- Thailand aims to boost competitiveness and economic growth by enabling virtual banks
By 2025, the Bank of Thailand (BOT) intends to enable the creation of virtual banks. This marks a significant step towards modernizing the Thai banking industry and a shift towards digital banking services.
Banks that only conduct business online are known as virtual banks or digital banks. Without the need for physical branches, they provide a variety of financial services through digital platforms including websites and mobile apps. This allows them to operate more economically and offer services at a lower cost than traditional banks. Customers can access their bank accounts and conduct transactions from anywhere at any time with virtual banks, which also provide a better level of ease and accessibility.
The “Virtual Bank Licensing Framework Consultation Paper” published by the central bank states that applications for the provision of financial services will be accepted later in 2023. The action is aimed at increasing competitiveness and accelerating the economic growth of Thailand.
By 2024, the Bank of Thailand will grant three separate licenses to interested companies. According to the investigation, there are at least ten parties that are eager to issue permits.
The licensing structure will apply the same rules and supervision to virtual banks as to conventional commercial banks. Additionally, qualified candidates must meet specific prerequisites.
The central bank claims that in the initial years of operation, virtual banks would operate in a limited phase, which implies careful supervision to guard against concerns from the financial system. To increase investor protection, the Securities and Exchange Commission of Thailand recently announced measures to tighten regulations for cryptocurrencies. Also, the authority is creating a strict set of regulations for cryptocurrency advertisements.
Amid a rapid increase in demand for mobile payments, e-commerce, and cryptocurrencies in the nation, media reported that Thailand and Hungary recently engaged in a technical cooperation agreement to assist in the use of blockchain technology.
In 2022, the nation saw a variety of cryptocurrency-related developments, including proposals to test a central bank digital currency with approximately 10,000 users. According to analytics firm Chainalysis’ global cryptocurrency adoption index, Thailand ranks ninth.
A key step towards modernizing the Thai banking sector has been taken with the Bank of Thailand’s decision to allow the establishment of virtual banks by 2025. Virtual banks will drive financial inclusion, increased competition and innovation. The laws of the BOT will ensure that virtual banks work safely. This action is anticipated to increase accessibility, convenience, and competitiveness in the banking industry, all of which will ultimately benefit customers.