Virtual banks — a boon for Thai gig workers and SMEs, or market disruptors?

Clicx Bank, Thailand’s first virtual bank, will begin offering financial services from June 2, marking a giant step for the country into the digital era.

Two more virtual banks (VBs) are expected to receive their licenses from the Bank of Thailand (BOT) and the Ministry of Finance later this year and next year.

Their arrival raises an important question: will virtual banks disrupt traditional lenders while meaningfully improving access to finance for freelancers, self employed workers and small businesses that have long struggled to obtain appropriate services?

How a virtual bank works

As a fully licensed commercial bank, a virtual bank operates without physical branches.

Unlike traditional banks, it delivers services almost entirely through digital channels, mainly via mobile phones. This branchless model allows a virtual bank to avoid large upfront investments in fixed assets such as office buildings, as well as the ongoing maintenance and staffing costs that come with operating a nationwide branch network.

Virtual banks must instead invest heavily in information technology infrastructure. Robust systems are required to ensure seamless service, protect customer deposits and guard against various types of financial scams and cyberattacks.

By leveraging technology and data, virtual banks can typically operate with fewer staff, reducing cost per head while still aiming to provide services comparable to, or better than, those of traditional banks.

Meeting the needs of the underserved

According to the BOT, the country’s financial sector is undergoing a structural transition toward the world of digital finance.

Both financial institutions and non bank providers are shifting business models to focus on digital channels and data driven services that better meet the needs of different user segments.

Despite this progress, some retail customers and small and medium sized enterprises (SMEs) lack access to any financial services, or, the available services are not appropriate for their needs. These groups include low income individuals and very small businesses.

Even among those who already use digital financial services, there is room for more comprehensive, convenient and tailored offerings.

Within this evolving landscape, the BOT says it aims to support a digital economy and sustainable growth by encouraging the financial sector to use technology and data to develop innovative digital financial services. The challenge is to balance innovation with prudent risk management.

Solely digital channels

A key policy direction is the introduction of branchless commercial banks, or virtual banks, following international regulatory trends.

The main objective is to enable entities with expertise in data, technology and digital services to provide efficient new forms of financial services via digital channels.

This approach should lower costs related to staff and premises and improve the fit between financial products and the needs of different customer segments—especially retail users and SMEs that are currently underserved.

It should also improve the depth and convenience of services for those already using digital channels, according to the central bank.

At the same time, authorities stress that virtual banks must operate sustainably and should not intensify competition in a way that leads to excessive indebtedness or the misuse of market power that could threaten financial stability, depositors or consumers at large.

Conflict of interest?

The emergence of virtual banks has sparked concerns about potential conflicts of interest, specifically whether a VB might favor its founders or affiliated companies over ordinary consumers.

For instance, Clicx Bank’s founding shareholders include Krungthai Bank, Advanced Info Service PCL (AIS), and PTT Oil and Retail Business PCL, which are major players in the banking, telecommunications and energy industries, respectively.

Critics worry that such powerful conglomerates could shape products and pricing to benefit their own ecosystems rather than the broader public.

To address this, the BOT has set the criteria for virtual bank licensing stressing independence and fair treatment. Virtual banks must not grant undue benefits to affiliated firms, and the BOT has outlined restructuring options for applicants to prevent inappropriate favoritism and ensure that financial businesses are separated from the “real sector” of non financial operations.

Will virtual banks disrupt the financial market?

Executives at Clicx Bank present a more collaborative vision. Under the slogan “Bank in one Clicx”, the bank positions itself as a next generation fintech player offering a comprehensive digital financial platform designed for the lifestyle of Thai people. The stated aim is to make financial matters more accessible, secure, and equitable.

Clicx also plans to create a “new phenomenon” by introducing, for the first time among Thai banks, a feature that allows customers to choose their own account numbers.

To encourage savings, it will offer interest “in kind” in certain campaigns, such as rewards in the form of coffee cups or oil, instead of only conventional cash as interest.

Suporn Sunthornrohit, chief executive officer of Clicx Bank, recently argued that Thailand was entering a new era in its financial system. In her view, financial services must extend beyond simply providing bank accounts or basic services.

“Today, Thailand still has room to expand financial services to reach more people in a way that better fits real life, especially those with irregular income such as freelancers, self employed workers, or small business owners,” she said.

“Many of them have income, financial discipline and good spending behavior, but still cannot access suitable financial products or credit because they lack income documents or credit histories under traditional criteria,” she added.

Citing BOT data, Suporn noted that more than 63 per cent of people are unable to fully access financial services to their potential. Meanwhile, over 80 per cent of Thais have emergency savings that would cover living expenses for no more than six months.

These figures underscore the vulnerability of large segments of the population, particularly gig workers and micro entrepreneurs.

Suporn, however, downplayed fears of direct confrontation with existing banks. She assures that “VB will not disrupt traditional banks, but will be complimentary to it.”

In her view, virtual banks will fill gaps in the market, leverage data and digital channels to better serve difficult to reach segments.

What it means for banking industry

Experts are divided on the likely impact of VBs.

Nada Chunsom, an economist at the School of Development Economics, National Institute of Development Administration (NIDA), believes that virtual banks may not dramatically increase competition or efficiency in the local banking sector in the short run.

Adoption takes time, and consumers and businesses must build trust in fully digital services. However, she sees significant long term potential. As people adapt to digital banking and everyday life becomes more embedded in the digital economy, VBs could gradually reshape how financial services are delivered, priced, and targeted.

In contrast, former finance minister Thirachai Phuvanatnaranubala is more skeptical about the scale of change virtual banks can bring. He concedes that VBs may achieve “some success” in helping more people access financial services but doubts that the overall impact will be very large.

Thirachai instead urges the central bank to open the market further to major foreign banks to spur more competition.

“Should foreign banks compete for large corporate clients with local banks, it will force local banks to step into financial services to retail clients—gig workers, self employed and SMEs,” he argues.

He also contends that welcoming more foreign banks could enhance Thailand’s appeal as a regional financial hub, particularly at a time when instability in the Middle East may make Dubai a less attractive financial center.