Bank of Thailand Is Considering Issuing Licenses to Digital Banks to Enable Greater Financial Inclusion
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The Bank of Thailand is reportedly considering issuing licenses to digital banks, which aim to provide greater financial inclusion while catering to changing consumer requirements in the digital age.
New Fintech industry participants are encouraging competition and disruption in Thailand’s banking sector. These startups aim to offer more opportunities to the nation’s residents to help them access modern financial services, allow for greater financial inclusion, and further develop the country’s financial ecosystem, Ronadol Numnonda, deputy governor for financial institutions stability, confirmed.
Ronadol remarked to the Bangkok Post:
“In the digital era, the central bank needs to consider the overall banking landscape in the long term, and digital banks are an option. Whether digital bank licences will be issued needs a comprehensive study of all dimensions.”
Digital banking services have been growing to meet changing consumer behavior and preferences. Several local Fintech companies have been expanding their line of digital products and services, which offer financial services such as payments through e-commerce platforms.
Digital-only banks have also become increasingly popular in neighboring countries such as Japan, South Korea and China. In 2019, regulatory authorities in Hong Kong, Taiwan and Singapore issued many digital banking licences. Malaysia will also be taking digital bank license applications this year.
Digital-only banks can provide financial services at significantly lower costs than brick-and-mortar banks and they are also more convenient to use than traditional banking institutions.
Arthid Nanthawithaya, CEO at Siam Commercial Bank (SCB), said that being able to accurately predict the success of the digital model is not easy because a lot may depend on regulatory issues.
For SCB, online banking services might be provided by subsidiary SCB 10X Co Ltd, instead of the bank.
Should this be the case, then SCB will have to handle managerial decisions and duties, such as dealing with matters related to cost and asset quality control, and resource management, Meanwhile SCB 10X would have to serve the institution’s S-curve growth and long-term income sources.
Kattiya Indaravijaya, co-president at Kasikornbank, noted that the institution has a clear plan to go fully digital.
KBank will also be implementing the digital platform to provide financial services in Thailand’s market and has reportedly been looking for business opportunities locally, including in the area of digital banking.