Virtual banks: An earthquake in Thai banking landscape?
Five consortiums are vying for three virtual bank licences this week as Thailand enters new era of digital disruption in financial services
With only days left before the application window for Thailand’s new virtual banking licences closes on Thursday (September 19), traditional banks are downplaying the potential impact of new competitors.
Five consortiums are reportedly vying for the three virtual banking licences being issued by the Bank of Thailand, with services expected to be up and running by mid-2026.
However, of the dozen or so major banks in Thailand, only three – Krungthai Bank, Bangkok Bank and SCB – have shown interest in the bidding process.
Traditional banks point out they are already offering mobile banking, and argue that the difference between them and virtual banks is minimal.
Kattiya Indaravijaya, CEO of Kasikornbank (KBank), said the bank is not interested in the licence application, as virtual bank services do not differ significantly from those already offered by commercial banks. KBank is also expanding its services to groups with limited financial access via digital subsidiaries that operate in similar ways to virtual banks.
The new virtual banks are expected to serve two market segments: the estimated 63% of Thais who are unbanked (18%) or underbanked (45%) and small and medium enterprises (SMEs) who face barriers to obtaining loans from traditional banks.
The nation’s 2.9 million SMEs form the backbone of the Thai economy, accounting for 99% of all businesses and creating 9.7 million jobs. However, many have complained of difficulty obtaining credit from traditional lenders. Virtual banks are expected to help plug this gap.
Another traditional lender unfazed by the virtual competition is Kiatnakin Phatra Bank (KKP). CEO Apinan Klaewpatinont said the bank had not applied for a virtual licence, as traditional banks already provide the digital functionalities offered by virtual banks.
However, he sees the entry of new market players as a positive development.
“The large banks are already competing, and more competition is seen as beneficial because it increases diversity in marketing, product benefits, and innovation. Despite this, digital banking services are already in place and not significantly different from virtual banks,” Apinan said.
‘Virtual banks benefit entire system’
Sakchai Peechapat, CEO of TISCO Group, said the introduction of virtual banks will enhance access to financial services for underserved groups that traditional banks currently cannot reach. Thus, the public will benefit from the addition of more service providers and technological advances, which will improve financial access for the unbanked and underbanked.
Accelerating digital upgrades
He also believes the rise of virtual banks will compel traditional banks to adapt and enhance their digital services to remain competitive.
Lending to small, high-risk segments is a challenge that both traditional and virtual banks must address. If virtual banks can lend to small borrowers more effectively, it will directly benefit consumers, he said.
TISCO Bank is not interested in obtaining a virtual bank licence, believing its current services are comprehensive and effective in reaching various customer groups through its branches.
Virtual banks: High investment and risk
Applicants for a virtual bank licence must have a minimum capital of 5 billion baht.
Experts point out that the underserved market targeted by virtual banks comes with extra challenges and risks.
“If lending to underserved markets is 10 times riskier than traditional lending, virtual banks will need 10 times their initial capital, amounting to at least 50 billion baht,” Sakchai said. “This represents a massive investment, and returns in the short to medium term may not be immediate. Thus, some banks are hesitant to enter this market.”
Undaunted by the challenge, five consortiums have reportedly prepared bids for virtual bank licences.
These are SeaMoney Thailand, which operates ShopeePay and SPayLater; SCB X, Siam Commercial Bank’s holding group; Charoen Pokphand (CP) Group, under TrueMoney; Gulf Energy in partnership with Krungthai Bank; and VGI in partnership with Bangkok Bank.
