Three consortiums are expected to apply for virtual bank licences, as the application period for submissions to the Bank of Thailand (BoT) started on Wednesday, running to Sept 19.
SCB X, a financial technology conglomerate and holding company of Siam Commercial Bank (SCB), said it is in the process of applying for a licence and plans to announce a new Chinese partner this week.
SCB X
According to SCB X chief executive Arthid Nanthawithaya, the company entered into an agreement with a Chinese technology firm to establish a consortium to set up a virtual bank, with the new partner scheduled to be announced within a few days.
SCB X is working with KakaoBank, the largest digital bank in South Korea, to set up a consortium in preparation for applying for the new banking licence.
Large banks and corporations have expressed interest in applying for new virtual banking licences.
SCB X holds the majority of shares, with KakaoBank holding at least 20%.
Mr Arthid did not disclose any changes in the shareholding structure of the consortium following the addition of the new partner.
"The new partner will bolster our virtual bank's technological capabilities, while KakaoBank brings expertise in customer engagement," he said.
"We are committed to putting our best effort into the licence application process, although the final decision rests with the central bank's evaluation."
The regulator's initial plan was to limit the number of virtual bank licences to three, but the final decision placed no limit on the number as the Finance Ministry wants to open up the process to qualified applicants, allowing the central bank to determine an appropriate amount to stimulate competition without jeopardising the stability of the financial system.
Mr Arthid said the business model of its prospective virtual bank will target underserved and unserved customers, in line with central bank requirements.
Technology will play a pivotal role in the operation of a virtual bank, with a particular focus on an artificial intelligence (AI)-driven organisation, he said.
The integration of AI technology would enhance efficiency and control operating costs, representing a cornerstone of the business model, said Mr Arthid.
He said SCB X's pursuit of the new banking model is not hindered by any financial constraints.
With a robust capital base of 400 billion baht, the new venture offers capacity for the company's loan expansion, said Mr Arthid.
However, the venture's primary focus under the new business model would not be loan growth, but rather seizing new business opportunities, enhancing cost efficiency and improving access to financial services for underserved individuals, he said.
CP Group
Suphachai Chearavanont, chief executive of Charoen Pokphand (CP) group and board chairman of True Corporation, said the group is in the process of preparing the necessary documents and ensuring readiness before applying for a virtual bank licence.
He said development of the virtual bank service would be jointly led by CP Group's TrueMoney, a Southeast Asia e-payment and financial service provider, together with Ant Group and the CP Group's retail channels such as 7-Eleven convenience stores, which could be touchpoints for the service.
The group is eager to start a virtual bank to serve unbanked people, as well as to complement the group's business portfolio, Mr Suphachai said.
He did not specify a timeline for when the group would submit the licence application.
TrueMoney is part of CP's Ascend Group and a partner of Ant Group, an affiliate of China's Alibaba Group. Ant Group is a shareholder of Ascend Group.
A telecom analyst who requested anonymity said the virtual banking service under Ascend and Ant Group would be supported by their conglomerates, which have strong engagement in people's daily lives through their products and services.
This alliance's virtual bank service could become a strong competitor, said the source.
Another consortium, comprising major corporations Gulf Energy Development, Advanced Info Service (AIS), PTT Oil and Retail Business (OR) and Krungthai Bank (KTB), also expressed interest in applying for a new banking licence.
Gulf
Sarath Ratanavadi, chief executive of Gulf, said on Wednesday that the consortium intends to apply for a virtual bank licence.
"We believe both KTB and AIS are ready to expand to a new business and we are in the process of discussing with OR how it can participate in the plan," he said.
The virtual bank venture is expected to have registered capital of 5 billion baht as the initial investment, including technology expenses. Gulf, KTB and AIS will have an equal shareholding of 33.3%, said Mr Sarath.
After receiving a licence, the joint venture partners will look at how to deploy technology to develop services for customers, he said.
KTB and AIS have a large customer base for the virtual bank. In general, virtual bank clients do not seek large loans, said Mr Sarath.
The credit limit should be 30,000 to 200,000 baht, accessible to most people using collateral such as a mobile phone, meaning a car or land as collateral are not needed, he said.
"New players are entering the virtual bank business. Competition in the banking industry has increased. However, I believe long-term competition depends on stable technology for services and access to customer groups. The nature of the business does not compete directly with large banks," said Mr Sarath.
Virtual banks have a different business model from that of Gulf and other joint venture partners. Customers can access virtual bank services at all times, similar to the crypto market.
The technology must be stable, he said.