Bank of Thailand deliberates over regulating fintech businesses

Bank of Thailand (BoT) has announced that it has considered more fintech regulation in Thailand in order to prevent systematic risk to financial stability and ensure consumer protection.

The BOT governor cited saying that regulations need to be in place to prevent systemic risk to financial stability as there is an expansion in the fintech businesses, a Thailand media reported. He called for fintech firms to be registered with the central bank as an initial step in building fintech-specific regulatory framework.

"The businesses using fintech need to be regulated," Bank of Thailand governor Veerathai Santiprabhob said. "Fintech services have generated new risks, so consumer protection and supervision of service providers have to be sufficient. Consumers might neither be familiar with many aspects, such as technological services, risks nor the regulatory framework, so safeguarding consumer rights is an important issue."

Among financial institutions, a system for business to verify the identity of clients will be put into practice. Apart from this, a standard on payment by Quick Response Code is expected in the final quarter.

“The Payment System Act, which supports and supervises electronic transactions, has received cabinet endorsement and is being considered by the Council of State. It is expected to be approved by the National Legislative Assembly soon,” he added.

P2P lenders will be allowed to become members of National Credit Bureau (NCB) that will make them access the credit information of consumers’ for loan risk assessment and the procedure is waiting for the approval from Finance Ministry.

The central bank said that the fintech regulations will not be too stringent since this would hinder innovation. Also, a regulatory ‘sandbox’ would be implemented for supervision of fintech businesses. With this sandbox, businesses can test innovative products, business models, services at the same time ensure consumer protection.

"This is the first year that the Bank of Thailand has received requests for the closure of bank branches rather than expanding them," Veerathai said. "This reflects a change in how financial institutions have tried to reduce costs for service operations and technology undoubtedly will play a greater role."

The BoT also has plans to join the Thai FinTech Club in order to help foster development.