The Bank of Thailand (BOT) proposed guidelines for establishing branchless commercial banks (Virtual Banks) offering new financial services through digital channels, with the comment period ending on February 12, 2023.
The guidelines sets out a framework for establishing and supervising a new type of service provider, namely a virtual bank, which is in line with the guidelines of regulators in many countries. The guidelines ensure that a virtual bank should offer new financial services in a branchless manner through digital channels and provide access to financial services at a reasonable price to retail users and small and medium-sized enterprises efficiently. The guidelines enable virtual bank to develop responsible innovation and conduct business in a sustainable manner, without stimulating competition to the point that may lead to over-indebtedness or improper use of market power that may affect the stability of the financial system. The key highlights of the framework for establishing and supervising virtual banks are as follows:
- Allow virtual bank to operate a full commercial banking business, so that virtual bank is flexible and able to adjust its services to meet changing customer needs.
- Applicants for establishing a virtual bank must have appropriate qualifications, such as having a business model that can sustainably meet the above goals, and should have expertise in information technology digital service.
- Virtual banks must comply with the same regulatory criteria as commercial banks. BOT will supervise virtual banks according to their risk level and give importance to good governance and risk culture.
- Allow virtual bank to operate in the initial phase (phasing) according to the specified conditions under close supervision, so that the operation in the first period is stable and does not pose a risk to the system.
Based on responses to this consultation, BOT and the Ministry of Finance will prepare and issue criteria for establishing a virtual bank in the future. BOT hopes that a virtual bank will help meet the Green Line's sustainability needs—that is, it offers comprehensive financial services that meet the needs of each group of customers. especially underserved and unserved groups and create a good financial service experience for customers. Going forward, BOT expects to open the application for establishing a virtual bank in 2023 and announce the results of those who have been selected and approved by the Minister of Finance within 2024. BOT and the Ministry of Finance will continuously and closely monitor and assess the performance of virtual banks.
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