Krungthai Bank’s Srivanich: “My aspiration is to establish the next normal in digital banking”

• Krungthai implements the ‘carrier’ and ‘speedboat’ banking models for the transformation of its core businesses and introduction of new capabilities
• The bank continuously upgrades its technology stack and invests over $600 million to drive fintech innovation  
• It introduced the Pao Tang G-wallet app to enable Thai consumers to access financial services without having a bank account, and support the tourism sector during the pandemic

Krungthai Bank (KTB), the largest state-owned bank in Thailand and the fourth largest commercial bank by assets, has accelerated its digital reinvention to increase revenue and enhance value-added solutions for customers. The bank’s total assets stood at THB 3,171 billion ($101.51 billion), as of the first half of 2020.

The bank serves 40 million of the country’s total population of almost 70 million. Ten million customers currently use the Krungthai NEXT mobile banking app, and the bank aims to increase that number to 12 million by end of the year.

The bank’s regional network straddles mainly Indochina countries such as Cambodia and Laos, as well as China, India and Singapore. It has wholesale banking branches in Kunming, Los Angeles and Singapore. Its domestic branch network, largest in Thailand, was consolidated to 1,113 nationwide at the end of March.  

In October, the bank set up a new technology subsidiary, Infinitas, to serve as research and development (R&D) hub for newly digitised financial products.

Payong Srivanich, president and CEO at Krungthai Bank, said it is necessary to implement digital reinvention to take advantages of advancement in technologies such as artificial intelligence (AI), data analytics, cyber security, blockchain, as well as open banking. The innovation in technology brings new organisational competencies and expertise in banking. It also leveraged its Pao Tang G-wallet app to support the government's efforts to boost spending in the tourism industry during the COVID-19 pandemic.

As the CEO of Krungthai Bank, he aspires to establish the next normal in digital banking for Thais through its vision of ‘growing together.’ The bank targets to provide financial services to people at all levels and serves as a vital economic pillar.

Srivanich, is also chairman of the Thai Bankers' Association, which under his leadership seeks to reach more unbanked consumers and help small businesses grow.

Below is the edited transcript of the interview:

Foo Boon Ping (FBP): What does digital reinventionmean to you personally?

Payong Srivanich (PS):Digital reinvention means that an organisation places importance on its relationship with customers. It reviews and emphasises building excellent experiences for customers, business partners, and related stakeholders.

The success of digital reinvention lies on the organisation’s ability to take advantage of advancement in technologies such as AI, machine learning, data analytics, cyber security, blockchain, and open banking.  It is imperative to utilise these together with several operations, to set new strategic targets. (Find new ways of doing business, creating more revenues and values),  It can build new organisational competencies and expertise, and change ways of  doing business .

The ‘carrier’ and ‘speedboat’ banking models

FBP: What does reinvention mean for your bank and what are you trying to drive? Why is it so important?

PS: The bank has undertaken two banking models as parallel strategic initiatives in 2020 in the context of a more rapid and severe disruption. We call these the ‘carrier’ and the ‘speedboat.’ The ‘carrier’ refers to sustaining traditional banking business, namely credit, deposit, fees and others, including the development of Krungthai NEXT application to fulfil all customer needs.

The ‘speedboat’ refers to open platform as a service focusing on creating new business models and building innovative, shared service platform and extending partnership & building ecosystems to create new revenue generator. In this regard, such platforms and applications use AI, machine learning and data analytics that completely understands and responds to all customer needs.

These strategies and goals are set to support the bank’s financial platform to address all the needs of customers including the grassroots and urban societies through complete digital system.

Moreover, the strategies and goals also support the initiative to be an open bank through the use of the Pao Tang platform and e-wallet, which is an open system for all sectors to connect through application programme interface (API). This enables Thai people to use financial services even without a bank account. The bank can reach more people. Together, with our partners, we can develop financial products and services for customers and partners of the bank.

Due to Krungthai Bank's ability to build a large customer base, it will empower the bank to expand many businesses. It supported the business expansion of its customers’ partners.

It starts from the bank’s main customer, the “government” as a centre and expands to the business sectors of partners, namely distributors, community enterprises, retail shops, restaurants, hotels, and others in the supply chain.

All of them are connected through effective technology that links into the bank's ecosystem. It enables the bank to provide financial services that truly meet customer needs. It helps the bank  gain big data for analysis and effectively support future business expansion of target customer groups.

