Bank of Thailand considers issuing digital banking licenses
IT’S 2020, and financial institutions need to go digital.
Thailand understands that and wants to motivate the industry to adopt technology. As a result, the Bank of Thailand (BoT) has announced that it is looking into issuing licenses for digital banks.
According to the BoT’s Deputy Governor Ronadol Numnonda, digital licenses will shake up the banking scene in the country by introducing new players into the market.
This move has many benefits. Not only will it open up more opportunities for domestic players to gain access to various banking services, but also promote financial inclusion, prevent monopolization, and facilitate the healthy growth of Thailand’s financial ecosystem.
“In the digital era, the central bank needs to consider the overall banking landscape in the long term, and digital banks are an option. Whether digital bank licenses will be issued requires a more comprehensive study of all dimensions.”
Regardless of geographical locations, banks are quickly recognizing the value of going digital.
One of the greatest advantages of digital-only is that it allows banks to offer better rates and lower fees.
Costs can be drastically reduced by taking the ‘brick and mortar’ out of banking institutions, enabling banks to pay more attractive annual percentage yields (APYs) on savings.
Also, with a digital-only bank, consumers would no longer be plagued by a complex range of hidden or not-so-hidden fees, such as those for keeping an account open with a low balance, making direct deposits, or making payments through different channels.
However, the level of confidence in going digital is not the same amongst Thai banks.
Siam Commercial Bank (SCB) CEO Arthid Nanthawithaya noted that it is difficult to predict the success of digital models as they heavily rely on the local regulatory decisions.
Meanwhile, Kasikornbank Co-President Kattiya Indaravijaya said that banks are well-suited to go digital. The entity Indaravijaya represents will begin by improving digital platforms, enabling them to offer a wider array of financial services.
It will take some time before we can gauge the success of the going digital initiative in Thailand’s financial industry.
However, what is certain now is that Thailand is making the right move in being sensitive to emerging trends and technologies, and acting on them quickly.
This agility should be emulated by all, governments and businesses alike, to ensure that they can stay relevant in a constantly disrupted industry.