KBank boosts transactional banking as clients seek cheap labour overseas
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Kasikornbank has gone digital with its transactional banking, using a system it calls "biz automation" to serve corporate customers more efficiently as they expand overseas in search of abundant cheap labour.
Executive vice president Vasin Vanichvoranun said the bank had invested about Bt1.5 billion in upgrading to the automated system, which facilitates cash management and international trade, global synchronisation, muti-channel software, multi-currency capacity, and time-frame guarantees.
Crossing the borders
Thai corporates have been moving their production bases to neighbouring countries that have greater numbers of working-age labourers and low wages. When this happens, banks have to find ways to offer corporate customers financial services outside Thailand at reasonable costs.
“We have therefore streamlined transactions by integrating them to reduce risk. Meanwhile, biz automation will support their activities in offshore markets,” he said.
The digital system can help a corporate reduce the cost of financing by 10 per cent, KBank says. However, the objective of the bank in streamlining all transaction activities is to allow corporate customers to look for new business opportunities without worrying about manpower.
However, usage of digital banking by corporate customers is small because the law mandates that some payments be physical transactions such as cheques.
KBank is the leader in transactional banking with a 25-per-cent market share, and after the digital upgrade, it hopes to boost that share to 30 per cent within three years.
According to data compiled by the Bank of Thailand, the volume of transactional banking grew by 20 per cent last year, representing 2,200 trillion transactions, while the value grew by 10 per cent, representing Bt320 trillion despite slow economic growth.
Transactional banking can help shore up the bank’s income amid the slowdown of corporate deals.
Most fee income from transactions comes from recurring activities, but when the economy brightens next year, fee income from investment-banking deals such as initial public offerings, mergers and acquisition etc should bring in more income. The proportion of fee income to total income currently is 57 per cent.
Vasin said in the first eight months, corporate lending grew by 3 per cent to total outstanding loans of Bt434 billion, from Bt424 billion at the end of last year.
The bank is confident of loan growth of 5-7 per cent this year based on the deals in the pipeline such as real-estate investment trusts and infrastructure projects.
Transactional banking next year is expected to be boosted by imports of construction materials and machinery by contractors and subcontractors thanks to the government’s infrastructure projects, he said.
