Thailand's virtual banks: banking for everyone

Success may not come easily or quickly to the new market entrants.¹ In Asia-Pacific and around the world, regulators have licensed many new digital-first banks, but few have moved rapidly to profitability. Where it happens, the transition typically takes from three to eight years. 

That said, the percentage of the Top-100 ranked digital banks that are now profitable improved from 48% in 2024 to 61% in the 2025 rankings.² Brazil’s Nubank is an example of a strongly profitable digital-first bank that helps over 120 million customers while also improving financial inclusion.³

Thailand’s contenders have an advantage in that only three virtual bank applications have been approved compared, for example, to the eight licenses granted in Hong Kong since 2019. However, the restricted number of licenses comes with clear green and red lines in terms of regulatory expectations. 

These include helping underserved retail and SME customers with fast, secure, life-style oriented financial services, while not engaging in unsustainable business models or overly aggressive pricing tactics.⁴

Around the world, new digital-first banks often acquire customers using competitive offers such as high-interest savings accounts or generous cashbacks on cards. However, the Hong Kong regulator’s review of its virtual banks in 2024 noted that most have not yet turned rapid rates of customer acquisition into robust business volume growth – though they have spurred innovation in areas such as remote on-boarding and expediting loan approvals.⁵ Virtual banks need a strategy for leading customers from initial discounted products to a deeper and more profitable relationship.

Another challenge is that times have moved on since the first generation of digital banks emerged around the world a decade ago. Thailand’s new banks will be competing in a more mature digital banking market in which consumers already expect a high degree of seamless, digital-first convenience. Ninety-seven percent of Thailand consumers use mobile banking apps at least once a week – the highest rate in the Asean region – and the country also leads in terms of the percentage of consumers (86%) regularly using real-time payments.⁶

Market differentiation – 4 key themes

The green and red lines set out by the regulator may be a bonus if they push Thailand’s new banks to think big and think different. The goal should be to become a ‘bank for everyone’ with the right mix of four key themes to help each bank differentiate itself: 

• Financial inclusion at scale. Breaking down historic barriers to financial inclusion will mean finding new ways to distribute low-cost banking services to individuals and microbusinesses/SMEs. Through their consortiums, some of the successful applicants have access to extensive retail and telecom subscriber networks with millions of customers across Thailand. This will help improve their reach and potentially allow them to cross-sell services such as personal loans and insurance. Other applicants have deep experience of serving the unbanked or underbanked outside Thailand.⁷
  
  
• Ease of adoption and everyday convenience. The new banks and their competitors will aim for streamlined onboarding, potentially leveraging the Thai National Digital ID (NDID). They will weave payments seamlessly into everyday activities such as bill payments and online shopping and make features such as instant peer-to-peer transfers even easier to use. The banks may be able to leverage Thailand’s membership of projects such as Nexus, a central bank initiative to connect national instant payments systems and make cross-border payments faster, easier and cheaper.⁸ They may also embed financial services such as on-demand insurance.
  
  
• Hyper-personalized and fun to use. The banks will need to build a 360-degree view of the customer in real-time and use AI-driven personalization to supply the most relevant products and services at the right moment. Services may include personal finance management (PFM) – financial insights, recommended actions, spending and saving insights, and predictive alerts – as well as gamified experiences. Virtual banks around the world have found success through gamification techniques such as points, rewards, digital badges, leaderboards, competitive challenges and progress tracking. Games and loyalty programs could link back to a wider consortium or partner ecosystem, e.g. by featuring merchant promotions or point-based consumer benefits.
  
  
• Unlocking services for the under-banked and SMEs. One of the biggest challenges in Thailand is widening access to credit products such as loans, e.g. to help fund microbusinesses. Solving this issue means improving the accuracy and speed with which banks understand individual credit risk profiles – e.g. by applying advanced analytical models to new sets of data, such as those available from ecosystem partners or through open banking. With the customer’s permission, banks can access credit risk-related data such as their record in paying utility bills, their transactional history or their record supporting loyalty programs. Some of the new virtual banks may also want to support microbusinesses and SMEs in other ways, for example, through offering SME tools such as links to accounting services, inventory management and tax filing support. Other potential SME-related services include invoicing solutions, cash-flow management and payroll management.

Defining their offering around these four themes will make it easier for the new banks to lead customers towards a wider and more profitable set of products. For example, banks can use PFM services to nudge consumers from one product area (e.g. savings) to others such as family protection, retirement or investment, based on each individual’s circumstances and financial goals.

Equipping banks for a virtual world

Delivering a ‘bank for everyone’ with differentiated offerings will mean planning and implementing new capabilities from the start. It may also mean learning how to co-exist with and complement existing financial services, rather than trying to beat them at their own game. 

While some of the virtual banks may leverage expertise and technology from members of their consortia, they are likely to approach building their core platforms largely as a greenfield exercise. Today’s banks need to have modern technology stacks that allow them to build, launch, learn, innovate and scale at speed with low operating costs. 

