Factors key to success of virtual banks illuminated

Innovative, personalised financial services powered by artificial intelligence’s (AI) native capabilities and alternative data scoring are the keys to success for virtual bank operators in Thailand, according to a recent forum.

- SUCHIT LEESA-NGUANSUK

“Virtual banking will be the business of the future, not only for Thailand, but also for SCB X Group,” Manop Sangiambut, chief financial officer of SCB X Plc, said earlier this week at the “Thailand Focus 2025” seminar organised by the Stock Exchange of Thailand.

SCB X is the holding company of Siam Commercial Bank.

Despite high mobile banking penetration in Thailand, a large percentage of the population is underbanked or underserved, he said. The market is likely large enough for three virtual banks to succeed, said Mr Manop.

The Finance Ministry recently approved three applicants seeking to establish the country’s first virtual banks. They are ACM Holding Co (TrueMoney), backed by CP Group; Krungthai Bank, collaborating with Advanced Info Service and PTT Oil and Retail Business Plc; and the SCB X consortium, which includes South Korea’s KakaoBank and China's WeBank.

He said these partners are successful because of their innovative, user-friendly, and hyper-personalised products, creating an “overwhelming” experience that is distinct from current mobile banking apps.

A virtual bank must be AI-native from front to back office, deploying technology and a team with an Al-native strategy from the outset, avoiding the legacy system issues of incumbent banks, said Mr Manop.

Another critical factor is achieving a significantly lower cost-to-serve and cost-to-income (CI) ratio compared with traditional banks.

KakaoBank has a CI ratio of 30%, while WeBank’s is less than 30% and SCB's is less than 40%.