Bank of Thailand says virtual banks to be operational by 2025 as it launches consultation papers to get feedback on its plans

The Bank of Thailand (BoT) has come out to say that it has issued ‘consultation papers’ for possible launch of 3 ‘virtual bank’ licenses to put Thailand’s digital growth on the roadmap that the rest of the world is witnessing.

The BoT said that after the initial hearing that ends in 1-months’ time, the central bank would open the doors for applicants to seek license to operate ‘Virtual Bank’ which would be branchless and without any automatic teller machines (ATM).

The aim is for Thailand to have its 1st virtual bank operational by mid-2025. The timeline for the process is for the BoT to select the 3 names within 6-months from the date of application, after that the application winner’s names would be forwarded to the Ministry of Finance (MoF) which would take another 3-months to consider. It is only after the MoF gives the go-ahead the winners will be informed and given 1-year to prepare for the ‘official’ launch sometimes in mid-2025.

Tharit Punpiamrat assistant governor Financial Institutions Policy Group at the BoT came out to say that the hearing would go on until March 12 or a 1-month period from yesterday and will help the country move closer to the what the world is heading towards, a more cashless society.

The establishment of this branchless bank is one of the BoT’s masterplans that will enable the financial sector in Thailand enter the new world. This includes sustainability, digitalization, and how everyone adapts under uncertainty. The BoT wants to develop new financial innovations such as e-payments, the use of linking statements between banks. investment made easier and use alternative information to apply for credit, etc.

The BoT’s concept of establishing a branchless bank because they want to get out of the traditional banking framework and branchless banks will provide services on a digital basis, with no branches, no ATMs for Thai people to have more access to various financial services, both loans and deposits or other digital financial transactions.

Virtual Bank is a full-service commercial bank on a digital platform will help retailers and SMEs access to credit by using alternative information and Virtual Bank can join hands with partners such as Thailand Post, convenience stores or other banks so that Thai people can use cash along with digital payments.

Wipawin Phromboon, senior director Financial Institutions Strategy Department, BoT, said that the qualifications of those interested in establishing a branchless commercial bank is, it must be registered in Thailand. The firm needs to have a registered capital of 5 billion Baht and has has to have 7 other qualifications:

  1. It must have a business model, both in terms of expanding the customer base product development
  2. Sustainable revenue and cost service
  3. Good governance
  4. Expertise in providing digital services
  5. Able to design services that create a good customer experience
  6. The use of flexible technology reduces operating costs
  7. Develop financial products quickly

The move to have virtual bank comes as the use of digital payment has risen sharply over the past 5-years, with digital transactions in Thailand having grown by leaps and bounds. The number of users of digital bank has risen by 18 times over the past 5-years, and a 3-fold increase in the number of mobile banking accounts, showing that many Thais are ready to use financial services through digital channels.

The BoT expects new players to create innovation and create benefits for society and would not pose a risk to the financial system.

Foreign investors would be eligible to hold 25% stake but if they want to hold up to 49% then they would need to seek permission to do so from the BoT and the central bank would approve it on a case-by-case basis.

“I would like to see a new service offering. better respond to customer needs especially small and medium-sized enterprises (SMEs) that have not yet reached or access is not good, such as in terms of credit, people in low-income groups self-employed irregular income or never had a history with the bank may not be able to access credit,” Wiphawin said.

But virtual banking though the digital footprint would be able to track more of the user’s habits and be able to offer services that traditional banks may not or would not be willing to undertake.


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