The Bank of Thailand (BOT) has taken a significant step towards advancing financial inclusivity by granting preliminary approval for three virtual bank licenses. The move aims to cater to underserved customer segments and enhance accessibility to financial services.
BOT Governor, Sethaput Suthiwartnarueput, emphasized that the limited number of licenses is strategic, intended to preserve stability in the local financial market and protect depositors from risks associated with new ventures. The finalization of licensing regulations is set to conclude this month, paving the way for submission to the Finance Ministry for final approval. The application process for these licenses is scheduled to open in 2024, with official operations of the virtual banks projected to commence in 2025.
While these virtual banks will not be classified as domestic systemically important banks, the central bank recognizes the potential impact of any risks or issues with these entities on public confidence and the overall financial system. To ensure the sustainability of virtual banks and align with the central bank’s objective of nurturing the virtual banking industry, the BOT will closely monitor their business operations.
Applicants for these virtual bank licenses must meet relatively high requirements, including a minimum registered capital of 5 billion baht, ensuring that only robust and substantial entities apply for these licenses. However, during the initial phase, prospective virtual banks may encounter significant expenses, particularly for customer acquisition and IT investments, making business survival a critical concern.
Governor Sethaput emphasized the importance of promoting reasonable pricing and open competition for virtual banks. He highlighted that an increased number of players does not automatically guarantee low-interest rates, as rates are also influenced by credit risk considerations.
Presently, Thailand has 17 conventional banks offering full-branch services, with three virtual banks poised to enter the market. Comparatively, South Korea boasts 52 conventional banks and three virtual banks, Singapore features 34 conventional banks and four virtual banks, while Malaysia is home to 42 conventional banks and three virtual banks.
The approval of virtual bank licenses by the Bank of Thailand signifies a significant stride towards a more inclusive and dynamic financial landscape, poised to cater to a diverse range of customers and promote economic prosperity in the country.