“Banking is necessary, Banks are not.” This phrase reflects the major transformation Thai banks must undergo, including branch reductions, digital transformation, mobile banking that allows account opening and loan applications, and innovations like QR code payments accessible to all age groups.
The big challenge for banks today is not just having better products to keep customers loyal. Thairath Money had the chance to speak with banking industry Thought Leader Thakorn Piyapan, CEO of TMBThanachart Bank (ttb), to delve into Thai consumer insights and behaviors in the current era and how to truly create Financial Well-being.
Managing the K-Shaped Economy
However, a clear challenge for banking is the household debt level exceeding 80%, amid a K-shaped economy where consumers with purchasing power continue to grow, while others struggle, limiting growth in retail loans. Banks must balance multiple priorities simultaneously.
“Our future strategy will involve fuzzy logic: in the morning, we focus on Wealth customers; by afternoon, we attend to Mass customers and retail debt. We want loan growth, but household debt burdens restrain us. Lending too much is risky; lending too little stunts economic growth,” said Thakorn.
Over the past 2-3 years, amid current conditions, there has been growth in affluent customer segments. Previously, Wealth clients were business owners or experts from generations 1-2. Now, ttb connects with a new Wealth generation by developing ttb reserve for clients with assets under management (AUM) of 5-30 million baht, and recently launched ttb superior for AUM of 1-5 million baht, adding lifestyle benefits and financial advisory to expand client wealth.
In retail loans, home loans focus more on the secondhand/refinance market, which is still growing compared to new homes. Borrowers are mainly aged 30-40 and above, who consider affordability before applying. Auto loans are growing in line with vehicle sales recovery, including expanding electric vehicle (EV) portfolios in major and secondary cities, with customers generally having good income and credit scores.
For unsecured loans like credit cards and personal loans, ttb sees improvement in non-performing loans (NPLs) as some troubled borrowers have restructured debt. Spending volumes grow faster than the market, especially among Wealth segments and those earning 50,000-70,000 baht per month, who continue spending steadily. Only the 30,000 baht income group appears to moderate spending.
Risk-Based Pricing: “Good Credit Should Be Rewarded”
“Previously, good credit customers rarely benefited. Now, we use credit data to set rates. Customers with AA ratings should get lower interest rates. For example, Cash to Go loans offer AA grade clients rates as low as 13.99% per year, compared to typical cash card rates of 24-25% per year,” Thakorn explained.
Previously, interest rates were based on income criteria, but now ttb uses Credit Scores, believing this better reflects repayment behavior. Currently, ttb applies Risk-Based Pricing to title loans (non-transferable), personal loans, and will extend it to ttb Flash loans by year-end.
After adopting RBP, ttb expects NPLs for these loans to decline. Currently, NPLs are just over 2% for home loans, below 1% for credit cards and personal loans, and around 1% for new car loans. Low NPLs result partly from ongoing customer support programs, government measures, and the “Debt Coach” initiative helping individuals restructure and manage debts more effectively.
Virtual Banks on the Rise: Should Banks Be Concerned?
In this era, serious internal AI adoption is necessary to boost productivity. Simultaneously, data and customer behavior analysis must fix existing shortcomings and “repair customer journeys.” For instance, some customers start mobile banking product selections but abandon transactions near completion. To address this, the bank may add inquiry buttons or have staff contact customers facing issues to ensure smooth service use.
Thakorn added that technology implementation isn’t just about availability but ensuring all customer groups use it smoothly. Currently, systems are being improved to better serve elderly generations, enhancing security and reducing customer concerns.
All these efforts reflect the four years Thakorn Piyapan has dedicated to fostering comprehensive Financial Well-being for ttb customers, simplifying finances, and enabling clients to live as they wish. Moving forward, it will be interesting to see how he and this blue-orange bank expand their initiatives.
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