BOT holds public hearing on revise draft regulations for virtual banks

The Bank of Thailand (BOT) announced on its website that a public hearing is being held from Monday (June 19) until July 4.

A virtual bank will offer banking services only through electronic channels. All services of virtual banks are offered online without any physical branches.

The BOT said the draft regulations that are placed for the public hearing have been revised from the first draft which invited public responses from January 12 to February 12 this year.

The BOT said the first draft of regulations for considering and approving virtual banks received a lot of public opinions during the first round of hearing and the BOT had revised the draft based on the feedback.

The central bank said it wanted to see virtual banks lead to fair competition among the operators.

It said it would like the virtual banking operators to provide tools and convenience to clients in case they wanted to switch over to other virtual banking operators.

The customers must be able to transfer their own data to the new operator in line with the open data policy of the BOT.

The central bank added that the revised guidelines would not allow operators to block clients from transferring their data to other operators to open accounts.

The revised guidelines set the following key qualifications for virtual bank operators:

Good governance: Executives and directors or advisers of a virtual bank must not hold positions in another financial institution at the same time to prevent conflict of interest. This will allow the executives to devote their time to the management of their virtual bank.

IT qualifications: A virtual bank must be built on a flexible and secure IT system. The core IT systems must not be shared with other financial institutions' core systems, such as core banking, mobile banking or Internet banking system. This will prevent contagion risks and cyber-threats and leakage of data.

Data governance: An applicant to set up a virtual bank must be able to demonstrate its data governance capability and capability to develop online banking systems to provide convenience for its clients.

The central bank said it would consider approving virtual banking operators based on their sustainable capability to meet requirement.

The draft also states that a virtual bank will be prohibited from changing its core shareholders during the first three to five years of operation unless it receives permission from the BOT.

After the second round of hearing, the BOT will submit the draft regulations to the Finance Ministry for deliberations within July.