Titien Ahmed spoke to
Roy Gunara, the GE Money-appointed head of consumer banking at Bank
of Ayudhya, Thailand’s fifth-largest retail bank, about his bank’s
ambitious plans to grow its market share. The aim is to be seen as
the country’s most admired universal bank – though it faces tough

Even with the engine of GE Money running at full speed inside it,
Bank of Ayudhya, Thailand’s fifth-largest retail bank, faces a
tough time in its attempt to become the country’s fourth or third
largest player over the next few years.

The local Big Four – Bangkok Bank, Kasikorn, Krung Thai and Siam
Commercial – are also upping their game and foreign groups such as
ING, through its acquisition of TMB, are now in play too. Rungruang
Sukkirdkijipoon, for instance, executive vice president of retail
lending at Siam Commercial, the largest retail bank with 874
branches, recently told RBI that SCB “plans to grow faster
than the market” and increase the gap between its rivals (see
RBI 586

GE Money is certainly investing heavily in Thailand. It now owns
39.42 percent of Bank of Ayudhya and, in a statement released at
the end of February, said it wants GE Money Thailand, its separate
consumer finance service provider, to grow its non-bank business by
over 10 percent “to reinforce its leadership position in Thailand’s
consumer finance market”. GE Money Thailand’s president, Piriyah
Wisedjinda, has said he expects the consumer finance business in
Thailand to grow at around 10 percent – more quickly than in the
past two years – fuelled by improved consumer confidence and the
establishment of a more stable government.

For Bank of Ayudhya, which currently has 566 branches, the goal is
simple and ambitious: to become the country’s most admired
universal bank. “In 2007, we have gone through transformations and
building the foundations for growth. Most of the planned activities
have been completed,” says Roy Gunara, head of consumer banking at
Bank of Ayudhya, talking to RBI. “Moving into 2008, we
will be more aggressive in our marketing campaigns to both increase
the share of wallet of our existing customers and to acquire new
ones as well as to strengthen our market position. The next step is
really growing the bank. Our chief executive officer has set the
direction that we want to be the most admired universal bank in
Thailand. We will strive to achieve that vision.”

The bank now plans to roll out products and a new tagline for its
consumer banking business in the next few months. On 20 March, for
example, GE Money Thailand launched GE Money Mobile Payment, an
innovative mobile-based payments service for 11 GE Money products
in use by four million customers.

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The most admired bank in Thailand

To achieve the goal of being the most admired bank in Thailand, the
bank has a fight on its hands: it made a THB3.99 billion ($126.7
million) loss in 2007 compared to THB1.67 billion in net income in
2006. A weaker performance in 2007 was due, said the bank in its
annual results, to “foundation strengthening expenses” while the
incurred net loss of THB4 billion was mainly a result of a more
prudent provisioning of THB12.4 billion in accordance with
international accounting standard IAS39.

A big boost to the bank could come from its expanding consumer
finance business. On 14 February, Bank of Ayudhya completed the
acquisition of GE Capital Auto Lease Public Company Limited
(GECAL), a wholly owned subsidiary of GE Capital Asia Investments,
for THB16.18 billion. GECAL is the second-largest auto financial
solutions provider in Thailand, with total assets of THB80.3
billion and a loan portfolio of THB79.3 billion – the acquisition
immediately increased the bank’s loan portfolio by 18

At the time of the deal, Tan Kong Khoon, CEO of Bank of Ayudhya,
said: “With a higher net interest margin [NIM] for the GECAL
business than Bank of Ayudhya’s, this is expected to help lift the
bank’s overall NIM. Our range of consumer financial solutions will
also be enriched by GECAL’s innovative products, enabling us to
offer one-stop financial services to our customers. This will
further accelerate the growth of our consumer banking business and
strengthen our leading position in Thailand’s banking sector,
bringing us closer to achieving our vision to become Thailand’s
most admired universal bank.”


The bank’s business has been typically driven by its corporate
banking arm. In 2006, 41 percent of its loans were to corporates,
41 percent to SMEs and 18 percent to individuals. The aim by 2010
is to make the split 50:50 between corporate loans and
SME/individuals – in 2007, the percentage of loans to consumers
grew to 21 percent of total lending, up from 18 percent in 2006.
“In the past, most of the bank’s retail customers were depositors.
Individuals make up the largest proportion of deposits but only
about 17 percent of the total loan size of the bank is in consumer
loans and mortgages,” says Gunara.

“We have to change the mindset and build the infrastructure.
Consumer banking is not like commercial banking where you need to
review the loans one by one. You need a systematic process approach
from underwriting to servicing to collections and that is one of
GE’s areas of expertise… We plan for 20 percent return on equity in
consumer banking, and therefore we can not rely only on mortgages.
We need to accelerate growth in other products such as personal
loans, bancassurance, fee income and auto loans.”

The bank has laid out an aggressive business plan to achieve its
target ROE of 20 percent. Market analysts are sceptical as to
whether this is achievable but the bank believes it will be
achieved by 2010 through increasing the proportion of consumer
banking and through both organic and inorganic growth. It is also
looking to boost fee-based income to 40 percent from 28 percent by
2009, promote cross-selling, upgrade its sales force and strengthen
its risk management and compliance.

For 2008, Bank of Ayudhya is targeting to increase net loan growth
by THB39 billion, a rise of 8.8 percent. The target is broken down
into growth in corporate lending of THB11 billion, THB12 billion
for SMEs and THB16 billion for retail. Fees and commission income
is targeted to increase by 26 percent.

In addition to infrastructure, Gunara says that the mindset among
staff is the other key challenge in building a successful retail
banking business. The bank has previously tried to beef up its
personal loans business but scaled back after a few months because
of the commercial banking mindset that still prevailed. “Once you
go into implementation, it’s all about the mindset. We do not have
a fresh team working from scratch [so] we have to change the same
group of people who have been doing things a particular way for
years and that change requires training and careful change
management,” he said.

“The key to growth in consumer business is about sales force
effectiveness – which means that the bank will be able to serve a
customer’s multiple needs with more products through cross-selling
and up-selling.

“This is all basic, not rocket science… We [have] used a new
approach that GE Money started in many of the businesses.
Consumer-centric transformation covers four areas: understanding
the customer insights, looking into segmentation, building a value
proposition and applying your products to all your distribution
channels… [Also] marketing and advertising are great tools to drive
consumer awareness and interest towards products and or services…
There are a lot of iterations in the process to make it work. The
change doesn’t happen overnight but more of a continuous


An Exclusive banking service

At the sharp end of the customer service challenge is wealth
management, and mass affluent and private banking. On 27 November
last year, the bank launched Exclusive Banking, a service it said
was a “superior financial service especially designed to provide
personalised advice to high net worth retail customers in order to
optimise their financial growth”. The first Exclusive branch, open
to people with at least THB5 million in savings or investments, was
opened at the same time and the bank has since said that it is
planning a further 15 across 2008.

Talking about the wider Thai banking market, Gunara openly admires
his competitors for the strides they have made in consumer banking.
“We have strong players in the Thai market who have focused over
the last three to four years on transforming their banks to be more
consumer-friendly. They have really focused on better services and
expanding their distribution networks.”


He says that the next step for his particular bank is to “try to
understand what level of differentiation is needed. I see that
there are two groups of consumers – the modern and the traditional.
The modern is willing to change and expect something new… We are
trying to find a way to offer the right product to the right
segments. We will continue to enhance our services and focus on
delivering a better value proposition; it is not just about