(Bloomberg) — Thailand is preparing rules for the setting up of virtual banks, set to join countries from Singapore to Malaysia in promoting financial technology to spur competition and wider access to banking services.
The Bank of Thailand plans to issue the guidelines for digital banks by June and may allow existing lender and new applicants to seek licenses, Assistant Director Roong Mallikamas said at a virtual briefing Tuesday. The central bank also plans to scrap a limit on investment by commercial banks in financial technology, except digital assets, she said.
Thailand is the latest country in Asia to embrace the concept of virtual lenders as companies like Ant Financial Services Group and Grab Holdings Inc. scour the region for investment opportunities. While Thailand lacks independent virtual banks, local and foreign lenders do offer various digital services in the country, including payments. The BOT will also expand the business scope and flexibility of existing banks, it said.
“We expect to see more competition and innovations by allowing virtual banking and it will benefit depositors,” Roong said. “No one will stay still. Existing players will also adjust.”
Under a public consultation titled “Repositioning Thailand’s Financial Sector for a Sustainable Digital Economy,” BOT said it proposes to provide more players access to key financial infrastructure such as the payment system and credit guarantee mechanism at more fair and reasonable costs. The central bank will also finalize guidelines to steer the financial sector to incorporate environmental risk assessment into business operations and support the transition of companies away from unsustainable activities.
The repositioning of Thailand’s financial sector needs to strike the right balance between promoting innovation and managing risks as well as allowing for flexibility in dealing with abrupt changes, Governor Sethaput Suthiwartnarueput said at the same briefing. BOT will seek to minimize unnecessary regulatory burden or cost to the service providers by pushing lenders to adopt financial technologies.
The BOT consultation paper will be open for feedback from the public until Feb. 28 and policies will be fine-tuned with the inputs, Roong said.
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