TBank aims to provide SMEs with 'total solutions'
The new head of SME banking at Thanachart Bank says small and medium-sized enterprises deserve equal treatment with corporate customers, and should be offered total solutions to help drive their competitiveness, in addition to regular lending.
Sutut Chitmonkongsuk, executive vice president and new head of SME Banking, said last week that it's not easy to drive the yield of SMEs above 5-6 per cent, due to serious competition. To maintain a yield of 5-6 per cent for TBank's SME banking, the bank must adopt a strategy of offering transactional banking, including cash management, to this category of clients.
Sutut replaced Jiratchayuth Amyongka, who moved to be head of SME banking at CIMB Thai Bank.
Previously, TBank targeted outstanding SME loans of Bt90 billion.
He said that SMEs' strength depends not just on lending, and that the bank should offer cross-selling products as a total solution, especially for medium-sized enterprises with credit lines of between Bt10 million and Bt600 million.
Transactional banking will lead to an increase in products held by existing customers. TBank now handles 20,000 SMEs, most of which purchase two or three products, a number that should be increased, Sutut said.
"Next year we will try to drive up the penetration rate of SMEs. We are improving the process and training staff to strengthen transactional banking," he said.
Sutut said he has given a 100-day action plan to SME banking staff, believing the short-term direction will increase efficiency.
SMEs need flexibility in doing business - therefore, transactional services are essential, not only loans, he said. He added that banks have offered total solutions to corporate customers, and SMEs should be offered the same solutions.
The bank will actively promote cash management and trade financing to SME customers in 2014 because most SME customers are traders, he said, noting that the export outlook in 2014 is expected to recover.
He said the bank does not expect fee income from offering total solutions, but believes that when SMEs see higher revenue from using more bank products, the customers will stay with the bank.
"It is not easy to approach customers from other banks because that means the bank must use pricing, which does not benefit our yield. In term of loans, we will offer overdraft loans or increase credit lines to existing customers," Sutut said.
In addition, to increase flexibility in taking care of customers, the bank has assigned bank branches to service small enterprises with credit of less than Bt10 million. However, loan approval is the department of the SME Banking division. SMEs with credit lines of less than Bt10 million account for 70-80 per cent of customers.