Kiatnakin sets sights on the rich in provinces

KK’s branches in the provinces have been geared to chase deposits, instead of solely pursuing hire-purchase business.
Before its merger with Phatra Capital, KK tapped the HNW market by offering high-rate deposit products, with low-profile entrepreneurs forming most of its clients.
Phatra, meanwhile, was widely known for its expertise in wealth-management services.
To sharpen its wealth-management service, the bank has leveraged Phatra’s services and created a segment called Priority banking, in order to increase the wealth of its existing HNW clients, who have assets under administration (AUA) of Bt10 million and above.
Kulnan Tsanthaiwo, first executive vice president and head of KK’s Priority Banking Group, said untapped well-off people upcountry were generally offered funds by financial institutions in terms of where to park their money.
However, this has not been the way for KK, but it is now leveraging Phatra’s wealth management services, she said.
KK has adjusted its branches in upcountry provinces as a channel for mobilising deposits, as opposed to merely offering auto loans, she said, adding that the bank must, therefore, build the Priority brand to accommodate the new focus.
AUA at KK-Phatra Financial Group total Bt250-260 billion, of which some Bt70 billion is accounted for by deposits of the bank’s high-net- worth clients.
KK’s overall bank deposits from all customer categories at the end of last month were nearly Bt200 billion.
“We have targeted our AUA rising to Bt500 billion within four or five years,” Kulnan said.
Financial consultants from Phatra will help relationship mangers at KK to capture more HNWs.
They will offer “open architecture” from outside, which entails analysis by the Phatra team in terms of returns on investment and the fees paid to outside managers.
The bank will have consolidated statements showing all investment products and their returns, comparing each product’s performance over the past five years, she explained.
The bank has split its sharpening of Priority banking into two phases. Firstly, relationship managers and financial consultants will together look after the existing clients of the bank, most of whom are depositors, so that they can diversify into non-deposit products such as fixed-term funds.
In the year to date, AUA of existing customers have grown by Bt16 billion, she said.
The second phase is to deliver a seamless customer experience, enabling them to make use of all investment products from KK and Phatra under one umbrella when visiting the bank’s branches.
A single investment account should consist of several investment products and deposits as part of their investment, said the executive.
While the model is used in international markets, Kulnan acknowledged that this phase was expected to take some time to achieve because the bank must first improve its back-office system to cope with a seamless customer experience.
What the bank is doing in both expanding and securing Priority customers is offering a new high-rate deposit account for individuals prepared to lodge between Bt5 million and Bt10 million, which is an indicator of those with the potential to be upgraded to Priority status.
Of the current total of 10,000 Priority customers, almost 3,000 are upgraded clients, Kulnan said.
“KK has small branches, but they [customers] come to us because of the higher deposit rates, even though the gap between our deposit rates and those of others has declined to 10 basis points, from 25-30 basis points. On top of that, we will offer investment that is analysed by the Phatra team for our clients,” she said.
At KK, content is the most important offering for wealthy customers, and not privilege, she said, adding that content meant investment products that generate returns in response to customer needs.
“Most HNW clients are enterprises that are delivering businesses to their successors ... We will focus on the inspiration of successors in family business. Enterprises who have land plots are more actively involved in the tax system, and while KK is not expert in tax or law, the bank can help these customers in preparing themselves via seminars, by joining with the experts in those areas,” she added.
“As a small bank, we cannot beat out rivals on privileges. The priority in Priority banking is content, which has been widely accepted by investors who are customers of Phatra, and this will be offered to KK customers, as well,” said the executive.