(Bloomberg) -- Thailand’s largest commercial banks and firms backed by the nation’s top billionaires are in race for the first batch of virtual bank licenses for which applications closed on Thursday.
SCB X Pcl, Bangkok Bank Pcl, Gulf Energy Development Pcl, Krung Thai Bank Pcl and Charoen Pokphand Group are among the bidders for an unspecified number of permits to be jointly issued by the Bank of Thailand and the Ministry of Finance.
Singapore-based e-commerce giant Sea Ltd. said it has formed a strategic alliance with Bangkok Bank, BTS Group, Saha Group and Thailand Post to apply for a virtual bank permit. The consortium will leverage each company’s strengths to offer innovative and compelling digital financial services, focusing on improving access to financial services for underserved segment, according to a Sea spokesperson.
The central bank will announce the winning bidders in the first half of next year and grant them one year to start services.
Thailand is opening its banking industry to greater competition in a bid to ensure easier access to loans for borrowers not covered by existing lenders. The nation of 66 million people is following similar moves by other Asian countries where digital banks are already up and running.
“The Thai banking industry is unlikely to have a significant transformation with the new virtual banking licenses,” said Adisorn Mungparnchon, an analyst at Phillip Securities (Thailand) Pcl. “The new permission is the way for them to expand into untapped customers, which could complement their traditional businesses.”
New technology and the digital platform will allow virtual banking operators to reach “underserved customers”, who otherwise face some hurdles in getting access to banking services, Payong Srivanich, president of Krung Thai, said this week. Easier access to financial services will benefit the overall economy, said Payong, who is also president of the Thai Bankers’ Association.
Billionaire Dhanin Chearavanont’s CP Group in March revealed its interest in a new virtual banking license and plans for a joint bid with partners such as China’s Ant Group. Gulf Energy, backed by tycoon Sarath Ratanavadi, too is seeking permission to offer branchless banking services in Southeast Asia’s second-largest economy with partners including Krung Thai and PTT Pcl.
SCB X has formed a consortium including China’s Webank and South Korea’s KakaoBank for the virtual bank license, the group said in March.
--With assistance from Olivia Poh.
(Updates with Sea Ltd.’s bid in third paragraph.)
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