Data will be the great differentiator in Thailand’s digital banking marketplace. Virtual banks have a huge advantage in that they can plan their data architecture around the need to gain a 360-degree view of the customer, rather than trying to stitch that view together across existing product and operational silos. 

They can also fully embrace robust cybersecurity practices and features such as ‘privacy by design’. By integrating privacy considerations from the start, firms can prevent issues from arising rather than remediating  them through the data lifecycle.

Incumbents competing with virtual banks, meanwhile, need to address the issue of legacy core systems. This need not mean risky ‘Big Bang’ core replacement: banks can now put middleware strategies in place that give them accelerated access to data in in near real time to support rapid innovation and personalized insights, e.g. for PFM. They can also harness AI to help them accelerate legacy transformations and cloud migration. 

AI will need to be embedded across banks to both speed up bank processes and to generate personalized insights from data in real time. This means having a clear AI strategy, investing in the right enabling technologies and putting in place AI governance frameworks.

Virtual banks and their competitors will look to gain data and distribution strengths by connecting to a wider ecosystem of partners and suppliers. This means that they will need to build open, API-driven architectures that allow secure, real-time data sharing and service integration. Such platforms will enable collaboration with fintechs, e-commerce players, utilities and other ecosystem partners.

Finally, virtual banks and their competitors must nurture regulatory relationships while keeping compliance costs under control as they scale up. They will need to keep track of fast-emerging data, privacy and AI regulations in Thailand and across the region – and deploy AI to improve and speed up compliance processes and keep costs low.
 

Concluding thoughts: planning for profitability

For both the new virtual banks and market incumbents, the next few years will prove critical in terms of working out how to differentiate themselves in the marketplace and putting in place the capabilities required for success.  Leaders have a chance to take banking models and financial inclusion forward in Thailand and, potentially, across the region.

While the new banks must move rapidly, they also need to enable their longer-term trajectory. The new banks and market incumbents must plan to put in place efficient, scalable operating models that allow them to learn as they grow, deepen the customer relationship across products, and turn rapid customer acquisition into profitability at a time of their choosing. 

How Capco can help

Over the last decade, Capco has helped to launch new virtual and digital-first banks around the world. As the world’s largest consultancy focused on the financial sector, we are experienced in building the cutting-edge capabilities that digital banks need to succeed, such as creating a differentiated user experience and selecting/building the core banking system.  

Our success stories include Mettle, a digital bank account set up by NatWest for the self-employed and small businesses in the UK. We have helped many other clients in Europe and the Americas to create digital banks and digital services targeted at specific groups such as millennials – helping devise the digital banking strategy and deploying large-scale agile project delivery. We can also help existing banks overcome legacy infrastructure constraints to deliver differentiated digital experiences quickly through:

• Establishing an autonomous structure separate from the incumbent bank, enabling faster decision-making and innovation.
• Building a cloud-native, microservices-based tech stack to ensure scalability, resilience and modularity.
• Embedding continuous user research using the Jobs-To-Be-Done framework to identify underserved customer needs and validate product/market fit.
• Implementing agile delivery frameworks with cross-functional mission teams aligned to clear objectives and key results.
• Launching MVPs rapidly, iterating through Alpha, Closed Beta and Open Beta phases to refine the proposition.
  
  

Our approach means clients can move from concept to app store launch in under a year, with a scalable platform and a compelling value proposition. We partner with you to make your virtual bank an indispensable part of your customer’s daily life – continuously evolving to inspire trust, deliver delight and drive healthier financial lifestyles for everyone. 

References

¹ For example, while Hong Kong’s eight digital banks have made significant in-roads into the market, most remain some distance from reporting a net yearly profit: https://www.techinasia.com/news/hk-virtual-banks-lose-160m; https://www.scmp.com/business/article/3309033/hong-kongs-8-online-banks-set-sights-managing-wealth-after-74-deposits-growth 
² https://www.theasianbanker.com/press-releases/nubank-ing-global-and-webank-are-the-world-s-top-digital-banks-with-61-of-the-top-100-reporting-full-year-profitability?utm_source=chatgpt.com
³ https://time.com/6980420/nubank/; https://international.nubank.com.br/company/nu-holdings-ltd-reports-fourth-quarter-and-full-year-2024-financial-results/; https://international.nubank.com.br/company/nu-holdings-ltd-reports-second-quarter-2025-financial-results/ 
⁴ Bank of Thailand, Virtual Bank Licensing Framework, January 2023, pp. 8-9.
⁵ https://www.hkma.gov.hk/media/eng/doc/key-information/press-release/2024/20240806e3a1.pdf, p.5
⁶ https://www.bangkokpost.com/business/general/2876722/thailand-leads-march-towards-cashless-society 
⁷ https://www.nationthailand.com/business/banking-finance/40048844 
⁸ https://www.bot.or.th/en/news-and-media/news/news-20240701.html