‘Sandbox’ to monitor fin-tech
THAILAND is following in the footsteps of the United Kingdom, Singapore and Australia in adopting the “regulatory sandbox”
The plan was unveiled by Bank of Thailand Governor Veerathai Santiprabhob during his speech yesterday at the C asean Forum’s “Positioning Thailand’s Fintech Ecosystem” event.
The central-bank governor did not say when the sandbox would be ready.
He said that in regulating fintech, the BOT had set three criteria -– regulations must not impose barriers to innovative products and the growth of fintech, customers must be protected, and the products must not jeopardise the financial system or the economy.
The BOT is part of the fintech ecosystem, as the regulator, he said.
All fintech companies hope to see their products reach target customers, but this must be done with minimal risks to the customers and the financial system, Veerathai said. Regulations now are designed to fit service providers of all sizes, but are not flexible enough for fintech companies, which are mostly small.
“Fintech is a new thing for the central bank and we have limited knowledge in this area. Therefore, having the regulatory sandbox will open opportunities for product experimentation and for the companies to ramp up their scale,” he said.
In Britain, the Financial Conduct Authority is the organ responsible for the regulatory sandbox. It was designed to be a “safe space” where businesses can test innovative products, services, business models and delivery mechanisms. This makes it easier for firms to meet requirements and reduce the cost and time to get the test up and running.
On the sidelines of the event, Veerathai said such a testing ground was necessary for fintech companies.
“These companies have target customers but in the sandbox, if any risk prevails, it will be contained,” he said.
He is also convinced that the Payment Systems Act will help support fintech.
The new law, pending passage by the National Legislative Assembly, would cover payments by all service providers – banks, non-banks and fintech and other lenders.
“The existing regulations should also be relaxed to enhance the flexibility of banks and fintech companies,” he said.
The BOT recently proposed an amendment to the law governing the National Credit Bureau, seeking to extend the agency’s membership to fintech companies offering peer-to-peer lending services.
Next quarter should see a rule in place to allow commercial banks to establish venture-capital funds for fintech investment.
As digitisation takes shape in society, digital banking services are expected to flourish.
Veerathai said Thai banks were keener to close branches than to open new ones, as they adjust to the new environment.
According to a BOT report, the number of bank branches across the country increased by 37 to 7,063 in the first half of this year. However, in Greater Bangkok, where Internet and mobile-phone penetration is the highest, the branch count dropped by 18 to 2,164.
Among the banks closing branches in Greater Bangkok were CIMB Thai Bank with 46, Kasikornbank with eight, TMB Bank with six and Thanachart Bank with six.
Wisudhi Srisuphan, a deputy finance minister, pledged assistance to fintech, saying it would improve access to funding among small and medium-sized enterprises – through venture capital and crowd funding. Fintech would also provide an innovative investment choice for the middle class.