Krungsri (Bank of Ayudhya PCL), today headquartered in Bangkok, Thailand, has been in operation since 1945, established in Phra Nakhon Si Ayutthaya Province, the original capital of Thailand. It is the fifth largest bank in Thailand in terms of assets, loans and deposits, providing products and services in multiple lines, including consumer banking and finance, investment and asset management, and corporate and SME (small and medium-sized enterprise) financing. Krungsri operates nearly 700 domestic branches and over 34,186 service outlets nationwide. In 1977, its ordinary shares were first listed on the Stock Exchange of Thailand. In 2013, Krungsri reached key milestone when becoming a subsidiary of MUFG Bank, Ltd. (MUFG Bank), which is the wholly-owned subsidiary of Mitsubishi UFJ Financial Group (MUFG), Japan’s largest banking group.
Led by its six core values of customer centricity, integrity, team spirit, passion for excellence, making innovative changes and global awareness, Krungsri proceeds with a vision of being their customers’ “number one preferred financial group”.
International Banker was fortunate to be joined by Mr. Pornsanong Tuchinda, Krungsri Head of Commercial Banking. As the success of a nation’s businesses significantly impacts the success of the country as a whole, Krungsri’s commercial-banking group is committed to being a trusted partner to its customers in business.
Mr. Tuchinda, thank you for your time today….
Last year, Krungsri announced its commercial-banking business strategy under its new Medium-Term Business Plan covering 2018-2020, with an aspiration to be a top-tier financial group in Thailand. How is this plan progressing? Are you currently on course to successfully accomplish it?
We aim to gain top-tier perception from both external and internal stakeholders. We strive to be a trusted banking partner, moving beyond a loan office to becoming a thought partner for corporate customers and a main operating bank for SME (small and medium-sized) customers. It’s a long-term commitment. That is why we focus on providing total financial solutions and continue enhancing digital platforms to achieve sustainable growth.
Since the launch of the plan, we are very well on track to achieving it. Last year, we made substantial progress in our strategies and initiatives, while continuing to drive strong financial performance.
However, we are aware that the banking industry is facing the challenge of rapid market changes driven largely by digital innovation. While our plan serves as our medium-term strategic roadmap, we must ensure that we are flexible enough to swiftly adjust our plan as the ever-changing market environment may dictate. Moreover, we run our PDCA (plan-do-check-act/adjust) cycle against our strategies and initiatives to consider adjustments and take necessary actions in response to the progress of our efforts and market conditions, while ensuring organization-wide alignment.
In 2019, we are continuing to focus on our customer-centric approach and give priority to understanding the needs of our customers at each stage of growth, as well as to deploy digital technologies to provide a variety of products and upgrade service standards to serve different customer needs.
With our Corporate Banking Group, Krungsri is moving forward to achieve our goal of being a trusted banking partner for corporate customers. We are committed to being a thought partner and providing financial solutions for large corporations. In addition, the collaboration with Mitsubishi UFJ Financial Group (MUFG) enables Krungsri to leverage with world-class innovations and utilize an advanced digital platform to create more business opportunities for our customers. On the SME Banking Group front, Krungsri is going ahead with plans to become a main operating bank for SME customers through collaboration with MUFG and enhancing business opportunities for Thai entrepreneurs. By leveraging MUFG’s global network, Krungsri aims to increase the flexibility and efficiency of executing international trade transactions for SME customers. We continue to support SME customers with Krungsri SME Business Empowerment to enhance business opportunities for SMEs by arranging knowledge-sharing and business-matching activities through various platforms. In addition, Krungsri aims to develop a digital ecosystem for SME entrepreneurs to facilitate their access to funding sources and help them increase efficiency in making financial transactions.
What are some of the most significant advantages that Krungsri gains from being a member of Japan’s MUFG? Are there many beneficial opportunities for the two entities to collaborate?
As a member of Mitsubishi UFJ Financial Group (MUFG), we can leverage MUFG’s global network and wide product suites, which can bring lots of opportunities to our customers. The synergy between Krungsri and MUFG greatly enhances our competitive advantage against global players. The combined resources of Krungsri and MUFG provide access to world-class financial solutions to all customer groups, facilitating offshore business expansions, joint ventures, business matching and new markets.
