The decision to only award three digital bank licenses aligns with the BoT’s overall conservative approach to digital banks. The BoT has had time over the past five years to observe how online lenders have developed in neighboring economies. It has seen how Hong Kong allowed eight digital banks – likely more than the market can sustain in the long term. It has likely concluded that there is no drawback to starting off with fewer licensees – it can always permit more in the future.
Several familiar faces have thrown their respective hats in the ring ahead of the deadline. The first is a consortium made up of Hong Kong’s WeLab Bank and Thai payments firm Lighthub. The latter is licensed by BoT and four other central banks in Asia and Europe and processes more than US$10 billion in funds annually. WeLab has 65 million users in Asia and has disbursed about US$15 billion in loans thus far. Having previously expanded to Indonesia, WeLab now appears to be looking to deepen its footprint in Southeast Asia with a presence in Thailand.
Another familiar face is Sea Group, which seems intent on building a digital banking presence across the region. If it is successful in its bid for license in Thailand, Sea will have digital banks in four Southeast Asian countries also including its home market of Singapore, Malaysia and Indonesia. Sea is applying for the license in Thailand in a consortium that also includes conglomerate BTS Group Holdings, Bangkok Bank, goods manufacturer Saha Group and Thailand Post.
Other applicants for digital bank licenses in Thailand include consortiums respectively made up of SCBX and Kakao Bank; Thai conglomerate Charoen Pokphand Group (CP Group); and Gulf Energy Development, telecoms giant Advanced Info Service and Krungthai Bank. CP Group will apply for a digital banking license through its Ant Group-backed e-wallet TrueMoney. TrueMoney is the paramount node in the ecosystem of Ascend Money, which became Thailand’s first fintech unicorn in September 2021, achieving a US$1.5 billion following a US$150 million funding round.
The BoT will take its time deciding the winners of the bidding, with an announcement not expected until June 2025. The new digital lenders will then have a year to get their respective operations up and running.
The overall impact of the digital banks on Thailand’s financial services sector is likely to be moderate. The applicants all say they want to boost financial inclusion, but to really do so they will need to cater to a customer demographic with a higher level of default risk than the typical borrower at a traditional commercial bank in Thailand.