Thailand’s Virtual Bank Licenses: Opportunities and Challenges Ahead

Virtual banks, financial institutions that operate entirely without physical branches, are redefining the future of finance. By offering services exclusively through digital channels, they promise enhanced accessibility, reduced operational costs, and personalised user experiences that legacy banks often struggle to match.

While the virtual banking model has gained substantial traction globally, Thailand is now making a decisive entry with a well-structured regulatory framework. The country aims to leverage virtual banking as a catalyst for digital transformation and inclusive financial access.

Globally, virtual banks are disrupting traditional financial ecosystems. The United Kingdom is home to prominent digital banks such as Monzo, Revolut, and Starling Bank, which offer everything from multi-currency accounts to cryptocurrency trading. South Korea’s KakaoBank capitalised on its integration with a dominant messaging platform to achieve profitability within three years.

In Hong Kong and Singapore, regulatory support has enabled the rapid rise of digital banks like ZA Bank, Mox Bank, and Trust Bank, which have already begun scaling regionally. These examples highlight the potential of virtual banks to deliver agile, customer-focused solutions in mobile-first economies.

The impact of virtual banks is evident across financial inclusion, competition, and innovation. KakaoBank, for instance, became one of South Korea’s largest retail banks by customer base, significantly expanding access to credit for younger and previously underserved demographics. Hong Kong’s eight licensed virtual banks introduced fee-free accounts, instant onboarding, and 24/7 availability, compelling traditional banks to modernise. Similarly, Trust Bank in Singapore surpassed 600,000 users in its first year, providing seamless digital services and promoting sound financial habits. These global experiences suggest that virtual banks can widen access, lower transaction costs, and accelerate the evolution of the banking industry.

If designed inclusively, virtual banks can reach unbanked populations, empower SMEs, and enable responsible lending models that bypass the limitations of brick-and-mortar networks.

Despite the promise, challenges remain. Navigating regulatory environments is often complex, especially for operators with cross-border ambitions.

Cybersecurity remains a significant concern due to the fully digital nature of these platforms. Many virtual banks have also faced difficulty achieving early profitability, with customer acquisition costs often outweighing short-term revenues. Nonetheless, the potential for transformative impact remains particularly strong in emerging markets where mobile penetration is high, but access to formal financial services remains limited.

Thailand’s recent move to allow the establishment of virtual banks marks a turning point in its financial services industry. In March 2024, the Bank of Thailand (BoT) issued Notification No. SorNorSor. 1/2567 (Ministry of Finance Notification: Rules, Procedures, and Conditions for the Application for and the Issuance of a Virtual Bank License). This regulatory framework sets the foundation for digital-only banks to enter the Thai market, aiming to promote innovation, healthy competition, and access to finance for underserved populations such as low-income households, gig workers, and micro-enterprises.

According to the BoT framework, a virtual bank must be a public limited company operating exclusively through digital platforms. Only groups of applicants (including juristic persons) with a shared intention to establish a virtual bank may apply, and they must collectively hold all issued shares. These applicants must also demonstrate proven experience, financial strength, and technological capability aligned with the proposed business model.

A minimum registered capital of THB 5 billion is required, which must be increased to THB 10 billion within five years. While operations must remain fully digital, exceptions such as the use of ATMs or agents may be granted with explicit BoT approval. New licensees will begin in an initial operational phase, during which certain supervisory rules may be relaxed. Full transition to standard oversight will follow once readiness is demonstrated.

The regulation also outlines governance standards, including definitions for significant shareholders (those holding over 10%) and principal shareholders (those holding 20% or more). Any changes in these shareholder roles require prior BoT approval. Virtual banks must comply with all existing governance and prudential standards applicable to traditional commercial banks, with additional oversight tailored to digital operations.

The licensing process is being conducted in a phased and transparent manner. It began with a public consultation from January 12 to February 12, 2023. The application window opened in Q2 2023 and closed after six months. The BoT is currently reviewing submissions, with a final shortlist to be approved by the Ministry of Finance. If all goes according to plan, Thailand’s first virtual banks are expected to launch by Q2 2025.

Key milestones include:

• Q1 2023: Public hearing and drafting of the framework

• Q2 2023: Licensing application period (6 months)

• H1 2024: Application review by BoT and Ministry of Finance

• Q2 2024: Announcement of successful license holders

• Q2 2025: Launch of operations by approved virtual banks

Photo Credits: BoT, Bangkok Post

Three major consortiums have already emerged as leading candidates. SCBx, in partnership with KakaoBank, intends to bring South Korea’s digital banking expertise to Thai consumers.

A second group led by Krungthai Bank, AIS, and Gulf Energy aims to combine banking, telecom, and infrastructure capabilities into a national digital platform.

A third contender, comprising TrueMoney and Jaymart, seeks to integrate payments and retail technologies for mass-market appeal. Each consortium brings a distinct proposition but shares a common vision of financial inclusion and digital transformation.

Although the initial licensing round is capped at three operators, there is likely to be a second phase based on market performance and regulatory assessment. New entrants can still participate indirectly by partnering with licensed virtual banks, offering technology, embedded finance, or digital infrastructure solutions. As the market matures, the BoT may also consider thematic or niche licenses tailored to specific sectors or underserved segments.

Thailand’s virtual banking initiative is not merely a technological upgrade; it represents a systemic evolution in the delivery of financial services. If implemented effectively, this initiative has the potential to position Thailand as a regional leader in digital finance, expanding economic participation and setting new benchmarks for inclusive banking in Southeast Asia.