Krungsri Consumer seeks new categories for instalment lending
Play
AYUDHYA Capital Services Co (Krungsri Consumer) will expand its instalment plans into new segments such as medical treatment, products for parents such as baby carriages, and home shopping as use of such plans for new purchases of home appliances and smar
Zero-interest instalment plans could also be in the offing.
Krungsri Consumer managing director Nayanee Peaugkham said the instalment programme had experienced sharp growth since 2013 driven by smart gadgets, but growth in this category will mature soon, so the company should seek new segments for the programme.
“Medical treatment and [parents’ goods] are among potential areas for instalment loans, while merchants in these categories want us to design a zero-interest instalment programme as well,” she said.
The company this year targets 20-per-cent growth in instalment loans, compared with 15 per cent last year. The instalment-loan portfolio last year was Bt33 billion.
The firm still targets 20-per-cent growth for the existing categories such as smartphones and home appliances, but new segments that Krungsri Consumer adds to the programme should grow by the same rate, Nayanee said.
“Instalment plans for home shopping and online shopping are able to grow a lot, so we are in talks with Lazada, a leading online merchandiser, on offering an instalment programme to consumers,” she said.
Consumers nowadays are smart spenders, and zero-interest instalment plans help them manage their cash flows better than paying by cash because they don’t have to pay interest if they pay their instalments on time, she said.
The company last year established a marketing team to promote its long-term instalment programmes for all five of the credit cards and personal-loan cards it manages to 20,000 merchants.
The team studied the character of merchants and customer segments so as to offer the right instalment programme to each customer.
This helped the company last year achieve growth of 15 per cent, she said.
The company last year witnessed high growth upcountry in the smartphone category after Apple asked it to handle an instalment plan offering zero interest for 24 months.
“They wanted to expand upcountry, and they had found that an instalment programme could help them to meet their growth [targets]. So [Krungsri’s] First Choice [credit-card division] designed a long-term instalment plan with zero interest,” she said.
The maximum instalment term with zero interest is 24 months for holders of personal-loan cards and 10 months for credit-card holders.
Krungsri credit cards contribute 35 per cent of instalment-plan participation, followed by First Choice at 30 per cent and Tesco Lotus cards.
At present, 13 per cent of Krungsri Consumer customers use the instalment programme, up from less than 10 per cent three years ago.
However, it will take time to boost the penetration rate of instalment lending to credit-card holders because most of their transactions are for fuel, which has no need for an instalment programme, Nayanee said.
