In the last five years, the rapid development of information technology has resulted in a significant transformation of the economy, consumer behavior, and financial Thailand. The Bank of Thailand (BOT) has supported the adaptation to the digital age in financial institutions. Through supporting the development of infrastructure of critical digital economic systems such as PromptPay, QR code standard, and digital identity verification system. as well as developing other supporting mechanisms such as Regulatory Sandbox and adjusting the rules to make it easier for cloud based digital banking solutions institutions to provide services through digital channels; as a result, both consumers and economic operators can quickly adapt to the digital age. This was partly reflected in the volume of transactions made through online channels, especially mobile banking, which accelerated exponentially. Along with the gradual elimination of physical service points (such as branches and ATMs), new financial products rely on information technology and alternative information to provide full-service digital services, such as digital personal loans. began to play a more significant role.
In addition to domestic developments, the Bank of Thailand has closely monitored the development of the financial system abroad and found that regulators in many countries have allowed the establishment of new commercial banks. To take advantage of the development of information technology and alternative information systems by establishing a Digital-only bank or Virtual bank, a branchless commercial banking and financial services app development that provides services through digital channels throughout the service process. With those regulators stipulating that virtual banks vary in their purpose and context in each country, a virtual bank may be an alternative. That helps meet the needs of the digital adaptation of the Thai financial economy. Still, to allow the establishment of A virtual bank that can be adequately established in Thailand, it is necessary to consider the objectives, impacts, and risks all around.
The virtual bank service model
A virtual bank or Digital-only bank means a commercial bank that operates on a fully digital channel. The important characteristics are
- there is no physical location(such as branches and ATMs), but a head office can be established; and
Providing financial services through digital channels throughout the service process and starting from getting to know the customer (KYC), accepting deposits. Until the service other financial such as credit Transfers and payments and investments. Customers can use the service, inquire or complain about the service via digital channels provided by Virtual banks.
A virtual bank accepts deposits and is licensed to operate a commercial banking business. Unlike other digital financial services such as (1) Peer-to-Peer lending, which has a platform acting as an intermediary for matching borrowers and lenders, (2) Crowdfunding, which has a platform. Intermediary functions to help match fundraisers and investors; and (3) Decentralized Finance (DeFi), a non-intermediary financial service.
In addition to the characteristics and services described above, virtual bank differs from traditional commercial banks in that most conventional commercial banks use the Core banking system. from the old technology Lack of flexibility to connect to other systems or not be able to adjust to meet needs business efficiently (Legacy system).
Although at present, many traditional commercial banks have restructured their work systems to support digital financial services but still exists in two primary forms :
(1) the provision of Internet/Mobile banking services by using the original Core banking system in parallel with the provision of Low code ISV Banking and financial services at the branches of service points; and
(2) Internet/Mobile banking services on newly developed Core banking system But it still uses other existing infrastructure (Figure 1), which is an important starting point for providing digital financial services to consumers. Consequently, commercial banks still face obstacles regarding flexibility in their operations. Internal resource management, including some regulatory restrictions.