI TECH in Shenzhen to create strong cross-border service innovations.
• KBTG aims to strengthen technological infrastructure and personnel to serve customers in all lifestyle dimensions, establishing "KASIKORN X" to generate new income for the bank and create Thailand's first fintech unicorn, with a goal of becoming the number one technology company in ASEAN by 2022, preparing an investment budget of over 17 billion baht in innovation, technology, and personnel over the next three years.

Announcing a new strategy to empower customers to live and do business to the best of their ability.

            Ms. Kattiya Indaravijaya, Managing Director of KASIKORNBANK stated that the challenging economic environment, coupled with technological changes causing disruption across various industries worldwide, has significantly altered customers' lifestyles. Therefore, businesses must adapt quickly for survival. Over the past 75 years, KASIKORNBANK has always been a leader in transformation, making 2020 a crucial step for the bank to move forward by building capabilities ready to seize new opportunities through a new strategy centered around customers, empowering every customer’s life and business. The bank will drive its business along 8 Transformation Journeys to enhance capabilities in eight areas.

Ecosystem Orchestrator & Harmonized Channel- Collaborating with partners in the business ecosystem to integrate service channels seamlessly to create joint business opportunities.

Intelligent Lending- Granting personal loans from intelligent databases to generate returns aligned with risks.

Proactive Risk & Compliance Management- Proactively managing risks to prevent damage and continuously monitor.

New Growth in Regional Market- Seeking opportunities and growth in regional markets.

Data Analytics- Data analytics capabilities will be central to creating business opportunities and enhancing management efficiency.

Cyber Security & IT Resilience- Enhancing cybersecurity standards and rapid IT management capabilities.

Performing Talent and Agile Organization – Promoting personnel with skills and capabilities to drive together through highly agile work.

Modern World Class Technology Capability- Enhancing organizational capabilities with modern world-class technology.

          The key to every transformation is quality personnel and a new organizational culture that includes customer-centricity (Customer at Heart), collaboration, innovation, and agility.

  "KASIKORNBANK will empower all personnel across the bank, enhancing necessary skills for the modern era, promoting employee capabilities, and enabling smooth and agile work towards a common goal of empowering customers to live and do business with reliable, convenient services that provide seamless access to life while supporting cross-border usage and expanding opportunities for entrepreneurs into potential regional markets, driving Thailand's society and economy to be strong and stable."

Proactively managing risks across all dimensions, preparing to use AI to detect cyber threats, considering social and environmental risks, and providing loans and investments under ESG.          

          Mr. Pridi Daochai, Managing Director of KASIKORNBANK  revealed that technology has made services more accessible and convenient, but risks still exist in business. Customers often have three main concerns: security (Secure), accuracy (Correct), and trustworthiness (Trustworthy).

The Vision 2020 will drive the bank towards the goal of empowering every customer’s life and business, with the core focus on risk management, strengthening the bank, and reducing customer concerns to confidently move forward with the bank. KASIKORNBANK will advance Proactive Risk Management alongside adjusting strategies into three main axes.

1) Basic Risk Management from Banking Services The bank maintains financial stability measures to ensure its sustainability and protect customer deposits and investments by maintaining a capital adequacy ratio (CAR) of 19.62%, which is 171% of the required standard. The liquidity coverage ratio (LCR) is at 188% of the required standard. Additionally, stress testing has been conducted for potential economic events and changing regulations, along with plans for capital and liquidity management and regular testing of these plans, while enhancing capabilities in management and data analysis to better understand customer risks.

           The bank also prioritizes transaction security between customers and the bank and providing impressive services to customers, having installed fraud detection systems (Fraud Monitoring) for transaction fraud, application fraud, and internal fraud monitoring, with a total investment of over 500 million baht. Particularly, the transaction fraud monitoring completed in 2017 has continuously improved the fraud to sales ratio, achieving the lowest ratio compared to other service providers and the national average, resulting in the bank receiving the VISA Champion Security Award (Southeast Asia) in 2019.

2) Increased Risk Management from Digital Services (Digital Transformation) includes risks from service instability, cyber risks, and customer data protection and privacy risks. The goal of managing risks from digital services is to ensure the bank's services are smooth, convenient, and secure. Here, "people" are crucial, both as the source of risks and as key personnel in prevention. The bank works to manage risks from digital services in four areas:

Standards prioritize compliance with international security standards to protect against cyber threats and customer data.

Employees through the Cyber DNA project, raising awareness and ensuring safe behavior against cyber risks and data leaks.

Customers through the "Mindfulness" project, promoting knowledge among bank customers, encouraging them to be mindful of their self-care in the digital age.

Collaboration with Third Parties by establishing operational guidelines and processes to ensure that service providers and partners maintain cybersecurity and customer data protection standards comparable to those of the bank.

In 2020, KASIKORNBANK will elevate its focus on cybersecurity and customer data privacy to the highest level and will implement AI and Machine Learning technologies to detect Cyber Crime and Cyber Risk.

