Thai financial institutions put price on bad strategy

From insurance to lending, the winners are those doing "less but gaining more" by prioritizing risk-adjusted returns over market share.

Ask most CFOs how much their organisation's worst strategic decisions cost last year, and they will go quiet — and that silence is exactly the problem.

Speaking at a panel discussion at the Asian Banking & Finance and Insurance Asia Summit held in Thailand, Karin Boonlertvanich, executive vice president for corporate strategy and innovation division head at Kasikornbank Public Co. Ltd., laid out a four-part cost framework for pricing discipline.

Three categories were familiar: credit risk, operational, and process inefficiency costs. The fourth — what he called strategic cost — was different in kind.

"The most challenging one is what I call the strategic root cost," he said. "It is the cost of the wrong decision at the top level."

Unlike a loan that defaults or a process that runs over budget, poor strategic decisions manifest slowly — in capital earning below its hurdle rate, in product innovations that consume resources without generating returns. Boonlertvanich's tool for addressing this is rigorous capital budgeting paired with honest strategic review.

In many institutions, the review legitimises decisions already made at the executive level rather than genuinely stress-testing them. He also connected the argument to AI adoption, but pointed the lens inward: rather than customer-facing applications, he sees AI's more immediate value in exposing flawed internal processes — the mis-wired workflows that quietly erode margins from inside.

The argument becomes concrete in how KBank allocates its portfolio. Boonlertvanich described a three-lens framework — return, sustainability, and growth — specifically designed to guard against over-concentrating capital in whatever is performing well today

For Theekapak Sriyukwong, president of Thanachart Insurance, strategic cost takes a different but related form. With repair costs climbing and loss ratios under pressure, the company has been absorbing increases internally rather than raising premiums.

The anchor through that pressure, he argues, is underwriting discipline — the rigour that competitors abandoned during more competitive periods to chase volume.

"The core of the insurance business is to keep our top-tier service quality," he said, "because that is the foundation for the next phase of growth."

The same reckoning plays out in SME lending. Vikas Jain, country head of Funding Societies Thailand, noted that fintech growth expectations have reset sharply since 2020 — a 30% growth rate now draws more scrutiny from boards than 200% once did.

His firm's structural response has been to keep average loan tenors at six to seven months, maintaining cash flow visibility on borrowers and generating continuous data to refine credit models.

Korbchai Pitrasatorn, vice president for automotive lending at TTB Bank, applied the same logic to EV lending — a segment with higher depreciation risk — by tightening borrower criteria and shifting the internal success metric from loan volume to risk-adjusted return on capital. "We do less but gain more," he said.