Phattharaphong Kanhasuwan, Kasikorn Bank, flags AEC+3, turning disruption into the New S Curve.

Phattharaphong Kanhasuwan
Deputy Managing Director
Kasikorn Bank

 Flag AEC+3
Bringing Disruption to the New S Curve

“International business is the Bank's New S Curve, but the Bank's team in Thailand is the most important division. Because they faced many difficulties but were still able to build a lot of strength. Domestic businesses are an important force in generating income so that foreign businesses can seek opportunities from outside.”

Kasikorn Bank has been moving forward in international business for 20 years following the vision of Chairman Emeritus Banthoon Lamsam. that sees the changing world context and the connectivity of the region has become more Therefore, it is considered fortunate that Kasikorn Bank has begun to move forward with foreign business for a long time.

Phattharaphong Kanhasuwan, Deputy Managing Director of Kasikorn Bank Being one of the pioneers in seeking opportunities to pave the international business path for Kasikorn Bank, Phattharaphong graduated with a Master's Degree (Finance Direction) from the University of Toledo, USA. Started working at Kasikorn Bank in 2537 at the Administration Office as Director of Credit Policy.

Then move to see the credit risk policy and management department. before becoming a senior director of the China Business Administration and Foreign Office Assistant Managing Director and appointed Deputy Managing Director Take care of responsibility for foreign business matters.

Unfolding the AEC+ route map
Pinning China as a pillar

Phattharaphong talks about Kasikorn Bank's strategy for expanding its business network abroad. First and foremost, bank expansion is not holding too many assets. Or call it going out like Asset Light.

For the Bank's foreign business strategy, it will follow a 3-step plan by

The first step is to get a local banking license and to expand the business using digital both mobile banking for individual customers and internet banking for large business customers. To create income on that license and use the income to expand the business further.

Currently, Thai businesses investing in ASEAN are growing well. There are big companies that can grow further, which is a good opportunity for the bank. This is consistent with the direction that ASEAN countries are growing very quickly. For example in Vietnam which is growing rapidly. It is expected that in the next few years it will be able to develop to the same level as Thailand.

The second step of the plan is to expand the customer base. It will focus on small businesses. Both individual customers and small businesses The bank aims to develop the K Plus application that can be used in many countries and internationally. The goal is to develop the K Plus app into a regional mobile banking platform with 2 million users. In the second quarter of this year, K Plus users in Thailand will be able to use the K Plus app in China, and will also be able to develop internet banking for business customers that can be used internationally.

The third stage of the plan is once the customer base has been sufficiently expanded in each country, it will begin offering online lending, adhering to the Better Me philosophy, a Personal Investment Finance service model pioneered in the bank's business in China.

However, although the use of digital in many countries has advanced to the point where the relationship between customers and banks is weakening. You can get loans online without having to meet face to face. But the bank will still use a mix of methods. I mean, we have to meet each other sometimes. There is a mechanism for resolving debt like businesses used to do, but using technological capabilities to help. This method has been well accepted by the central bank in China.

“The opportunity to expand overseas today is lower in cost than in the past. In the past, there was no way to spend 100 million baht to expand a business overseas. But nowadays it can be done with the help of technology. When you can start one branch, you can use your technological capabilities to expand to cover that country as well.”

Phattharaphong also said that the countries that Kasikorn Bank is interested in are AEC+3 countries or ASEAN countries and China, Japan, and South Korea, which is the reason why the bank decided to close foreign branches in Europe and America to focus on this region with China. is the first priority Followed by CLMVI countries, meaning Cambodia, Laos, Myanmar, Vietnam and Indonesia.

China is the bank's number one target. Followed by Vietnam in second place, which plans to upgrade the Ho Chi Minh City representative office to a full-fledged branch in August 2564. Following behind is Indonesia, but there is not much they can do because the bank still has a stake in Shareholding in Maspian Bank A small proportion of strategic alliances It plans to increase its shareholding to 40% this year while Laos and Cambodia are able to move forward with their own businesses. In Myanmar, due to the current domestic situation, it has been delayed for the time being.

“The bank's format for expanding its international business focuses on being a local bank in that country. The reason is because being a local bank can do business covering the entire country. Can increase the number of branches and various channels in the target country without limit. Each country has different laws. In some countries, foreign banks cannot even install additional ATMs. Therefore, being a local bank model will provide more opportunities for business expansion.”

New S Curve
Grow 10 times

Phattharaphong said: Continuing with the bank's foreign business is considered a disruption of its own business because resources must be divided from the original business and talented personnel must be drawn from the original business to perform specific duties in international matters. Foreign business is considered an important New S Curve of Kasikorn Bank.

“International business is like the Bank's New S Curve, but the Bank's team in Thailand is the most important division. Because they faced many difficulties but were still able to build a lot of strength. Domestic businesses are an important force in generating income so that foreign businesses can seek opportunities from outside.”

