BOT will allow only three virtual banks to ensure stability of financial system
The Bank of Thailand (BOT) will limit the issue of licences to only three virtual banks so that the financial system’s stability can be maintained when new financial services are offered through digital channels, a senior executive said on Thursday.
Wipawin Promboon, senior director of the BOT’s Financial Institutions Strategy Department, said that in providing virtual bank licensing for the first time in the country, the central bank wanted to introduce a new form of banking and financial services through digital channels, as added value to the existing services.
“The bank wants to see new financial services that meet the demands of all customer sectors, especially SMEs [small and medium-sized enterprises] and unserved/underserved groups. The goal is to create a good experience in using digital financial services for customers and encourage appropriate competition among financial institutions,” Wipawin said.
“What we don't want to see is business practices that pose a risk to the stability of the financial system and cause large-scale damage to depositors and service users,” she added.
The BOT plans to introduce virtual banks – a new type of commercial banks – in the country for the first time next year by granting three virtual bank licences. The decision was made in July last year, as the central bank argued that the number was suitable to ensure the domestic financial market’s stability and protect depositors from risk associated with new businesses.
According to the plan, virtual banks are not allowed to set up physical branches as their services are offered mainly through the digital channel.
Application for virtual bank licences can be submitted from March 20 to September 19. The central bank will call a meeting of potential applicants on March 19 to clarify the regulations and criteria involving virtual banks.
The successful applicants to run the country’s first virtual banks are expected to be announced by the first half of 2025. When obtaining approval from the finance minister, the successful applicants are required to make necessary preparations, such as information technology systems and risk management tools, so that their virtual banks can start operating by June 2026.
