In 2020, going digital is no longer a choice. Financial institutions, in particular, are waking up to the benefits that digital transformation affords.
For example, digitalisation boost convenience with regards to accessing, editing and storing files which, in turn, boost employee productivity and overall company efficiency.
Thailand understands the usefulness and necessity of technology in the financial sector 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, digital licenses will shake up the banking scene in the country by introducing new players into the market.
This move will open up Thailand 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.
It was noted that 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.
Bank across the world 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.
The CEO of one major local bank stated that it is difficult to predict the success of digital models as they heavily rely on the local regulatory decisions.
Meanwhile, the Co-President of another local financial institution stated 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.
According to an earlier OpenGov Asia article, a digital asset exchange has become one of only a handful of businesses authorised to provide cryptocurrency exchange services in Thailand.
The company is focused on providing retail and institutional investors with the ability to invest securely in cryptocurrencies.
This is after the nation’s Ministry of Finance and the Securities and Exchange Commission (SEC) granted them the first digital asset exchange licence of 2020.
The CEO and Co-founder of the Thailand branch of the company stated that the company believes that being a regulated entity will help provide trust to newcomers looking to enter the digital assets market.
Active Regulation
Thailand has been active in recent years forming a legal structure for digital currencies and tokens, with an emphasis on initial coin offerings (ICOs) and digital exchanges who need to comply with KYC/AML procedures and implement strict levels of IT security.
With exchange operations already established in Singapore, Australia and Indonesia, the expansion into Thailand will mean the new arrival will now facilitate fiat-to-crypto pairings in THB, USD, SGD, IDR and AUD.
The firm’s advisory board are thought to have been instrumental in guiding the company through Thailand’s legal landscape and include a former chairman of Stock Exchange Thailand, the Vice Minister to the Deputy Prime Minister of Thailand, and the Corporate Affairs Specialist of True Corporation Plc.
It was noted that digital currencies and securities are emerging asset classes for both the banked and unbanked. It is an interesting time in Thailand’s financial history, and industry experts are glad that Thai regulators are working with exchanges to build regulatory frameworks for these new technologies to operate within.
So, it will take some time to properly gauge the success of the going digital initiative in Thailand’s financial industry.
However, Thailand is evidently making the right move in being sensitive to emerging trends and technologies and acting on them quickly.