Thailand's banking sector goes digital: BOT to permit virtual banks by 2025

Thailand aims to boost competitiveness and economic growth by permitting virtual banks

By 2025, the Bank of Thailand (BOT) intends to permit the creation of virtual banks. This marks a significant step towards the modernization of the Thai banking industry and a shift towards digital banking services.

Banks that only conduct business online are referred to as virtual banks or digital banks. Without the necessity for physical branches, they provide a variety of financial services through digital platforms including websites and mobile apps. This enables them to operate more cheaply 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 “Consultation Paper on Virtual Bank Licensing Framework” published by the central bank states that applications for the provision of financial services would be accepted later in 2023.The action is intended to increase competitiveness and accelerate Thailand’s economic growth.

By 2024, the Bank of Thailand will grant three separate licenses to interested firms. According to the research, there are at least ten parties who are eager to issue permissions.

The licensing structure will apply the same rules and oversight to virtual banks as it does to conventional commercial banks. Additionally, qualifying candidates must fulfill specific prerequisites.

The central bank asserts that in the initial years of operation, virtual banks would operate in a limited phase, which entails careful supervision to guard against financial systemic concerns. To increase investor protection, Thailand’s Securities and Exchange Commission recently announced measures to tighten regulations for cryptocurrencies. Additionally, the authority is creating a stringent set of regulations for cryptocurrency advertisements.

Amidst a rapid rise in the demand for mobile payments, e-commerce, and cryptocurrencies in the nation, media reported that Thailand and Hungary recently engaged into a technical cooperation agreement to assist the use of blockchain technology.

In 2022, the nation had a variety of cryptocurrency-related developments, including proposals to test a central bank digital currency with about 10,000 users. According to analytics firm Chainalysis’ Global Crypto Adoption Index, Thailand is placed ninth.

A key step towards modernizing the Thai banking sector has been taken with the Bank of Thailand’s decision to permit the establishment of virtual banks by 2025. Financial inclusion, more competition, and innovation will all be fueled by virtual banks. The BOT’s laws will make sure that virtual banks function in a safe and secure manner. This action is anticipated to increase accessibility, comfort, and competitiveness in the banking industry, all of which will ultimately benefit clients.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing