Thailand's Central Bank Pushes for Inclusive Digital Finance in ASEAN

 

The Bank of Thailand (BOT) is championing a bold strategy to foster financial inclusion across ASEAN by embracing open finance principles, a top official declared on Tuesday at the Money20/20 Asia. 

 

BOT deputy governor Roong Mallikamas outlined the central bank's "3 Opens" framework – focusing on open competition, open infrastructure, and open data – as the key to unlocking digital finance opportunities for the region's underserved populations.

 

Her address was given during her keynote presentation on the critical transition "From Open Finance to an Inclusive Digital Society" in the ASEAN region.

 

Highlighting the immense potential of ASEAN's burgeoning digital economy, projected to surpass $360 billion by 2025, Roong underscored the persistent challenge of financial exclusion.

 

"Our region, a vibrant mosaic of economies, presents an unparalleled opportunity for fintech innovation," she stated. "Yet, a significant portion of our population remains unbanked or underbanked. For instance, studies indicate that over 60% of adults in some ASEAN nations lack access to formal financial services."

 

Roong explained that these barriers often stem from limited data for credit assessment, a lack of transparency, and poor system interoperability, driving up customer acquisition costs for traditional banks.

 

She argued that fintech firms, with their agility and data-centric approaches, are uniquely positioned to bridge this gap.

 

Drawing on Thailand's experience, Roong detailed the evolution of their policy objectives, starting with the successful implementation of PromptPay, the national real-time payment system.
 

 

Initially focused on inclusion and stability, the BOT's strategy has shifted towards prioritising competition and efficiency. 

 

"Initially when developing PromptPay... Thailand focused on driving inclusion and maintaining stability," she explained. "Now, we emphasise competition and efficiency, recognising that smaller, agile players – fintechs and new entrants – are often better positioned to innovate."

 

This shift has led to the BOT's "3 Opens" strategic priorities:

Open Competition: Encouraging new players to foster innovation and enhance consumer choice.

Open Infrastructure: Promoting interoperability and seamless connectivity for efficient financial transactions.

Open Data: Facilitating data sharing and collaboration to drive the development of personalised financial solutions.

 

Roong elaborated on the rationale behind each pillar. Regarding Open Infrastructure, she acknowledged the initial restriction on non-bank participation in PromptPay as a "lesson learned," which, while ensuring stability and high adoption, inadvertently stifled innovation.

 

The BOT is now moving towards allowing non-banks to play a greater role, enhancing access for underserved groups.

 

On Open Data, Roong highlighted the "Your Data" project, aimed at empowering customers to securely share their financial and non-financial data with different service providers based on their consent.

 

"Open Data is not just about technology; it's a catalyst for financial inclusion," she asserted. "By enabling secure and seamless data sharing, we're empowering individuals and SMEs... to access tailored financial services."
 

 

These two "Opens" form the foundation for Open Competition, with the imminent launch of virtual banking licenses and the integration of data sharing into the National Credit Guarantee Agency.

 

Roong believes this framework will allow all players – banks, fintechs, and virtual banks – to operate at their full potential.

 

Recognising the risks associated with new technologies, Roong stressed the importance of a collaborative regulatory approach.

 

"Our approach moving forward is deeply rooted in collaboration," she affirmed. "We are committed to working hand-in-hand with the industry, including our fintech community, to refine our policies and navigate the complexities of this dynamic environment."

 

This collaborative spirit extends to the BOT's Enhanced Regulatory Sandbox, designed to attract fintech innovation with a focus on areas like Programmable Payments and Programmable Escrow Payments.

 

The aim is to create a more agile and accessible sandbox with faster processing times to foster rapid iteration and inform evolving regulations.

 

In her concluding remarks, Roong reiterated the Bank of Thailand's commitment to building a future-ready and inclusive ASEAN fintech ecosystem.

 

"We firmly believe that by strategically embracing the '3 Opens' – Open Competition, Open Infrastructure, and Open Data – we can unlock the immense potential of digital finance to address the unique needs of our diverse populations, particularly the underserved. The path ahead necessitates continued collaboration – between regulators, financial institutions, fintech pioneers, and the very communities we aim to serve," she stated.