DESPITE the growing number of customers using digital banking, Bank of Ayudhya
By assets, Krungsri is ranked the fifth-largest Thai bank, but its current number of branches, 644, is well behind the 1,100-1,200 at each of the top four banks: Bangkok Bank, Krungthai Bank, Siam Commercial Bank and Kasikornbank.
Since becoming a member of the Bank of Tokyo Mitsubishi UFJ group, Krungsri has had a three-year plan, for 2016-2018, to join these four institutions in the top tier of Thai banking. Last year, the bank opened 20 new branches, with a further 30 planned for this year and another 20-30 for 2017.
Phonganant Thanattrai, head of Krungsri’s Distribution Group, said the country’s top four banks had all slowed the opening of new branches as their scale was now sufficient to serve their customers while some of the Kingdom’s other banks had also closed down branches due to the policy of their parent bank.
Customer traffic and branch location are both essential to considering the opening of new outlets, he said, adding that customers nowadays found it more convenient to go to a bank within a shopping mall than visit a stand-alone branch, a trend would increase in the coming years.
Online banking, meanwhile, is not a threat to Krungsri and the bank is looking at it as another channel that can support the conventional branch channel, Phonganant said.
While even more customers are moving to online banking – comprising ATM usage, Internet banking and mobile banking – transaction volumes at Krungsri branches have not fallen, he said. To support this point, he said that in the first half of the year, savings and investment transactions at Krungsri branches had exceeded the bank’s targets.
The number of deposits exceeded the growth target by 2 per cent, while mutual-fund transaction growth was 8 per cent above target, and bancassurance growth was 20 per cent higher than expected, he said.
At the end of the second quarter, deposits stood at Bt1.1 trillion, mutual funds totalled Bt170 billion-Bt180 billion, and first-year premium was Bt6 billion-Bt7 billion.
Krungsri’s branch-network expansion also contributed to growth coming in 30 per cent higher than expected during the first half of the year. However, as long as Thailand is still in large part a cash society, having a branch network is essential for those who want to make deposits and, in Krungsri’s view, the current types of online transaction do not mean that digital banking will reduce the role of the typical bank branch in the next three to five years, he explained.
Branches remain an essential channel, but online banking is an additional channel that can help provide a better all-round service to customers, he said.
“We should not panic about the upward trend of digital banking, but [at the same time] we will not lag behind the trend. We plan to create a pilot branch that is fully equipped with automatic tools, in order to monitor the behaviour of customers and see what they need when they come to branches. The pilot branch will be seen next year, and perhaps it will even have no staff,” the Distribution Group head said.
He also said that Krungsri branches must, however, increase their role in supporting lending to small and medium-sized enterprises, because the level of financial activity from this category of client was not much when compared with activity among retail – or individual – borrowers and those with savings and investment products.