The Bank of Thailand and Ministry of Finance latest Financial Sector Master Plan is expected to make real Digital Banking by 2020 | Techsauce

The Bank of Thailand and Ministry of Finance latest Financial Sector Master Plan is expected to make real Digital Banking by 2020

ดร.วิรไท สันติประภพ (กลาง) ผู้ว่าการ ธปท. และนางทองอุไร ลิ้มปิติ (ขวา) รองผู้ว่าการ ด้านเสถียรภาพสถาบันการเงิน ธปท.

Another good news for Financial Technology or FinTech in Thailand as the Cabinet has, on March 22, approved the Financial Sector Master Plan Phase III (FSMP III), jointly proposed by the Ministry of Finance (MOF) and the Bank of Thailand (BOT) running from 2016-2020.

The FSMP is part of the BOT’s three main strategies which includes the FSMP it self along with the Capital Account Liberalization Master Plan and the Payment Systems Roadmap which sits at the hearts of the Digital Economy development.

The plans were established under four pillars including “competitive, inclusive, connected and sustainable”.

“The Financial Sector Master Plan Phase III will set the course and the strategy for the BOT which wanted to pushes BOT’s and other government agencies’ policies in one direction in order to develop the country’s financial sector to match with the ever changing economic environment, the development of global financial system, the development of the capital markets and to coincide with the development plans for the country’s economy,” saidBOT’s governor, Dr Veerathai Santiprabhob.

Tongurai Limpiti, BOT’s Deputy Governor of its Financial Institutions Stability revealed the structures for the Financial Sector Master Plan Phase III into six factors, which include:

  • Depth
  • Stability
  • Competitiveness
  • Efficiency
  • Accessibility
  • Infrastructures

The four main policies that will support the main thought processes of competitive, inclusive, connected and sustainable are:

  1. Promote electronic financial and payment services as well as enhance efficiency of Thai financial system (Digitization & Efficiency) by supporting financial service providers to develop infrastructure and offer financial products and services that meet customers’ needs. In addition, the adoption of electronic transaction will be encouraged through the enhancement of financial literacy, customers’ trust and confidence, as well as pricing mechanism. At the same time, BOT will support the National e-Payment Plan, initiated by the government. Furthermore, financial service providers will be encouraged to establish automated internal working process and integrated IT system to improve operational efficiency. An industry-shared infrastructure and fraud monitoring system for managing cyber risk will also be promoted. Regarding the promotion of efficiency and stability of financial system, BOT will assess and consider the role of both existing and new players to ensure that the financial system remains robust and resilient and able to facilitate sustainable economic development. The BOT will also assess an appropriate financial landscape and consider the role of both existing and new players to ensure that the financial institutions system remains robust, resilient, efficient, as well as being able to facilitate financial and economic growth of the country.
  1. Support regional trade and investments linkage (Regionalization) by enhancing Thai financial system capacity to facilitate the integration of trades and investments in the region, including ASEAN Economic Community (AEC) and Greater Mekong Subregion (GMS). Key measures will include the establishment of Qualified ASEAN Banks (QABs), and the development of shared financial infrastructure and suitable financial environment among neighboring countries to foster regional trade and investment.
  1. Promote financial access (Access) so that individuals and businesses at all sizes (small, medium, and large corporate) are able to appropriately and widely access financial services. BOT will encourage service providers to offer financial products and services appropriate for changing customers demand, especially for aging people. At the same time, access points of services across the country will also be increased. In addition, improving SMEs database will enhance SMEs’ access to credit. The support of relevant financial institutions on credit extension to SMEs will also be promoted. Moreover, BOT will cooperate with related organization to promote market- base financing and create suitable environment for private sector’s capital raising.
  1. Develop relevant infrastructure (Enablers) in order to fulfill FSMP III’s vision. Key infrastructures include financial professional development, financial literacy and consumer protection, and legal infrastructure that enhance risk management and operation of financial institutions. In addition, regulations and supervisions will be strengthened to comply with international standard to ensure the stability of financial system.

The implementation of FSMP III will widely benefit the Thai economy and financial system leading to inclusive growth. Individuals and businesses will be able to access financial services and credit through diverse channels with undistorted price. This will create opportunities for business expansion, better jobs, education, and quality of living. At the same time, continuous promotion of financial literacy will lead to efficient financial management and appropriate choice of financial product by households and businesses. Consumer protection measures and financial institution supervision conducted by BOT will also help ensure the safety and soundness of the financial system.

After the FSMP III is fully implemented, the intended outcome for the Thai financial system will be as follows:

  • Competitive: Thai financial institutions are competitive in both domestic and international markets by having low operating cost, wide range of products and services with affordable price.
  • Inclusive: Individuals, SMEs, and Large corporate can appropriately and widely access financial services in line with their needs.
  • Connected: Thai financial institutions play important roles in the region with more financial services provided to support regional trade and investment.
  • Sustainable: Thai financial system is robust and ready to support the country’s economic growth as well as promoting sustainable economic well-being.

The benefits from the perspective of stakeholders include:

  • Financials institutions, including commercial and non-commercial banks, will gain more stability with better risk management program while opening up a channel for at least one Thai commercial bank to be large and competitive enough in the regional level. Any financial institution that has an all rounded Digital Banking technology with many financial services will be able to answer all of customer needs and there will be no more need to go to bank branches in the future. The BOT, as regulator, will have to update its regulations to match with international standard in the progress.
  • The people and businesses want Banking Anywhere, Anytime on Any Devices to create equality in term of access to all types of financial services no matter if it is an individual or a corporate.
  • There will be less operational cost for the overall economic activities and this will life the country’s competiveness.

“To sum-up in one sentence then the highlight is that, “Digital Banking has to exist”. Without it we will not be able to compete. If we can do it, all the other things that have been mentioned will come true including lowering costs, increasing capability, improving financial access and many other things that will follow,” Tongurai concluded.

Source: ThaiPublica, Bank of Thailand

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