Invests over $600 million to drive fintech innovation 

FBP: What role is technology playing in the reinvention of the bank? Can you give us some examples of technologies in use and how they’re supporting this?

PS: In order to support the achievement of the bank’s targets, it continues to invest in information technology in 2020, in accordance with the long-term IT system development plan of 2019 to 2023.

The bank has an investment budget of over THB19,000 million ($608.1 million) to drive financial technology and support its digital banking business, especially for scalability, stability and security.

The bank has set strategies and goals in information technology to connect with customers across all channels, intelligent operation, and de-constructing the core.

The bank has transformed its big and inflexible core banking system into smaller modules to support agile development methodology, IT risks reduction, integration with ecosystems, and creation of an event-enabled enterprise. It will enable the bank to understand customer activities and offers promotions that match customer needs in real time. It’s data-driven and has flexible multi-speed IT.

Introduced Pao Tang G -wallet app

PS: It supported the tourism promotion campaign Chim Shop Chai (Taste-Shop-Spend). The bank, as a listed state-owned enterprise, participated in this campaign and provided the application to support economic stimulus measures of the government. Krungthai has developed the Pao Tang G-wallet app. The government use this channel to give money to the participants, according to economic stimulus measures.

Participating merchants use it to receive payment for goods and services. The bank has developed the Thung Ngern (money) application as a payment tool for small and medium enterprises (SMEs), and community businesses.

As supporter of the campaign, Krungthai Bank has implemented various projects and operations. It added new features to the Pao Tang application to function like Krungthai Connext via the LINE platform. For example, notifications of financial transactions and cashback to e-wallet as well as chatbot and search tools to nearby shops. The system will show 10 nearby shops within 10 kilometres and routes in Google Map to facilitate people in finding shops to encourage spending.

The bank also provided payment services to shops participating in the Thailandpostmart.com website of Thailand Post Office, to enable e-wallet users to purchase products and services on the website. It serves as the largest local e-marketplace in Thailand.

From 27 September 2019 to 31 January 2020,more than 170,000 participating shops nationwide and more than 11.8 million consumers joined the campaign. They spent a total of THB 28,820 million ($921.5 million).

To carry out our mission, the bank continues to develop financial platform that can offer products and services to satisfy all the needs of customers. It can be done by simply connecting with other platforms like Pao Tang G-wallet that helps expand business opportunities in five targeted ecosystems, namely government, payment, health and wellness, education, and mass transit.

Several new features and products of  Pao Tang G-wallet have been developed and launched in 2020. Health Wallet was developed in cooperation with the National Health Security Office to offer a digital health platform through Pao Tang by adding health servicesto financial services including making an appointment, checking of medical history and  health record, medical rights, health digital ID, and payment services.  

Krungthai has collaborated with Public Debt Management Office in developing Blockchain Saving Bond on Pao Tang. The bank sold THB200 million ($6.4 million) worth of savings bonds with a smaller ticket size at an unprecedented face value of THB1 ($0.03) each through Krungthai Bank's blockchain-based e-wallet. It was sold out within 99 seconds to 1,374 retail investors in June 2020.

Students can check payment history, loan balance, interest, payment due date as well as make  no-fee repayments through the Student Loan Fund Payment feature on Pao Tang.

From participating in many projects that laid a foundation for financial innovation in Thailand, Krungthai is able to expand the base of potential new customers and reach the unbanked. It opens more opportunities in gaining big data for analysis that efficiently supports future business expansion of target customer groups.

FBP: With reinvention come risks and failures. What professional failure have you survived?

PS: Krungthai Bank encountered many challenges in supporting the tourism promotion campaign, Chim Shop Chai (Taste-Shop-Spend). The bank supports emergency economic stimulus measures. The bank had to develop e-payment infrastructure, registration system, and face recognition on the Pao Tang application within a very tight timeframe. In this campaign, there were more than 10 million participants and 100,000 participating shops nationwide.

Krungthai had to closely monitor registration process all the time. It expanded channel bandwidth and improved efficiency of website making it fast, secure, and auditable. 

Krungthai branches nationwide were opened on holidays to assist participants who had difficulties with facial recognition with the identification and verification process.

The bank audited spending during the tourism promotion campaign in line with its objectives. By using data analytics, it was able to identify and revoke rights of participating shops that violated the terms of the campaign such as encashing value in the  e-wallet, and accepting it for the purchase of alcoholic drinks, cigarette, and lottery.

The bank has promoted the campaign to establish a correct understanding of the  financial transaction data of participating shops that they are not used in tax tracking and  audits. 

