Thailand's second-largest bank, Kasikornbank, is strategically deploying artificial intelligence and enforcing stricter lending norms to steer through the nation's challenging economic climate and rising fraud risks, its CEO Kattiya Indaravijaya revealed in an interview.
AI as a Productivity Driver
The bank's chief executive stated that AI is expected to make a meaningful impact on productivity within the next two years. While the institution is still in the early phases of widespread AI adoption across all departments, Kattiya is optimistic about its potential. A key initial application will be in credit approvals, where AI is anticipated to handle straightforward cases. This will free up human underwriters to focus their expertise on more complex and uncertain loan applications, thereby improving efficiency.
Navigating Economic Headwinds
The shift in strategy is a direct response to Thailand's sluggish economic conditions. Kattiya pointed out that the country's GDP is projected to grow by less than 2% annually over the next two to three years. She emphasized the need for medium to long-term structural reforms from the government to address core issues.
The Thai economy is currently grappling with a triple threat: the impact of U.S. tariffs on exports, lower domestic consumption, and households burdened by significant debt. Compounding these problems, a strong Thai baht is further jeopardizing the crucial export and tourism sectors, with foreign arrivals already witnessing a 7% year-on-year decline.
A Cautious Approach to Lending and Deals
In light of these challenges, Kasikornbank adjusted its credit policy as early as 2022. Since 2022, we saw some signs that we need to be very careful, so that's why we adjusted our credit policy, Kattiya explained. This prudent approach has involved primarily extending loans to customers with an established credit or payment history with the bank. This focus on quality has already yielded positive results, leading to an improvement in the bank's ratio of non-performing loans.
Regarding external growth opportunities, the CEO confirmed that while the bank has received offers for mergers and acquisitions involving fintech companies, it is not actively pursuing any deals at the moment. Kattiya made it clear that any potential deal would need to perfectly align with the bank's existing strategy and deliver tangible value to both its customers and shareholders. We have to think very carefully before we make any decision, but there's always choices, she concluded, keeping the door open for future strategic moves.
