Thailand is laying the foundations for standalone digital banks as it strives to catch up with other Asian markets, according to its central bank governor.
"At this stage, Thailand might not have the ecosystem ready like in Singapore or Hong Kong, where the digital banking system is in better shape," the Bank of Thailand's Veerathai Santiprabhob said in an interview.
Mr Veerathai said three key pillars are needed to build digital banks: data from non-financial sources, an electronic identification system, and a suitable regulatory framework.
Thailand is stepping up its efforts to ensure these reach international standards, he said.
The authorities in Thailand are trying to keep pace with the digital banking transformation in Asia, where new entrants are emerging to compete with established banks such as HSBC Holdings. For Thailand, digitisation is seen as a way to spread banking services more widely as well as boost competition.
"When we talk about digital banking licences, we want to have a new financial services provider that can serve the currently underserved, meaning that you have to be able to meet the needs of people on the street," Mr Veerathai said.
Singapore is set to issue as many as five digital banking licences to non-banks in June, while eight virtual lenders are starting in Hong Kong this year. Both cities have attracted technology heavyweights, including Chinese billionaire Jack Ma's Ant Financial and mobile phone maker Xiaomi Corp.
While Thailand lacks independent virtual banks, local and foreign lenders do offer various digital services in the country, including payments. Singapore's UOB started its first mobile-only bank, known as TMRW, in Thailand last year.
Still, more digital banking services are needed in Thailand, Mr Veerathai said. Existing ones are limited mostly to fund transfers, and lending is "a big challenge" because there is insufficient data to help banks evaluate clients' creditworthiness, he said.
"This can come from when customers use mobile phones, the way they conduct their business using the digital footprint ecosystem," he said.
The Bank of Thailand is working with various parties to introduce electronic lending and other financial services this year, Mr Veerathai said, without giving details. More collaboration between government agencies is key, the governor said.
"It cannot be the central bank alone," he said.