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Central bank to allow fintech experimentation

Central bank to allow fintech experimentation

TUESDAY, September 20, 2016

THE BANK of Thailand will open the way for financial-technology (fintech) product experimentation under its regulatory “sandbox” in the first quarter of next year, in the hope that fintech developers applying to participate can receive licences quickly on

Vireka Suntapuntu, senior director of the Financial Institution Applications Department, said at a press briefing yesterday that the central bank was holding an online public hearing via its website about the regulatory sandbox until October 15, before announcing the opening up of the sandbox to commercial banks as the first group that would be allowed to join the scheme in the first quarter of next year.
Non-bank financial institutions with fintech developments will be able to apply for the sandbox in the second quarter, she said.
The regulatory sandbox is suitable for banks, non-bank fintech developers and technology firms that have sufficient capital and human resources, while start-ups who are fintech beginners should join the incubator programmes offered by financial institutions or the Fintech Club before joining the sandbox.
The experimental period under the regulatory sandbox will be around six months to 12 months.
Businesses wishing to join the central bank’s fintech sandbox must have innovative lending, payment and money-transfer services and products, and these products and services must only be offered within Thailand, she explained.
The regulatory sandbox will ensure that the Bank of Thailand, banks and other fintech operators share information and understanding in regard to the regulations, she said, adding that the BOT would ease some regulations if the experiment found them to be barriers to the competitiveness of fintechs and banks.
Meanwhile, the sandbox will help banks and non-bank fintech businesses understand how to develop products and services that comply with the regulations, thus enabling them to quickly receive licences form the BOT, she stressed.
Consumer rights protection in this area requires that banks and other fintech operators undertake appropriate testing of their innovative digital products and services, and must pay compensation to customers in they are damaged as a result of using their products and services, Vireka said.
Moreover, all participating banks and fintech businesses have to inform their customers that they are in the regulatory-sandbox process.
If the products and services from the sandbox can facilitate convenience, safety and protection for consumers, the central bank might consider adjusting the KYC (know your customer) rules to facilitate the use of those products and services, the senior director said.
Customers who intend to open a deposit account would still be required show their identity, but if the providers of innovative fintech products could prove that their customers were safe and protected, opening an account online by taking a selfie or using voice to confirm identity might be allowed, she said.
Moreover, mobile-banking solutions that allow consumers to pre-stage ATM usage via a mobile application, and complete the transaction by using a barcode on the ATM screen, might also be permitted in Thailand – as in some other countries – she added.