Digital Banks: Challenges lie in adopting a format appropriate for the Thai context (Current Issue No.3205)

Currently, the trend for digital-only banks (or digital banks) is gaining a lot of traction. Numerous central banks across Asia including Singapore, Malaysia, Taiwan and Hong Kong, to name but a few places, have issued digital banking licenses to applicants. These moves have been made in the hope of increasing competition in the banking market and enhancing financial inclusion for consumers. What makes these ventures interesting is the diversity of digital bank applicants that has been seen thus far, since most of them do not operate in the financial sector but consist of businesses that operate on online platforms, social networks, e-commerce platforms and within the telecommunications sector. These players possess IT expertise, data, and occupy spaces that are deeply ingrained in the daily lives of millions of potential customers. That is to say, they work within ecosystems that are conducive to the expansion of their existing services.

          Looking towards Thailand, the success of digital banks will undoubtedly hinge on issues that the Thai government has sought to address, including increased access to financial services for low-income consumers, and cost reduction of financial services provided by intermediaries. The clearer the objectives, the easier it will be for the government to pinpoint the direction for future policies, rules and regulations, as well as the eligibility guidelines of potential market players. The aforementioned issues will serve as challenges for the Thai government over the forthcoming period,  taking into account the present Thai context where  a considerable number of Thais particularly farmers, informal workers and senior citizens are still struggling to adapt or have limited access to digital technology. ​