Mr. Parithad Petampai, Deputy Managing Director of Muangthai Capital, a leading player in the microfinance sector, recently shared his visionary insights on propelling the company towards global recognition as a world class Thai microfinance institution.
How has the company changed since going public a decade ago?
It has changed. We would say around 30% has shifted, but 70% remains consistent with the core of our business operations. We’ve maintained our focus on core services such as secured loans, including motorbike, car, and land title loans, which have been the backbone of our business for over 30 years. The introduction of unsecured loans post-IPO is a notable addition, but it hasn’t overshadowed our primary offerings. Instead, we’ve aimed to enhance the effectiveness of our products and overall operations, with a focus on sustainable growth and increased profitability in the long run. The fundamental aspects have largely stayed the same, but there have been adjustments that contribute to a more standardised and sustainable approach. This has directly enhanced our competitiveness in the long term. The key changes lie in refining processes and structures to foster growth and profitability over immediate gains.
How do you still know your customers well even though your business is larger?
A decade ago, we only had 500 branches, people believed that the limit was 1,000 branches as Commercial Banks were closing branches, that it would not make sense to open branches and that FinTech was the future, as our industry was considered outdated and risky, but we remained steadfast and focused on our core business.
We expanded branches to 7,600 nationwide. We witnessed an incredible journey, moving from 400,000 to 3.5 million active customers. If we account for dropouts, that figure would surpass 5 million. It’s been nothing short of amazing. We’ve stayed true to our methods, demonstrating consistent growth. While others focus elsewhere, we’ve capitalized on this opportunity, leading to our current success.
Our approach to business set us apart, our focus on our customers, our employees, and purely focusing on this segment has allowed us to scale with a loan book over 100 billion baht. Now, as the industry garners interest from various sectors, including commercial banks, our resilience and performance stand as a testament to our enduring approach.
How do you manage to outperform others in the industry?
Momentum. The momentum in business is very important, we have seen how some companies come and go in our industry, in the technology industry, in the finance industry, new entrants, price wars and so forth, but it is the ones that maintain their momentum that continue to do well. This is why we focus on sustainability. While it may sound simplistic, our vision extends beyond short-term gains to a horizon of 20 years. We are not driven by quarterly or yearly targets. My objective is to build a company that will thrive for generations to come. This means prioritising sustainable growth over immediate profits.
Can you elaborate on how you achieve this?
Absolutely. Some competitors prioritize short-term gains and resort to aggressive sales tactics, we believe in a customer-centric approach. We only offer products that our customers genuinely need, at the lowest possible rates. You may visit our branches and observe for yourself, we are not selling anything more than our customers require. Over time, this commitment to service excellence and fair pricing has earned us a reputation as the industry leader. We rely on word of mouth rather than flashy advertising to attract and retain customers. Just as important are our employees, they are members of the team, compensated above the industry average, our incentives are focused on sustainable growth and not we are just in it for short-term gains – we’re here to build a sustainable business that benefits everyone involved.
With such a significant market share already, how do you plan to continue growing?
It’s true that our market penetration is substantial at 40% of the motorbike title loans market, but we see opportunities for growth in product diversification. For instance, while our motorbike title loans are a core offering, we’re expanding into other products like land title loans and loans for four-wheelers. This allows us to cater to a wider audience and increase our portfolio size even as our customer base approaches saturation. So, while there are challenges ahead, we’re confident in our ability to continue growing 20% per year.
Over the past decade, there have been multiple changes within the regulatory environment of the industry, can you explain the impact it has had upon MTC and the industry?
The changes and implementations of the new regulations have had a significant impact on MTC in a very positive manner. Allow me to elaborate. In the past there were common practises and a relatively loose legal framework, but the incumbents within the industry conducted business in a similar manner, focused on fair rates to customers and quality of service. However, at times new entrants took advantage of loopholes within the previous regulatory framework, ultimately at the cost of the end customer. The Bank of Thailand thus formalised the regulations for the industry, setting a maximum rate for licensed operators and business practises, a fair playing field was established and enhanced the sustainability of the industry. While the industry landscape may shift, our commitment to sustainable growth remains unwavering.
What distinguishes the customer base among the market segments of 2W, 4W and land title loans?
Our customers are 10% of the population. We do not aim to target the entire country, that’s not our forte. This 10% are our customers, several are still unbanked, however we understand their needs and we will service them well so that they continue to return as customers. We’ve remained steadfast in our core product, motorbike title loans, while gradually expanding into other areas like four-wheeler and land title loans. We’ve sustained an impressive growth rate of 18-20% annually, which has deterred competitors from entering the motorbike title loan segment. Even at our scale we still see the opportunity to continue growth another 20% per year for the next three years in our existing segments.
You have commented on sustainable growth and sustainability. Could you further explain your thoughts behind this?
Our vision is for Muangthai Capital to be a World Class Microfinance Company. Our aim is no longer just to be the best in Thailand, but to compete globally. We will continue implementing systems, practises and processes that will continue to enhance our ability to serve our customers well. A good example is within the Finance Department, we have expanded our corporate finance, liquidity management, risk management, and compliance. We appointed Three of the Big Four firms to improve our systems, risk, compliance, and sustainability departments.
Across all our branches, it is something as simple as ensuring all the computers are on the latest Windows license, to have systems where the internet is only accessible by local devices, and where every phone call is recorded. This provides us the ability to be auditable and ensure that any issues with customers are resolved smoothly.
Through the application of the above processes, it naturally flows throughout the organisation to be most conscious on the use of electricity, paper, petrol, and several other items. Simply the knowledge that our data is now measurable has resulted in savings of THB 7 million per year. Proudly, we have also been included into the MSCI ESG Index, we are on the FTSE for Good Index and we have received sustainability project financing from JICA, DEG, and SMBC
Where will MTC be by 2030?
The industry will be further consolidated, our number of branches close to 10,000 nationwide, with 4.5 million customers, and a THB 200 billion loan book. We will continue to focus on core services, being customer and employee centric, with a sustainable focus for Muangthai Capital to be a World Class Thai Microfinance Company.
Optiwise conducted the interview to provide insight into the foundational business strategies from the perspective of a leading executive at a Thai-listed company, for promotional purposes.