Bank of Thailand (BOT) was considering digital banking licenses in order to open more opportunities for financial inclusion and establish the financial ecosystem in the overall market. Thailand’s digital banking scene has been described as “quite vibrant” with incumbent banks, platforms and non-banks competing and collaborating for financial products. Vibrancy is partly reflected by the prevalence of mobile banking and digital accounts, where usage jumped almost 70% YoY in March 2020. Government and the central bank have also created a favorable environment for digital banking to flourish. The public are already being prepared for the disruption through the country’s PromptPay system and social welfare payments being made through digital wallets.
Uncertainty remains high in the sector, with high credit costs until 2022 and possible net interest income and net interest margin declining given multiple rate cuts in H2 2020. Moreover, Thai banks that hold off their tech investments could potentially lose market share against peers who continually take advantage of the shift. Thailand has a large middle-aged population and they prefer convenience. About 60% of the population is between 15 and 55 years old. Thai customers are increasingly more digital savvy. They lean toward online bank transactions rather than visiting their local branch, and this trend is visible in both the urban and rural areas. BOT has been reviewing its own regulations, with regulatory impact analyses and regulatory guillotine being carried out since 2018 to help with the digital shift. New approaches have been launched, such as proportionality and principle-based guidelines, whereby more breathing room is permitted when financial activities involved do not pose a risk of destabilization. Promoting rapid digital transformation of the financial system is one of the keys focuses for the BOT as highlighted in its Strategic Plan 2020-2022. The central bank is also promoting digital financial infrastructures to spur more innovations that are sufficient for the demand of the digital economy.