BANGKOK: The Thai Bankers’ Association (TBA) will this week talk to Bank of Thailand officials about an end to the new fee structure, which should be completed before July 15, the first day of ID registration. Association chairman Predee Daochai, who is also president of Kasikornbank, said customers would be happy with the new fees, even though the new structure will reduce fee income for the banking industry.
Each bank would have to seek other sources of income and manage operating costs, he said. KGI Securities (Thailand) said in its research recently that transactional fees are a major income source for commercial banks, representing 25 per cent of total fee income.
Fee income from money transfer accounts for maximum income in transactional fees, according to the research. KGI noted that the new fee structure would put pressure on the banking industry. Major and mid-sized banks are expected to be affected more than small banks.
Predee succeeded Boontuck Wungcharoen as TBA chairman. He said during his two-year term at the TBA, he wants to focus on ways for the banking industry to reduce costs, in order to maximise benefits for consumers. The new fee structure was an example. The ATM machine pool is part of the banking sector’s cost management strategy. In Japan, an ATM machine can provide services to all customers, which means banks have to collaborate with each other.
In Thailand, having an ATM machine pool might not easy, he admitted. Banks have to adjust because technology is pushing up expenses. To sustain profitability, banks must focus on cost reduction. However, reasonable cost reduction has no formula because technology changes rapidly, while cost reduction will have to be based on reasonable return for each bank, he said.
A reasonable return for Thai banks should compare with peers or banks in the international market. “We have to realise that foreign investors are stakeholders of Thai banks and they will expect returns from investing,” he said. Human training is one way to cut costs. The TBA has an academy and training programme to lift the standard of staff in the banking system.
He sees technology as a big challenge for the Thai banking sector, adding physical branches is one major example of the impact of technology. The bank has to adjust the roles of branches, products and services to cover anytime, anywhere and any devices to help customers enjoy maximum convenience.
