Thailand Cautious of Digital Banks

Thailand is embracing the digital economy along with its Southeast Asian neighbors, but the country remains wary of the potential risks that come with these advancements.

Here are some of the threats and how they’re being managed:

• Cyberattacks, breaches, and fraud. Unauthorized individuals might gain access to private user information, which could lead to security dangers and financial losses. To mitigate these risks, the country has implemented know-your-customers (KYC) measures and anti-money laundering (AML) processes.
• Lack of financial inclusion in the region. A large portion of Southeast Asia’s population remains unbanked, and even those who have access to banking services may lack the financial literacy to fully utilize them. To address this, Thailand has established regulations to ensure the presence of consumer protection, data privacy, and transparency in lending ventures.
• Financial instability of some digital banks. This may put clients at risk, if banks are not financially sound. To ensure that operations are seamless and able to withstand financial burdens, it is important to have an established risk management system in place and a well-defined business plan.

The Bank of Thailand (BoT) is taking steps to ensure that digital banks are well-regulated. In 2024, the BoT will be issuing three licenses for digital banks, and all applicants will be evaluated based on their financial status, among other factors.

During their first year of operation, the banks will undergo a “restricted phase” to assess their liquidity and capital adequacy.

While Thailand is embracing the digital economy, the country remains vigilant in managing the potential risks that come with these advancements. Through well-defined regulations and established systems, the country aims to ensure a secure and inclusive digital financial system for its citizens.