SCB X Plc is teaming up with KakaoBank of South Korea to set up a consortium to apply for a virtual bank licence from the Bank of Thailand.
SCB X, a financial technology conglomerate and holding company of Siam Commercial Bank, made the announcement on Friday after signing an agreement with KakaoBank, the largest digital bank in South Korea.
SCB X will hold the majority of shares in the consortium and KakaoBank will hold at least 20%. They plan to attract additional partners in order to promote greater competitiveness.
The agreement has been made in preparation for applying for a virtual bank licence from the central bank, said Arthid Nanthawithaya, chief executive of SCB X.
He said income inequality remains a big problem in Thailand, as many people cannot access financial services. Virtual banking is meant to serve this underserved segment, said Mr Arthid.
“Thai virtual banks will play a pivotal role in allowing the underserved population to access financial products and services conveniently and safely,” he said.
KakaoBank’s expertise and experience is in managing virtual bank businesses. The potential it provides in relation to financial technology should enhance SCB X’s competitiveness, said Mr Arthid.
By applying digital technology, avirtual bank could provide better access to financial services for lower-income earners, while reducing operating costs for the banking industry, he said.
Yun Ho Yong, chief executive of KakaoBank, said the collaboration with SCB X would benefit both Thais and its existing customers in Thailand and beyond. KakaoBank hopes to replicate in Thailand its success in the South Korean retail banking market, he said.
KakaoBank is the biggest mobile-first bank in South Korea. It has offered its digital banking service since April 2017.
A banking industry source who requested anonymity said competition for virtual bank licences is high. Many leading firms in the financial, tech and telecom sectors have expressed an interest in applying for a licence, including partnerships between Advanced Info Service and Krungthai Bank, and between Jay Mart and KB Financial Group, a South Korean financial services provider.
In addition, Charoen Pokphand Group is expected to join the fray.
The central bank postponed the issuance of virtual bank regulations from the first quarter until the third quarter of this year because it wants more time to clarify the new form of business licensing with related parties.
The regulator is offering just three licences for new business operations in the first round in line with its original plan.