Although Krungthai had to face many operational challenges, it took into account the benefits gained from the participation of the local communities.  More than 170,000 participating shops nationwide and over 11.8 million campaign participants spent THB28,820 million ($921.5 million).

Spending money through e-wallet 1 (THB1,000 or $31.9 funded by government) was approximately THB11,672 million ($373.2 million) and through e-wallet 2 (topped up by campaign participants) amounted to THB17,148 million ($548.3 million). The spending at small shops accounted for 92% of total spending and the rest came from large shops such as hypermarkets, shopping malls and department stores.

Fail fast, learn fast

FBP: How are you teaching people at your bank about risks and failures?

PS: As for the business strategy of Krungthai Bank in 2020, we have ‘X2G2X’ (e-payment) strategy which expands business from customers’ partners through two important approaches. First, “Carrier” approach, (traditional banking) focuses on increasing efficiency and reducing operating costs of main business units to safeguard the bank’s existing business and customers. Second, “Speed boat” (open banking platform), which focus on agile working based on the principle of “fail fast, learn fast”, and using data analysis in implementing digital platform/open banking.

FBP: Banks don’t necessarily have the best reputation and it is a highly regulated market. How do you think your bank can become the bank that people love?

Most socially impacted bank for cashless society

PS: Due to the bank’s role as a listed state-owned enterprise bank, it supports the Thai economy to achieve higher, sustainable growth, better quality of life for Thai people through better assessment of financial services.

To achieve the targets, Krungthai continues to place importance on five ecosystems, namely, government, education, payment, healthcare, and mass transit. It participated in many projects in laying a foundation of financial infrastructure in Thailand related to these five ecosystems.

The bank supports government policies especially the Thailand 4.0 strategy through building a cashless society, reducing inequality and income gaps distribution in society as well as serving a customer base of more than 40 million people.

The reputation of the bank is reflected in the success of several project implementation including 14.6 million government welfare cardholders, 15 million Pao Tang application users in Chim Shop Chai (Taste-Shop-Spend) campaign, more than 9 million Krungthai NEXT application users, and over 5.6 million student loan fund borrowers.

FBP: What are your personal aspirations for the New Year? What personal advice do you have for people wanting to follow your footsteps?

PS: This time we are facing the great challenge that never happened before. Apart from digital disruption that affects our financial banking sector and customers’ behaviour, we also have to deal with the COVID-19 pandemic that has tremendous impact on the global economy which in turn severely affected our life, business and economy all over the world. We all have been through countless fluctuations, crisis and changes.

As CEO of Krungthai Bank, my aspiration for this new year is to establish the next normal in digital banking for Thais under the Krungthai’s vision - ‘Growing Together for Sustainability.’

The bank aims to be a financial institution that is alongside Thai people by providing financial services at all levels. It also aims to be a pillar of the nation’s economy by helping its customers and Thai people get through every crisis based on the “Growing Together” vision under the four significant groups, namely, customers, society, employees and shareholders.

The bank links the needs of each group of customers with comprehensive financial solutions and designs its products and services to improve convenience. The bank utilises technology and innovation to enhance financial transactions of Thai people through its service channels, nationwide network and banking agents.

The bank focuses on the development of employees’ competency to be able to work efficiently by taking into account the service quality and morality. The bank aims to maintain its competitiveness in order to create sustainable returns for the shareholders.

The bank not only endeavours to improve service quality but also aspires to elevate the morality of the organisation. As a result, the Sustainable Krungthai initiative shall be intensively implemented in an attempt to create a culture of zero tolerance. All forms of corruption will not be tolerated, and the operation under market conduct - fair services to all customers will be observed.

The initiative will be implemented in three ways. The bank will convert “morals” into tangible matters through the compliance champion programme and “One unit, One sustainable plan” project under the concept of ‘a ‘problem to solve, a good deed to do’.” All activities must take into account the principles of ESG (environment, social and governance).

It cultivates sustainable Krungthai initiatives (Krungthai Kummatham) to be in the DNA of Krungthai people. It establishes sustainable Krungthai initiatives as an organisation mission, not just a project.

With the strategic plans to drive the organisation along with the cultivation of the bank’s DNA through the sustainable Krungthai initiative, I strongly believe that they will support the bank to grow alongside the Thai economy and grow together happily and sustainably with everyone – customers, employees, shareholders and all Thais – as we aspire to attain a better life every day.