We used MUFG’s global network to support local corporates and other customers in Thailand who are becoming increasingly globalized and in need of effective global banking services as they venture abroad, whether within ASEAN (Association of Southeast Asian Nations) or further afield. One cross-border business success in 2018 was Krungsri’s support of MUFG Bank in obtaining the status of the sole mandated lead arranger for financing a renewable-power plant project: the Boco Rock Wind Farm project in Australia, sponsored by the EGCO Group (Electricity Generating Public Company Limited), one of Thailand’s largest electric-power producers.
In terms of supply-chain financing, we promoted end-to-end solutions from supplier financing to dealer financing, tapping into the market of Japanese manufacturers and their supply chains. Capitalizing on MUFG’s long-term relationships with Japanese car manufacturers, Krungsri saw considerable business opportunities in the auto-dealer segment and cross-sold to gain substantial wallet share in the hire-purchase business.
In November 2018, Krungsri and MUFG jointly organized their Business Matching Fair for the fifth time in Thailand, attracting over 260 companies from Thailand, Japan and ASEAN, leading to 448 business matches. Digital and Innovation were among the new industry segments included in this year’s fair, in line with Krungsri’s desire to lead by innovation and think “digital first”. This created opportunities for Thai companies to expand into the Japanese and ASEAN markets, while providing a platform for MUFG customers to connect with Thai entrepreneurs.
In 2019, Krungsri continues to enhance our customer-service capabilities by uniting MUFG’s global platform and network with Krungsri’s local expertise and strength. The mutual synergy will create business opportunities for customers through advisory and knowledge-providing activities, including seminars, business journeys and business matching, which have been organized throughout the year.
Combining with Krungsri’s comprehensive financial solutions, customers will grow their businesses successfully and expand their businesses boundlessly.
Almost two years ago, you were appointed as executive officer (EO) of Bank of Tokyo-Mitsubishi UFJ Limited (BTMU), a position that is concurrent to your role as Krungsri Head of Commercial Banking. What benefits does holding this EO position provide to both yourself and Krungsri? What are the most significant ways in which the two roles have differed to date?
It was a great honor and pleasure for me to be involved as the executive officer of Bank of Tokyo-Mitsubishi UFJ Limited (BTMU), a subsidiary of the Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group and one of the world’s largest financial organizations. I was very excited about this unique opportunity given to me, as it marked the first nomination of a local senior executive to BTMU’s top-management position and also the bridge of mutual collaboration between Krungsri and MUFG. This position enabled me to share Krungsri’s competitive and unique capabilities while networking with and attaining MUFG’s best practices and global perspectives. Moreover, I could further leverage my global networks and perspectives and capture business opportunities in empowering Krungsri to a new height of success.
Referring to the bank’s 2019 goals, you recently said that you intend to “continue to focus on the customer-centricity approach and give priority to understanding the needs of our customers at each stage of growth, as well as deploying digital technologies to provide a variety of products and upgrade service standards to serve different customer needs”. What are the most significant digital technologies you aim to deploy this year?
Krungsri has implemented several initiatives to adopt digitalization to improve the efficiency and enhance flexibility for commercial customers. Last year, Krungsri became the first in Thailand to apply blockchain technology to supply-chain solutions, and this year we continue to pursue its success in supply chains by deepening and widening supply-chain solutions with the launch of Krungsri Supply Chain on Blockchain equipped with AI (artificial intelligence) deep learning, which helps create the benefits to all related parties enhancing Thailand’s supply-chain ecosystem. Not only does the technology increase speed, transparency and accountability of supply-chain transactions, but it also provides accessibility for smaller SMEs to financial services.
We adopt digitalization leveraging our synergy to provide innovative products and services to enhance customers’ experience as well as improve efficiency consistently for our customers. Going forward, Krungsri looks forward to bringing more new technologies to serve and enhance the operating efficiency of commercial customers.
In 2018, Krungsri joined hands with Siam City Cement Public Company Limited (SCCC) in developing Krungsri Supply Chain on Blockchain, a first-of-its-kind solution, to enhance Thailand’s supply-chain ecosystem. How is the project progressing? How significantly do you expect blockchain to transform supply-chain management?
