Krungsri Consumer, an unsecured loan unit under Bank of Ayudhya (BAY), says adoption of artificial intelligence (AI) can help improve debt collection and reduce default risks.
With AI, the firm's debt collection is improved in terms of productivity and efficiency, said Thakorn Piyapan, chairman of Krungsri Consumer.
He said the technology can also predict the difficulty level of collection from each debtor, based on ease of contact and discipline. The company's database showed that loans for those who are 36-48 days late on payments have the highest potential to turn sour.
"Such behaviour illustrates [a lack of] financial discipline and higher risk," Mr Thakorn said. "The company won't offer them additional credit lines for credit cards and personal loans."
The company has adopted AI for its four main business areas: call centres, credit underwriting, telemarketing and debt collection. The innovative technology is expected to be fully adopted by year-end.
Krungsri Consumer managed to lower its non-performing loan ratio for credit cards to 1.12% at the end of June from 1.24% in the previous quarter. The bad-debt ratio for its personal loans also fell to 2.83% at the end of June from 3.06% at the end of March.
Apart from AI, the company's stronger risk management and business strategy helps control distressed loans.
AI also supports the company's business expansion efforts.
Mr Thakorn said 400,000 customers predicted by the technology to have good financial discipline are offered additional credit lines of 30,000-50,000 baht each.
Krungsri Consumer has 8.6 million accounts in credit card and personal loan products.
Despite the adoption of AI, the company is keeping its stringent unsecured loan approval criteria in place.
The company has used the tougher credit-line criteria to keep its bad loans in check.
Mr Thakorn said Krungsri Consumer's credit line for personal loan averages two times a customer's monthly income and three times for credit cards.
The company requires a minimum income for personal loan borrowers of 12,000-13,000 baht per month, up from 10,000.