Phattharaphong also said that The bank's strategy for entering the AEC+3 countries will be based on a technology startup company with a banking license, which is different from fintechs that may have technology but do not have a banking license, as for large banks. Maybe it's too clunky and lacks technological ability.

Even though Kasikorn Bank in Thailand is very large, entering a foreign country is considered a new player that must start building a new customer base. The advantages of entering a foreign business in the form of a startup are available. A banking license reduces the barriers to starting a business from scratch that requires digital entry and a license. And after that, we will look for local partners with a customer base to expand further.

Phattharaphong said For China, which is the bank's main target country With a population of 1,400 billion people, China is a country with the most potential and opportunities for both large business customers and online digital lending for small customers. However, Kasikorn Bank's business model in China must be different from others. Will not focus on lending only Because if there is too much competition for lending, the market becomes a Red Ocean. Ultimately, it is a burden on the central bank in that country, as seen in many countries.

At the same time, Kasikorn Bank believes that in order for a business to compete, it must be different. This is the origin of the bank's philosophy in doing business abroad that is based on the laws of nature and being a bank with ethics that views the success of living customers, not just the business itself.

“The bank's business definition in China will be Personal Investment Finance, which is not just lending because lending is a burden and does not create a good life for customers. Therefore, the bank has set up a business model in China called Better Me, which is a Personal Investment Finance service. They have given out loans without any purpose, but customers must be able to use the money to make their lives better.”

Currently, Kasikorn Bank China has become an education technology partner in China with over 20 million users in order to use data obtained from partners to study customer behavior. Leads to planning a roadmap together with the customer before granting a loan. If the customer can use the credit limit received according to the plan together, it will actually lead to self-development. The bank will reduce the interest. This model may be similar to socially responsible lending, also known as Social. Responsibility, but Better Me will go further than that.

“Currently, Better Me has a customer base of 700,000 people in China and has a credit limit of approximately 4,000 million baht, which is considered not a lot because the average loan per customer is only 500-1,000 yuan or 2,500-5,000 baht.”

Phattharaphong also said that The bank aims to increase local partnerships in China beyond education. By finding partners, we will find people who believe in the philosophy of Better Me together. The Personal Investment Finance model that has been laid out will not only include individual customers, but will also include lending to small business owners operating on behalf of individuals. China is already a world of Digital Planforms that are ready to connect. The bank therefore has a network connecting to various aspects of the business chain, including HR, transportation, and marketing, to help further develop customers.

As for the Cross-Border SupplyChain business for business customers, although it is mainly aimed at China, it will not be just China, it will link trade between China and ASEAN countries as well. In the near future, the bank will have partners in the Digital Planform for international trade that will work together to lead to lending to businesses in the international supply chain.

As foreign business is the Bank's New S Curve, Kasikornbank's foreign business targeting also wants to generate significant income for the bank. In 2562, net income from foreign business was 0.5% compared to with the total net income of the bank which is still considered very little But it will follow the goal of increasing it to 5% in 2566.

“ในปี 2566 รายได้จากธุรกิจต่างประเทศสุทธิจะมีสัดส่วน 5% ของรายได้สุทธิรวมธนาคารกสิกรไทยในประเทศไทยหมายความว่าจะต้องโต 10 เท่าภายใน 3 ปี ซึ่งในปี 2563สัดส่วนรายได้สุทธิจากต่างประเทศสามารถเพิ่มขึ้นเป็น 1% แล้วและคาดว่าในปี 2564 จะอยู่ที่ 2 %แม้ Covid-19 จะมีผลกระทบบ้างแต่จะไม่มีการปรับลดเป้าหมาย”

Kasikorn Bank's foreign business network 

– People's Republic of China Kasikorn Bank (China) Co., Ltd. operates as a commercial bank registered in the People's Republic of China, with branches in Shenzhen, Chengdu, Shanghai, and sub-branches in Longgang and a representative office in Beijing. There is also a branch in Hong Kong.

– Socialist Republic of Vietnam, Hanoi and Ho Chi Minh City Representative Office format (Ho Chi Minh City Representative Office will be upgraded to a full-fledged branch in August 2564)

– Republic of Indonesia form the Jakarta representative office and will hold a 40% stake in Maspian Bank. in indonesia

– Lao People's Democratic Republic Forms of commercial banks registered in Lao PDR

– Kingdom of Cambodia Phnom Penh branch format

– Republic of the Union of Myanmar Yangon representative office format and holds 35% of shares in Ayeyawadee Farmers Development Bank or A Bank.

– Japan Tokyo representative office format

– Republic of Korea (South Korea) Cooperation model with 3 partner banks

 Follow the People column in the Finance and Banking Journal. May 2564 issue, issue 469, on leading newsstands nationwide and in digital format: https://goo.gl/U6OnIi