As a financial institution and a leader in blockchain solutions, in 2019 Krungsri is offering for the first time in Thailand Krungsri Supply Chain on Blockchain, equipped with state-of-the-art artificial intelligence deep learning to facilitate purchasing-selling processes between major and retail distributors, as well as dealers and sub-dealers, in Siam City Cement’s supply chain with an aim to reduce customers’ pain points by developing solutions that truly meet their needs.
Marking the first of its kind in the construction-material industry and the first deep-tier supply chain on blockchain and AI deep learning, the innovative and user-friendly system enables smooth product-purchasing processes in SCCC’s supply chain, ranging from purchase orders, purchase-orders approval and product shipment to invoices, billing notes, settlements and payment. It truly helps streamline the business with fast and accurate purchase orders from sub-dealers, thus reducing miscommunication and ensuring transparency by creating a systematic purchasing and billing process, of which details can be easily traced. Everything is fast, transparent and verifiable at every step. The transactions already occurred for the first time in Thailand in accordance with the regulations of the Bank of Thailand. Supply Chain on Blockchain helps provide a deep-tier solution to drive the business system toward success and boosts the ecosystem of the construction-material industry, a crucial cog in Thailand’s economy.
What is the most significant way in which Krungsri’s commercial banking is different from that of its banking peers in Thailand?
Like the overall sector, Thailand’s commercial banking has been very competitive, as financial technologies and innovations are changing the way banks do business. For Krungsri’s commercial banking, which serves large corporates and SMEs, we focus on differentiating our products and services, including enhancing digital platforms to serve the different needs of customers in various industries at different growth stages. We aim to become our customers’ thought partner by providing them with not only single traditional products and services but also comprehensive financial solutions to help them grow their businesses. Moreover, to help create sustainability for the growth of customers’ businesses, Krungsri provides value-added services called Krungsri Business Empowerment, which is supported by a dedicated professional team to enhance a lot of business opportunities for customers by providing knowledge and business networks with the synergy between Krungsri’s local strength and MUFG’s global network. We have also, since 2014, initiated an ecosystem with key partners to offer distribution channels to business customers through the Krungsri SME Online Business Matching Platform. As a result, more than 300 SMEs have gotten opportunities to propose their products and negotiate with distributors via our online service.
Since the beginning of last year, Thailand’s economic growth has slowed down drastically. Do you expect this slowdown to continue going forward—and possibly even enter recession territory? And if so, is Krungsri adequately prepared for such a scenario?
Krungsri Research’s forecast states that the outlook for the Thai economy in the second half is likely to improve from the first half. The clarity of the government’s economic policies and the new round of economic stimulus measures will help spur domestic demand, although the drought may put pressure on farm incomes. The government’s support will help alleviate those effects, while the recent upgrades of Thailand’s credit ratings to “positive” from “stable” will restore Thai and foreign investors’ confidence. However, public investment may rise gradually, due to delays in some state enterprises’ infrastructure projects and the delay in budget disbursements for the 2020 fiscal year (October 2019-September 2020), which could affect the government’s new investment in the first quarter of the 2020 fiscal year. Although exports are likely to shrink in the third quarter, hit by the impacts from the US-China trade war, it is expected that Thai exports may improve in the fourth quarter, partly due to last year’s low base, combined with the lagged effects of trade and investment diversion and the relocation in some industries following the trade war. In every circumstance, we very much look forward to supporting our customers in the dynamic and changing business environment with a wide variety of total financial solutions and knowledge-sharing as well as business opportunities.
How do you expect the Thai banking sector to change over the next few years?
The Thai banking sector is one of the industry sectors that have been most impacted by digital disruption and more stringent regulations, with numerous significant trends and developments. The Thai banking industry will continue to experience disruption at an increasing pace. The future of the banking industry will depend on its ability to leverage the power of customer insight, advanced analytics and digital technology to provide services that help today’s tech-savvy customers manage their finances and better manage their daily lives.
It certainly appears that Krungsri is on track to accomplish those goals for its customers. Thank you for being with us today, Mr. Tuchinda.