Seven Peaks Insights

The Future of Virtual Banking in Thailand



As of July 20, the Bank of Thailand (BOT) has decided to grant three virtual banking licenses, with license applications to open in 2024. Thailand will be the third country in ASEAN to allow virtual banking, after Singapore and Malaysia, with business operations of the first licensed virtual banks set to start in 2025.

This development follows a digital transformation trend in recent years across several industries in Thailand. Today’s consumers in Thailand already have access to in-app services like mobile banking, QR code payments, and PromptPay.

Nevertheless, virtual banking has the potential to drive the Thai financial sector further toward digitisation and increase competition.

Challenges for virtual banks in Thailand

Virtual banks differ from digital banking offered by other financial institutions. Unlike traditional banks, virtual banks do not have a physical branch, and offer services directly through digital channels.

Therefore, virtual banks have greater capacity for agility, reduced investment requirements, lower operating costs and a faster time-to-market. Conversely, virtual banks also face unique challenges and obstacles, particularly when it comes to resiliency.

With these risks in mind, the BOT has set certain requirements in its Virtual Banking Licensing Framework, including strong business models, and a steep capital requirement of 5 billion baht.

These requirements, most recently updated in July under the BOT’s revised consultation page, also include certain standards for technology and IT systems. Virtual banks must have agile, secure, resilient and high availability technology and IT systems. They must also demonstrate the ability to access, manage and utilize diverse types of data.

Additionally, virtual banks must develop data portability mechanisms to transfer customer data to other service providers.

To meet these demands, virtual banks must have significant expertise in financial technology, and must quickly develop a robust infrastructure, viable products, and effective front-end and back-end design for each system. Additionally, meeting these standards is also an opportunity for virtual banks to drive success, stay ahead of the competition, and better serve their customers.

Greater security through cloud solutions

The BOT’s requirements for secure and high availability systems can be met through well-designed cloud architecture. Virtual banks have the privilege of being cloud-native, without being tied down to legacy systems or databases.

Effective cloud solutions don’t just ensure data security and compliance requirements across an organization. Cloud solutions allow seamless and effective access and integration of vital information.

User-centric financial services and products

Virtual banks need to build feasible, desirable and viable digital products that customers will want. This starts with an iterative design process that involves continuous prototyping, validating and testing to ensure usability. It also means developing products that are agile and scalable as the bank evolves and grows, especially as new regulations are introduced and new standards must be met.

Furthermore, through a unified cross-platform experience, virtual banks can ensure a seamless user experience between mobile and web apps. This ensures greater customer satisfaction.

Data-driven decision making and risk management

Virtual banks can leverage alternate data and AI to draw more accurate insights on a customer’s credit risk when lending. The access and analysis of additional data increases financial inclusivity for customer segments who normally go underserved or entirely unserved, helping virtual banks make a real impact on society.

On the other hand, data can also help optimize customer experiences. Business intelligence and better data collection systems allow for the right insights to create personalized experiences, and can empower better strategies for the future.

Greater efficiency through automation

Automated processes allow virtual banks to limit manpower, increase precision, and run more efficiently. Cutting down on mundane, repetitive tasks, virtual banks saves valuable time and resources while eliminating error and bias, saving manpower for the customer interactions that require a special, human touch.

When integrated into effective product design and robust infrastructure, automation powers competitive financial services. Virtual banks can offer 24-hour banking, with faster applications to open accounts, and more effective processes for debit and credit card approval.

A new day for the financial industry

The arrival of virtual banking in Thailand will increase competition in the financial sector, and will increase customers’ expectations of their banks.

However, the financial industry can benefit a lot from the changes virtual banking will bring. Digital transformation in banking processes, systems, and services can improve how traditional banks run, as well as their relationships with current and potential customers.

Find out how Seven Peaks Software can support your business goals and drive your successes from ideas to digital products here.

Valentin Caudan, Lead of the Account Management Team at Seven Peaks Software

Valentin Caudan, Lead of the Account Management Team at Seven Peaks

With over 8 years of experience in technology research and consulting services, Valentin is passionate about helping clients achieve their business and technology transformation goals.

As the Lead of the Account Management Team at Seven Peaks Software, Valentin works with clients, partners and internal teams to build solutions that deliver strong business impact to organizations and drive change.

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