Bank of Thailand Set to Allow Virtual Banks

February 2023

The Bank of Thailand (BOT) recently issued a Consultation Paper on Virtual Bank Licensing Framework to introduce virtual banks as new financial service providers.

The BOT expects that virtual banks would operate in a sustainable manner to ensure responsible innovation. It called virtual banks not to initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties, nor abuse dominant market position, which will pose risks to financial stability, depositors, and consumers as a whole.

By 2024, the BOT will grant interested businesses access to three separate licenses. The intention to provide permissions is shared by at least ten parties. The BOT has set the following licensing framework for virtual banks.

  • Virtual banks may provide full-service banking businesses to be flexible and accommodate changing customer needs.
  • Virtual bank applicants must meet appropriate qualifications. These include possessing business models that can sustainably achieve the above objectives, as well as having expertise in technology, digital services, and data.
  • Virtual banks shall comply with the same regulations and supervision as traditional commercial banks. The BOT shall supervise virtual banks in a risk-proportionate manner, placing great importance on robust corporate governance, sound risk culture, IT system continuity, efficient customer support via digital channels, and appropriate outsourcing services.
  • Virtual banks shall go through a restricted phase during the initial years of operation. During this period, virtual banks shall be subject to specified conditions as well as to close monitoring to ensure sustainable business operations without posing systemic risks.

Applications to operate as financial services providers are to be available throughout 2023.

(Source: Bank of Thailand; The Paypers)

Our Services

Orissa International provides consulting services to companies that want to develop a market entry strategy for Southeast Asia or implement their business expansion into the region. We have very strong domain knowledge of markets and industry sectors, and a business network of over 16,000 distributors, resellers, and system integrators, built through advising and guiding more than 5,000 companies with their market expansion into Singapore, Malaysia, Indonesia, Thailand, Vietnam and the Philippines over the last 25 years.