Kasikornbank goes digital

Written by Kapronasia || April 03 2023

Slowly but surely, Thailand’s largest incumbent banks are positioning themselves to dominate the country’s nascent digital banking segment. This is no surprise. It’s how things tend to play out in East Asia – though it’s a shame for startups. The latest Thai incumbent bank to embrace digital banking is Kasikornbank, commonly known as KBank.

In the past year or so, KBank has accelerated its push into digital banking. In June 2022, it announced that it would convert its Make by KBank mobile banking app into a purely digital bank and apply for a virtual banking license from the Bank of Thailand (BoT).

The license will almost certainly be approved given KBank’s status. Like its competitor SCB, which also going all in on online banking, KBank is designated as one of the country's six domestic systemically important banks by BoT, reflecting its significant scale and financial system linkages. The BoT prefers minimal disruption to the financial services sector from its issuance of digital banking licenses and is thus tweaking the process to ensure that it is dominated by firms it views as reliable and trustworthy.

In July 2022, KBank announced a US$2.7 billion strategic program aimed at boosting access to banking services among Thailand's unbanked and underbanked population, small businesses and the self-employed. KBank’s CEO Kattiya Indaravijaya has described the initiative as a marriage of KBank’s strengths as a heavyweight traditional lender with the “DNA of a challenger bank to empower a whole new generation of Thais.”

Like the typical challenger bank, KBank now plans to streamline the banking process by making it possible to open an account online. It wants to reduce paperwork, improve customer service by making everything go faster. And of course, it wants to rejig the lending application process, “offering loans without collateral and based on a borrower's real ability and intention to repay,” according to Indaravijaya.

Of course, unlike the typical challenger bank, KBank won’t struggle with regulatory approval and capitalization requirements. Nor will it be under heavy pressure to quickly onboard customers.

Supporting KBank’s pivot to digital financial services is its partnership with Japan’s platform company Line, which is the most popular messaging service in Thailand. KBank is the only lender in Thailand that is offering banking services through social media. The partnership is smart move for KBank given that Line has more than 50 million users in a population of 71.6 million. Because of the KBank-Line tie-up, known as Line BK, a loan applicant is able to apply for a loan through an app the two companies jointly built and get a decision within 24 hours.

2022 ended up being a banner year for KBank’s digital banking pivot, according to the company. It added 2 million new users of its KPlus online banking app and recorded 11 billion more online transactions than in 2021. For its part, Line BK added more than 1.4 million new users and extended more than 18 billion baht in loans.

It will be interesting to see how KBank's digital banking initiatives fare beyond Thailand. It has already announced it wants to be the "regional digital bank of the new era" and his sights set on Vietnam, where there is a much bigger unbanked population than in its home market.