The digital personal loan regulations promulgated in the most recent announcement of the Bank of Thailand encourage service providers to use alternative data that does not concern personal income data to assess the willingness and ability of borrowers' debt payment. This arrangement reflects two positive objectives: 1) To increase accessibility to loan for consumers in particular among borrowers of informal credit and individuals who previously could not access personal loan; and, 2) To reduce cost for borrowers of digital personal loan. Nonetheless, KResearch has identified certain issues regarding the terms and conditions for digital personal loan operations, which will likely prompt digital lenders to become more alert and plan to adjust their businesses to the BOT regulations – a process which could present multiple challenges for the service providers. For example, they must prove the validity of the alternative data, while also facing difficulty of finding new borrowers amid economic uncertainty and retaining existing customers, as well as the rise in outstanding short-term loans with low credit limits.
KResearch views that the only a handful of digital personal loan providers that are well-prepared would be classified as digital lenders within the context of the BOT's announcement The main players will remain those established digital lenders in the market, particularly commercial banks. KResearch observes that digital loan providers are generally in the early stages of learning and planning to adjust themselves to the BOT's requirements, as well as screening new target customers and overseeing the service system management. Hence, a clearer picture of the digital personal loan business in accordance with the BOT's new announcement could be seen in 2021.
As digital loans are, by nature, short-term with low credit limit – compounded by the fact that these business models are still in their initial phase – their viability remains to be seen. For these reasons, KResearch expects that digital personal loan market value per the BOT's latest announcement may remain insubstantial in 2021 as digital loan providers are likely to be in their trial period and will be compelled to spend more time experimenting with different forms and approaches in order to find the ones that are best suited to the market.