Thailand gradually welcoming digital banking

The Bank of Thailand (BoT) has approved digital banking in the country, however, with a warning against irresponsible lending. As part of the growing trend of digital banking in Southeast Asia, Thailand has become one of several countries to adopt the technology, including Singapore, Malaysia, and the Philippines. The approved digital banks will go through a restricted phase for their first years of operation as the BoT assesses their qualifications, including financial stability.

Regulating the digital banking industry is crucial to prevent harm to consumers or the economy, and each country is approaching the sector with caution by implementing different regulations to ensure consumer protection. The digital banking sector faces several challenges, including ensuring customer security, complying with regulations to protect consumers, providing fair and transparent services, and financial stability. The BoT will assess digital banks’ financial status, including their capital adequacy and liquidity position, to ensure they can operate safely and responsibly.

The BoT plans to issue three licenses for digital banks, and the approved license holders are expected to be announced in the middle of 2024. Several firms, including SCB X, Super-app Grab, Sea, AIS and Krungthai Bank, and Jay Mart with KB Financial Group, have expressed interest in entering the digital banking sector in Thailand, showing a significant demand for digital banking services in the region.

While the digital banking sector faces challenges, it has the potential to bring significant benefits to the Southeast Asian economy by increasing access to financial services, reducing financial burden on households, and driving innovation and improving the quality of financial services.