Thailand is embracing the advancement in financial technology as it announced the country’s first virtual banks will start operations in 2015.
Also, the Bank of Thailand, the country’s central bank, will issue three different licenses for interested banks and companies with “at least 10 parties interested in granting permissions” next year.
“Higher competition will strengthen the overall banking system by prompting existing players to improve their services and innovations,” Bank of Thailand Assistant Governor Tharith Panpiemras said in a press briefing last week.
“New virtual banks will also expand their services into new underserved customers with lower costs that would benefit the overall customers,” he added.
Panpiemras is hoping to open the nation’s first virtual banks in 2025 to increase the country’s economic growth and boost competition.
“The BOT expects that virtual banks would operate in a sustainable manner to ensure responsible innovation,” the central bank’s Consultation Paper on Virtual Bank Licensing Framework read. “Virtual banks should not initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties, nor abuse dominant market position which will pose risks to financial stability, depositors and consumers as a whole.”
The country’s virtual bank will be under the supervision of the Bank of Thailand in a “risk-proportionate manner” to ensure that operating entities will place “great importance on robust corporate governance, sound risk culture, IT system continuity, efficient customer support via digital channels, and appropriate outsourcing services.”
Thailand, Southeast Asia’s second-biggest economy, is the latest country from the region to adopt the concept of virtual banking.
Currently, Thailand does not have independent virtual banks but the country’s largest lenders like Bangkok Bank, Kasikornbank and other businesses have made investments in initiatives offering digital services like online payments and accounts.
Last week, state-owned Krungthai Bank (KTB) partnered with major telecom operator Advanced Info Service (AIS) to collectively invest in a virtual bank to cater to both existing and new customers, Bangkok Post reported, citing KTB president Payong Srivanich.
The executive said both parties signed a memorandum of understanding for the collaboration, noting the partnership meant planned business expansion of KTB and AIS.
A virtual bank is a revolutionary breakthrough in banking where customers will have access to banking, businesses and other financial services without the need to go to any physical location.
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