TMB in sharp change of focus regarding fund mobilisation

Fund mobilisation will instead be mainly done through new deposit accounts that offer a higher interest rate than savings accounts and meet the needs of customers looking for both a savings vehicle and an investment gain, chief executive officer Boontuck Wungcharoen said yesterday.

The bank’s proportion of basic fixed-deposit products, regardless of the maturity, will gradually decline once customers learn the benefits of other TMB products such as the "No Fixed" deposit, which offer more than the basic products, he said.

He also predicts the phasing out of basic fixed-deposit products across the entire industry, as he expects other banks will follow TMB’s lead.

TMB launched the No Fixed product last year. After only one year, it has attracted more than 600,000 new accounts, and this is expected to reach 1 million by the end of December.

This is in stark contrast to the past 50 years, during which the bank opened about 300,000 fixed-deposit accounts in total, he said.

About 40 per cent of No Fixed accounts are held by new customers, lured by the 2.5-per-cent annual interest rate on offer, compared with just 0.125 per cent for a savings account.

Another attraction of the new product is that customers are allowed to withdraw part of the money, yet still enjoy the same interest rate. While they would get a rate of more than 3 per cent from basic fixed accounts, the interest would be automatically switched to the savings rate upon withdrawal.

The accumulated outstanding value of the No Fixed product is now Bt90 billion, while that of TMB’s basic fixed-deposit accounts is Bt120 billion.

"Actually, few holders of No Fixed accounts withdraw money. This shows that most just want to park their savings somewhere. Through this product, they enjoy a higher-than-savings rate and are offered a chance to transfer money [without penalty] when needed," Boontuck said.

No Fixed accounts constitute 17 per cent of the overall accounts at the bank, while basic fixed deposits amount to 39 per cent, savings accounts 33 per cent and current accounts 11 per cent.

The CEO said customers in the past had known only two types of account: savings and current accounts, which give lower interest and entail transaction fees, and fixed deposits, which offer higher interest but with tighter conditions.

Under its "Make the Difference" concept, he said TMB had developed deposit products that meet customers’ needs and provide them with real benefits by differentiating between transactional deposits, with a value-related fee but a lower interest rate, and deposits for savings and investment, which offer a higher rate and flexibility. To broaden the bank’s customer base via the No Fixed account, TMB has a promotional 3-per-cent interest rate for new depositors, while existing balances can attract the same rate if customers put additional money into the account.

The bank expects to attract deposits of about Bt50 billion from the promotion, which runs until July 31, he said.

Alongside No Fixed, "ME by TMB" is the other TMB savings and investment account now available, while "No Fee" saving and "No Limit Debit Card" are the bank’s transactional accounts.

Meanwhile, TMB has introduced a "Send to Save" service for transactional-account depositors who want to transfer excess money and get a higher interest yield by having it parked in a No Fixed account.