Virtual Banks in Thailand

A virtual bank, also known as a digital bank, is a bank that operates exclusively online without any physical branches. It leverages technology to provide a wide range of banking services such as deposits, loans, and payments. Many countries, including Brazil, the United Kingdom, Malaysia, Singapore, Taiwan, Hong Kong, China, and South Korea, have already established regulatory frameworks for virtual banks.

Virtual Banks in Thailand

In the first quarter of 2023, the Bank of Thailand (BOT) initiated a public consultation on the licensing process for virtual banks. The BOT aimed to gather feedback from the public and industry stakeholders to shape the regulatory framework.

By the end of the first quarter of 2023, the BOT finalized the licensing criteria. In the second and third quarters of 2023, applications for virtual bank licenses were opened. The selection process, which involved a rigorous evaluation, was completed within six months. The shortlisted candidates were then submitted to the Thai Minister of Finance for final approval.

By the third quarter of 2024, the approved companies were required to commence operations within a year. However, the BOT may grant extensions under special circumstances.

The Competitive Landscape

With the regulatory framework now in place, Thailand’s virtual banking landscape is rapidly evolving. Several prominent conglomerates and fintech companies have expressed their interest in obtaining a virtual bank license. Some of the notable contenders include:

• CP, True Money, Ant Group
• SCBX, KakaoBank, and a major Chinese big tech company
• GULF, OR, AIS, and KTB
• JMART and KB Financial Group

The emergence of virtual banks in Thailand marks a significant milestone in the country’s financial sector. These digital banks are expected to bring numerous benefits, such as

• Increased financial inclusion, by lowering barriers to entry, virtual banks can provide banking services to underserved populations.
• Enhanced customer experience, virtual banks can offer personalized services and innovative features that cater to the needs of digital-savvy consumers.
• Greater competition, the entry of new players into the banking market is likely to stimulate competition and drive down costs.
• Boost to the digital economy, virtual banks can accelerate the adoption of digital payments and other financial technologies.

However, the growth of virtual banks also presents challenges, including cybersecurity risks, data privacy concerns, and the need for robust regulatory oversight. As the Thai virtual banking market continues to evolve, it will be interesting to see how these new entrants differentiate themselves and shape the future of banking in the country.

Reference

• Bank of Thailand
• Bangkok Post
• KPMG
• PWC