Kasikornbank (KBank), the country's second-largest bank by assets, plans to shift its focus in bancassurance business to the middle-income segment as it looks to diversify income sources and boost revenue.
The bank's fee-based income generated by bancassurance business has continuously declined, mainly due to a low rate of policy renewals, particularly for five- and seven-year term insurance, said president Kattiya Indaravijaya.
Until now, upper-income clients with a minimum income of 100,000 baht a month were the bank's target group for bancassurance business, but the market segment is quite saturated, Ms Kattiya said.
KBank will concentrate instead on middle-income earners with a monthly income of 25,000-70,000 baht, she said, noting that insurance penetration of the middle-income earner group is low and presents an opportunity for the bank.
KBank recorded net premiums of 91.4 billion baht in 2018, down 8.4% year-on-year, and the bank's non-interest income fell by 505 million baht or 3.9% in the same period.
"Upper-income earners typically take out insurance with high premiums, and it takes a toll on overall premiums when they choose not to renew the policy," Ms Kattiya said. "Middle-income earners pay a smaller amount of insurance premium, so it will diversify the bank's risk [from customers who don't renew]."
In any case, it will take some time for the new strategy to cancel out the impact of upper-income customers' failure to renew policies, she said. The bancassurance business is still expected to contribute less income to the bank this year.
Ms Kattiya said KBank will adjust the sales and distribution plan of the bancassurance business this year to better access the new customer base.
Technology and the digital platform are key to business expansion and acquiring new customers.
Ms Kattiya said the bank still has no policy to offer financial services under the open-architecture platform, as some peers do.
Muang Thai Life Assurance Plc (MTL) is KBank's exclusive business partner, and the company's products can meet the requirements of all the bank's customer segments.
The bank is quite competitive in terms of product offerings, Ms Kattiya said, despite having just the one insurance partner.
KBank holds a 38.3% stake in MTL and a 51% stake in Muang Thai Group Holding.
KBANK shares closed Friday on the Stock Exchange of Thailand at 195.50 baht, down 1.50 baht, in trade worth 945 million baht.
