Bank of Thailand to allow virtual banks

Monday 16 January 2023 13:33 CET | News

Bank of Thailand has disclosed plans to allow the nation’s virtual banks to offer services in 2025 amid a push to boost competition and widen loan access.

By 2024, the Bank of Thailand will grant interested businesses access to three separate licenses. The intention to provide permissions is shared by at least ten parties.

Bank of Thailand plans to allow the nation’s virtual banks to offer services in 2025 amid a push to boost competition and widen loan access.

Applications to operate as financial services providers will be made available later in 2023, according to the central bank's ‘Consultation Paper on Virtual Bank Licensing Framework’. The goal of this action is to intensify competition while accelerating Thailand's economic development.

Under the licensing system, virtual banks will be subject to the same rules and oversight as conventional commercial banks. Additionally, qualified candidates will need to fulfill a number of prerequisites. However, they won't be permitted to set up physical branches and run their own ATMs. Candidates must have a minimum registered capital of USD 151 million, which must scale up to USD 300 million once fully operational.

The central bank asserts that during their initial years of operation, virtual banks will be subject to a ‘limited phase’. This entails stringent supervision to guard against financial systemic hazards.

Thailand’s move into the crypto market

In 2022, the country experienced a number of crypto-related developments. One of these was testing a Central Bank Digital Currency (CBDC) with about 10,000 users.

Recent efforts by Thailand's Securities and Exchange Commission to strengthen regulations for cryptocurrencies with the goal of enhancing investor protection have been made public. Additionally, the authority is also creating a tight set of regulations for cryptocurrency ads.

In response to the country's rapidly increasing need for mobile payments, ecommerce, and cryptocurrencies, Thailand and Hungary recently signed a technical cooperation agreement to encourage the development of blockchain technology.

Thailand doesn't have any independent virtual banks, but Bangkok Bank, Kasikornbank, the country's largest lender, and other local rivals have increased their stakes, providing a range of digital services. Because of this, the second-largest economy in Southeast Asia is the most recent nation to adopt the idea of virtual lenders as technology businesses like Ant Group and Grab Holdings expand financial services to meet the region's growing need.

Virtual banks and the promise of inclusivity

The goal of increasing financial inclusion through expanded accessibility and cutting-edge online customer experiences that are stated to be simpler, more personalised, and client-focused is implicit in the promises made by virtual banks.

Technology, especially the internet and phones, have altered every area of people's life, including how they bank and how important banking has become.

A move to a cashless society, which by definition requires access to a bank account as well as the ability to comprehend and use technology, will hasten the adoption of digital financial services, which are essential for taking advantage of the opportunities the internet offers to businesses and customers alike. As a result, even though these technological advancements may help some people become more financially included, they may also further entrench or create new unbanked or underbanked segments among those who cannot access or use the technology, as these people will be increasingly cut off from the financial system.

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Keywords: banks, central bank, financial services, regulation, ATM
Categories: Banking & Fintech
Companies: Bank of Thailand
Countries: Thailand
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Bank of Thailand

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