Krungsri Consumer rejigs regional expansion strategy
LEARNING from its recent step into the consumer-finance market in Laos via a joint venture with a local partner, Krungsri Consumer - the credit card and personal loan arm of Bank of Ayudhya - is adjusting its approach to broadening its services to other n
Krungsri Group aims to enhance its consumer-finance operations – comprising auto hire purchase, motorcycle hire purchase, personal loans, First Choice and micro-finance – by assigning them to establish footprints in CLMV (Cambodia, Laos, Myanmar and Vietnam) within the next three years.
The group’s strong expertise in consumer finance can help strengthen its presence in the region, while for corporate banking, Krungsri Group will rely on the experience of its major shareholder, Bank of Tokyo-Mitsubishi UFJ (BTMU).
Krungsri Consumer and Krungsri Auto, the auto hire-purchase unit, last month launched Krungsri Leasing Services, a joint venture with Laos’s Unity Capital, to offer consumer-finance products in the neighbouring country.
Krungsri Leasing Services is the first overseas expansion for Krungsri Consumer. However, the joint-venture company took more than a year longer to commence operations than under the initial plan, due to an insufficient understanding of the host country’s regulations.
Bank of Ayudhya has two branches in Laos – in Vientiane and Savannakhet.
“There were many parties that we had to contact, not only the central bank in Laos. We did it alone, as we had previously thought Laos was not a difficult country in which to do business, but in fact it was not easy. However, this has been a learning curve for us in preparing further steps into other countries,” said Thakorn Piyapan, managing director of Krungsri Consumer.
The company will hire consulting companies to guide it through the local regulations in other CLMV countries, as having such advisers will help ensure the more rapid establishment of operations in each market, he said. Krungsri Leasing Services, meanwhile, will have three branches in Laos within three years, with operations in Pakse and Savannakhet earmarked to follow the one just established in Vientiane.
Consumer finance in Laos will be the platform for Krungsri Consumer when expanding into Cambodia and Myanmar, while Krungsri should not have to start from zero in Vietnam as the country already has many consumer-finance players, he said.
Vietnam will, however, be the next country in which Krungsri Consumer establishes a presence, said Thakorn. “We should acquire a portfolio from existing players. BTMU has a strong footprint in Vietnam due to its strategic partner, the Vietnam Joint Stock Commercial Bank for Industry and Trade, which helps support the payment channel,” he added. This is unlike the situation in Laos, where Krungsri Leasing Services has only a branch operation and debt-collection has to be adjusted by using outbound teams, making operating costs high, he said.
