The Bank of Thailand has announced intentions to let virtual banks operate for the first time in Thailand, and provide services by 2025.
The bank's "Consultation Paper on Virtual Bank Licensing Framework" says that applications to conduct business as financial services providers would be accepted later in 2023, Bloomberg writes.
The Move Intends To Boost Thailand's Economic Growth Amid Increasing Competition
By 2024, the Bank of Thailand will grant three distinct licenses to interested businesses where at least ten parties are interested in issuing rights.
Under the licensing structure, virtual banks will be subject to the same rules and oversight as conventional commercial banks.
Moreover, qualified candidates must fulfill certain conditions, and it is cautioned that virtual banks should not start a lending race to the bottom by making reckless loans.
Furthermore, the stability of the financial system, depositors, and all consumers are at risk if virtual banks give related parties preferential treatment or otherwise abuse their dominant market position.
During their initial years of operation, virtual banks will also be in a "restricted phase," requiring rigorous supervision to guard against systemic financial concerns, Coin Telegraph notes.
It can be remembered that in an effort to increase investor protection, Thailand's Securities and Exchange Commission recently announced intentions to reel in on cryptocurrencies.
With that, the authority is also creating a tight set of regulations for cryptocurrency ads in accordance with investor protection.
With the need for mobile payments, e-commerce, and cryptocurrencies rapidly increasing, Thailand recently signed a technical cooperation agreement with Hungary to assist the use of blockchain technology.
Financial Express reports that the country saw several cryptocurrency-related events in 2022, including suggestions to test a central bank digital currency with roughly 10,000 users.
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Virtual Banking Will Bring Thailand To An Era Of Sustainability And Digitalization
The Bank of Thailand seeks to create new financial innovations such as electronic payments, linking bank statements, simplified investing, and the use of alternative information when applying for loans.
The idea of establishing a branchless bank was proposed because it wanted to break free from the constraints of traditional banking, and branchless banks will offer services exclusively online.
With this, more financial services, including loans, deposits, and other digital financial operations, will be available to Thais, Thai Inquirer notes.
By employing alternative information, Virtual Bank, a full-service commercial bank on a digital platform, will assist merchants and SMEs in obtaining financing.
The decision to establish a virtual bank coincides with an increase in the use of e-payments during the past five years, with digital transactions in Thailand soaring to unprecedented heights.
Over the past five years, the number of digital bank users has increased by 18 times, and the number of mobile banking accounts has increased by a factor of three.
According to this data, a large portion of Thai people are eager to use financial services available online.
With that, the Bank of Thailand anticipates that new participants will foster innovation, serve society, and not endanger the financial system.
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