Bank of Thailand considering licences for digital-only banks

The Bank of Thailand is studying licences for digital banks, a tool meant to enhance financial inclusion and keep pace with consumer needs in the digital age, says a senior official.

New players will encourage competition and disruption in the local banking industry, open more opportunities to Thais to access financial services, improve financial inclusion and develop the financial ecosystem in the overall market, said Ronadol Numnonda, deputy governor for financial institutions stability.

"In the digital era, the central bank needs to consider the overall banking landscape in the long term, and digital banks are an option," he said. "Whether digital bank licences will be issued needs a comprehensive study of all dimensions."

Virtual banking services have been growing in accordance with changing consumer lifestyles and tech advancement. Several fintech firms in Thailand have made digital strides, offering financial services such as payment through the digital platform.

Digital-only banks have taken off in Japan, South Korea and China. Regulators in Hong Kong, Taiwan and Singapore last year issued digital bank licences, while Malaysia is expected to accept licence applications this year.

Digital-only banks can operate at a lower cost and offer different services than traditional lenders.

Predicting the success of the digital model is difficult because much will depend on regulatory decisions, said Arthid Nanthawithaya, chief executive of Siam Commercial Bank.

For SCB, virtual banking services could be offered by subsidiary SCB 10X Co Ltd, rather than the bank itself.

If that were the case, SCB would play a role in managing operations, especially cost and asset quality control, as well as resource management, while SCB 10X would serve the bank's new S-curve growth and income contributors in the long term.

Meanwhile, Kasikornbank co-president Kattiya Indaravijaya said the bank has a clear direction to go digital.

KBank will pursue developing the digital platform to offer financial services in the local market and has been searching for new business opportunities regionally, including in digital banking.