KBank and Line partner

KBank and Line partner

Retail loans and digital banking targeted

The Kasikornbank-Line linkup will form the biggest financial consumer set-up ever seen in Thailand.
The Kasikornbank-Line linkup will form the biggest financial consumer set-up ever seen in Thailand.

Kasikornbank (KBank) has made a big push into digital banking by forming a joint venture with Line Financial Asia to tap into the online social giant's 44 million users, aiming to grow its retail loan and digital banking business.

The country's third-largest lender by assets and the largest mobile banking service provider by users aims for 10 million digital retail lending accounts amounting to 20 billion baht over the next 3-5 years through the tie-up with Line.

"The partnership is deemed to be KBank's self-disruption. Our [existing] working process will be obviously separated and we don't have plans for data collaboration. Customers who use KBank Line must open a new account at the bank's branches," said Patchara Samalapa, KBank's president.

In the digital age, customer data is crucial to empower entrenched lenders with better understanding of customers' needs, and provide services that meet demand. Traditional financial institutions that serve customers the best will be able to defend their business as online platform giants like Alipay put them in the firing line.

Under the tie-up deal, KBank and Line Financial Asia have incorporated Kasikorn Line Co, in which the Thai bank owns at least 50%.

Mr Patchara, right, says customers who use KBank Line must open a new account at KBank.

Kasikorn Line has been established with the aim to engage in personal loans and nano loans, as well as co-branding or providing a channel for the bank's products and services, and serving as an open architecture broker for insurance and mutual funds under the Line platform.

Personal loans are the first product launched under the tie-up with Line, Mr Patchara said, adding that the loan is granted based on behavioural data to be a channel for borrowers to access to loans.

Kasikorn Line has already sought for a lending license from the Bank of Thailand and it is expected to start operating in the middle of next year.

Initially, the company was set to provide a minimum loan of 10,000 baht per borrower and the interest rate is charged based on each borrower's risk profile but not exceeding the central bank's maximum requirement for personal loan at 28% per year, he said.

Kasikorn Line plans to provide the same services as banks, including money transfers, payments, insurance product purchases and wealth in the future, while it will not take deposits as it does not have the licence, he said.

KBank in November spent US$50 million (1.64 billion baht) to invest in ride-sharing application Grab to form a partnership to launch the GrabPay electronic wallet in Thailand next year, in a move to tap into merchant and customer data.

Young Eun Kim, chief operating officer of Line Financial Asia, said Line will make the venture in Thailand exclusively with KBank, a move that reflects Line's disinterest in disrupting banks, and is instead focused on the need to collaborate to develop new services.

"Cooperation is unavoidable in the current climate. We will enter joint ventures only with KBank," she said.

Mrs Kim said Kasikorn Line's operations will not overlap with Rabbit Line Pay as the services could be integrated into the venture firm's product lines in the future.

Kasikornbank Line will focus on using artificial intelligence to analyse behaviours, she said.

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