Banks turn to features in deposit drive
Banks have changed tack in launching deposit campaigns by offering attractive features rather than just higher interest rates to capture market share and secure liquidity to serve loan demand next year.
The commercial banks used to compete on rates, but their recent campaigns showcase deposit products with flexible conditions such as unlimited withdrawals, principal payments and lower transaction fees.
Weidt Nuchjalearn, a senior executive vice president of Krungthai Bank (KTB), said yesterday that the new features were designed in response to customer requirements. Depositors nowadays not only want higher interest but also flexible conditions that help them save on the cost of making transactions.
Banks are trying all ways to build their deposit bases and maintain their assets in preparing to provide more loans next year. All banks are expected to chase small-business and retail borrowers aggressively, he said.
Basel II standards are putting pressure on the capital of banks, so lending to retail customers and small businesses can stay within the banks’ comfort zone, he said.
KTB last week launched a deposit campaign with unique features and a high interest rate to attract elderly customers. Depositors can earn 4 per cent per annum. and choose between receiving minimum principal??? or interest.
The bank hopes to mobilise deposits of at least Bt20 billion from the campaign.
Another product that follows the new trend is the Tarm Jai Term Deposit Account, which gives holders the freedom of determining the maturity or term of their fixed deposit, from seven days to a maximum of 365 days.
KTB’s deposits in the first nine months exceeded the target of Bt200 billion but the bank continues to roll out promotions because it wants to ensure plentiful funds for loan expansion next year and also to protect or increase its market share this final quarter of the year.
TMB Bank yesterday debuted the TMB Free Flow Daily Account, allowing customers to make 10 banking transactions per month without paying fees. The transactions include money transfers, bill payments, mobile-phone top-ups and cash withdrawals. Customers need to make a one-time deposit of Bt15,000 per month.
However, the product will not pay interest because it is suitable for customers who make frequent transactions.
Kanchana Rojvatanyu, head of retail banking at TMB Bank, said it targeted 1 million accounts within three years from the new product.
For those who require both higher interest and no transaction fees, she suggests opening a TMB No Fixed Account instead.
Bernard Coucke, chief retail banking officer for TMB Bank, said cash withdrawals and money transfers were commodity transactions for which customers should not be charged. Banks in Europe waive fees for commodity transactions.
TMB believes pricing is not the requirement of customers. They prefer using products and services that provide value-added features, he said.
Siam Commercial Bank on Monday entered the fray with the "Flexible Fixed Deposit", a 12-month fixed-deposit account that lets holder make unlimited free withdrawals for up to 60 days while receiving up to 3-per-cent interest. The bank projects Bt40 billion in deposits from the product.
Bank of Ayudhya last month added features to its new savings account. Cash withdrawals, interbank money transfers and up to five bill payments per month are exempt from fees. Depositors can still enjoy a nice interest rate of 2.5 per cent per annum.
Kris Chantanotoke, executive vice president, said the attractive features would encourage customers to use BAY as their main bank.