3) Environmental, Social, and Governance (ESG Integration) Risk Management KASIKORNBANK aims to be a good global citizen under good governance principles and appropriate risk management, such as having policies and processes for lending that consider environmental, social, and governance impacts (ESG) and establishing an exclusion list of credit types the bank does not support. At the same time, the bank promotes positive impacts from business opportunities by financially supporting businesses that consider reducing environmental and social impacts, such as:

Renewable Energy Loans including solar energy, biomass energy, and waste energy loans. In 2019, the bank issued loans exceeding 6.3 billion baht, with a production capacity of over 800 megawatts, aiming for a market share of 15% of the domestic market in 2020 according to Thailand's renewable energy and alternative energy development plan.

Energy Conservation and Environmental Protection Loans including loans for installing Solar Rooftops, loans for building improvements for energy conservation, and loans for process improvements to reduce energy consumption in establishments. In 2019, the bank issued loans exceeding 2 billion baht, aiming for 2.4 billion baht in 2020.

Social Support Loans including projects supporting access to essential services in society, such as loans for retirees, employment generation support projects for SMEs and small community shops, and projects supporting entrepreneurs to access funding through franchise business loans. In 2019, the bank issued loans in this category totaling over 7.6 billion baht, aiming for 7.73 billion baht in 2020.

The bank has issued sustainable bonds since 2018, totaling 100 million USD, and aims to issue additional sustainable bonds in the future. Additionally, the bank invested in green bonds worth 1.841 billion baht in 2019 and plans to invest an additional 300-500 million baht in 2020. 

"All of this is to ensure that customers feel secure with us, alleviating concerns about asset and data security, transaction accuracy, and trustworthiness. The bank's risk management can meet diverse needs, ensuring the bank remains strong and reliable while empowering customers to live and do business without worry."

Partnering to create services available wherever customers are, aiming for an increase in personal loans by 178 billion baht.

          Mr. Patchara Samalapa, Managing Director of KASIKORNBANK stated that although consumer behavior is increasingly leaning towards digital banking, with transaction volumes through K PLUS increasing by over 200% in the past three years, the number of transactions through branches remains significant, exceeding 100 million transactions, particularly those involving cash and identity verification for activating various financial transactions at branches (Authentication). Therefore, the bank continues to prioritize the diversity of channels or platforms that customers use to ensure the best experience for its customers, aiming to make the bank's services available wherever customers want to access financial services.

        Over the past two years, the bank has leveraged its digital banking capabilities and expertise in providing comprehensive financial solutions, collaborating with the strengths of partners in various businesses to create solutions that enhance service delivery on platforms together. The bank has developed the capabilities of applications or e-wallets powered by KBank, including linking with the K PLUS application, allowing customers using both the bank and partner services to easily and conveniently access financial services that meet various lifestyle needs.

Currently, the bank and its partners can provide full services to customers, allowing them to use various services seamlessly on the platform that connects K PLUS of KASIKORNBANK with partner platforms, which includes:

 1) Connecting services between the bank and customers of partner groups with the technology structure ‘Powered by KBank’ to automate everything within a single application without needing to exit the app for payments or top-ups, enhancing convenience and speed for customer payments, such as the development of e-wallets like Blue CONNECT, GrabPay, YouTrip, Chulalongkorn University, allowing the bank to serve over 1.3 million partner customers.

 2) Enhancing service capabilities on the K PLUS platform by linking the customer databases of various partners with the bank's customers, with K PLUS as the main service channel, including two features: 1) Adding Membership Cards (Add Card), allowing customers to add membership cards from 13 brands such as AIS Points, AirAsia BIG Loyalty, PTT Blue Card, The1 on K PLUS, eliminating the need to carry cards, checking points, and receiving various privileges, and 2) Customers can pay for goods or services using credit card points in K+ Market, providing a channel for redeeming KASIKORN credit card points, with over 2.97 million cardholders, allowing customers to choose to purchase goods or services with cash or credit card points immediately, increasing sales opportunities for sellers. Last year, customers used KASIKORN credit card points to redeem goods or services totaling over 1.4 billion points.

3) Unsecured personal loans on K PLUS Since last year, the bank has started offering unsecured personal loans through all bank platforms, including services on K PLUS and access to partner platforms. Last year, the bank partnered with LINE Financial to establish KASIKORN LINE Co., Ltd., preparing to launch full-scale lending services under the LINE BK brand in the second quarter of 2020, allowing customers to access small funding sources for both general customers and small business operators continuously, quickly, and conveniently. In 2019, the bank issued unsecured personal loans totaling over 36 billion baht.

"In 2020, the bank aims to issue personal loans (Consumer Lending) increasing by 178 billion baht, growing 30% from 2019."

Seizing opportunities in the Asian era, applying for the establishment of KAITAI TECH in Shenzhen to design and create innovations while expanding channels in CCLMVI.

        Mr. Pipit Aneknithi, Managing Director of KASIKORNBANK revealed that amidst the challenging global economic environment, the bank believes in the potential of the Asian region, which is emerging as a leader in driving the global economy, especially CCLMVI. In 2019, Asia accounted for 57% of the global middle class, expected to rise to 67% by 2030. This middle class will be the group using technology to meet their lifestyle needs (New Middle Class). Additionally, Asia remains a significant technological powerhouse, with 65% of global patent applications coming from Asia in 2017 and 33% of the world's unicorn startups emerging in Asia, making this a crucial time for Thai entrepreneurs to expand markets and bring products and services to the ASEAN +3 region.