State-owned Krungthai Bank (KTB) has confirmed it plans to apply on Sept 12 for a virtual bank licence together with Gulf Energy Development, Advanced Info Service (AIS) and PTT Oil and Retail Business.
Payong Srivanich, chief executive of KTB, attributed the bank's interest in virtual banking to a study by the World Bank. According to the Washington-based lender, Thailand has a large unbanked and underbanked population, with 27% of households having no access to loan services provided by formal financial institutions.
Small and medium-sized enterprises (SMEs) can also benefit from greater financial inclusion, as only 17% of SMEs have access to loans in the commercial banking system, he said.
Up to 51% of Thai households use the informal economy, while only 26% have registered their businesses. The remaining 74% of SMEs use credit cards to finance their business, or use assets such as houses or cars as collateral for loans, said Mr Payong.
"A virtual bank does not require branches, which are the major cost for the banking business," he said.
"However, system stability and security are vital for virtual banking."
Mr Payong said virtual banks also need a model that can reach potential customers without access to finance.
"We must find a model that can reach customers to provide them loans and enable debt collection, leading to low non-performing loans," he said.
KTB has a customer base of 40 million, a similar number to AIS, which means the alliance should have access to most customer groups in the country, as the nation's population is 71 million, said Mr Payong.
Virtual banks must have registered capital of at least 5 billion baht, gradually increasing to at least 10 billion.
The list of applicants permitted to establish a virtual bank is expected to be announced by June 2025.
Using IT systems and risk management, approved applicants must start virtual banking operations within one year.
"KTB has developed over the years to have capabilities similar to leading commercial banks. As a leader in the use of digital technology, data is important to stay competitive in the next era of generative artificial intelligence," said Mr Payong.
"KTB's strategic focus areas include data utilisation, platform creation and inclusive growth. We need strategic partners to grow together. Most importantly, our staff must be developed by upskilling and reskilling to support our business in the next era."