In Southeast Asia, technological innovation
is rapidly changing the financial services industry. Enabling factors such as
steady economic growth, a large population and youthful demographics, a rapidly
expanding internet and smartphone penetration, and the proactive stance of a
number of national regulators have led investors to direct approximately US$1
billion into the financial technology (FinTech) sector since 2013.
Thailand in particular is well-positioned
to capitalize on the new developments in FinTech. The country has seen rapid
growth in mobile and internet penetration, with internet access increasing from
percent of the population in 2017 to 84
percent a year later.
Thailand also has one of the strongest
regional track records in improving access to finance, with 97 percent of the
population either banked or with access to formal financial services offered by
other providers. More fundamentally, perhaps, Thailand has the largest number
of software and app developers among the Association of Southeast Asian Nations
Recognizing the promise of FinTech
innovations for access to capital and financial inclusion more broadly, the
Bank of Thailand (BOT) has taken a leading role in creating an enabling
environment for FinTech expansion in Thailand. This work has included organizing
the 2018 Bangkok FinTech Fair, advancing a National e-Payments Master Plan, and
establishing a FinTech regulatory sandbox.
Given that social commerce has been booming
in Thailand at the moment, Fintech companies are coming up with even more innovative
technology that not only benefits the financial sector but also the social
As Thai consumer’s behaviour enters the
digital savvy era, FinTech start-ups are able to innovate and come up with new
financial services that will better serve consumers or even solve existing
problems. For instance, nowadays most online vendors do not own an official
payment system for their customers. Most of the time, online purchases in
Thailand are completed via contacting merchants via instant messaging
applications such as Facebook Messenger and LINE.
Afterward, consumers would have to leave
the chat application to transfer money then return to the application to send
the proof of payment. As a result, the process still requires several
procedures and consumes time. This is a gap for FinTech to innovate or offer
new services as a solution to enhance the payment services or best seek the
system that will best fit consumers’ way of life.
Blockchain is a type of technology that has
a heavy influence over the FinTech industry. A blockchain is a digitized,
decentralized, public ledger of
all cryptocurrency transactions.
Constantly growing as ‘completed’ blocks (the
most recent transactions) are recorded and added to it in chronological order,
it allows market participants to keep track of digital currency transactions
without central recordkeeping, thus making communication easier.
The prospects of Blockchain does not stop at FinTech, but also extends to other
businesses such as the tourism industry, organizations, or social commerce
which is the use of social media for increasing efficient trade. Thailand has
begun to adopt Blockchain in different industries such as finance, energy,
retail, and the government.
The Governor of the Bank of Thailand,
Santiprabhob, announced that Thailand plans to use blockchain
technology to improve existing banking applications. The technology is gaining
momentum in Asia. Santiprabhob made the plan public at the Nomura Investment
Forum in Singapore.
A new approach to interbank settlements is
also being developed by the Bank of Thailand (BoT). BoT is toying with an idea
to utilize commercial Central bank digital currency (CBDC) to explore
applications and implications for operation. The aim is to develop a faster and
cost-efficient transfer and validation system by removing third parties that
exist in such operations today.
The easy acceptance of blockchain technology
by Thailand does not mean that they are changing their stance on
cryptocurrencies. All businesses dealing with cryptocurrencies should register
with Thailand’s Security Exchange Commission within 90 days.
Thailand remains optimistic about the
potential growth of their Fintech industry as it is in line with the Thai
Government’s Smart Nation objectives.