SCB X, the financial technology conglomerate and holding company of Siam Commercial Bank (SCB), believes its planned virtual bank will comply with the central bank's requirements amid competition for the new banking licence.
Arthid Nanthawithaya, chief executive of SCB X, said a consortium under SCB X and KakaoBank, the largest digital bank in South Korea, is seeking partners to apply for a virtual bank licence from the Bank of Thailand. The partners could be either of the equity or business partnership variety to build stronger operations, he said.
The consortium can apply for a new licence under the central bank's initial requirements, covering registered capital and a sustainable objective for the new operation.
"We are mainly focused on financial inclusion, allowing the underserved population to access financial products and services on a fair and equal basis," said Mr Arthid.
"In addition, the company would offer financial products and services in line with the environmental, social and governance [ESG] framework."
Given the central bank's public hearings on revised draft regulations for virtual banks, SCB X proposed an interest rate calculation for the new business based on risked-based pricing with no ceiling, he said.
In addition, SCB X introduced an ESG business model as a pilot project through its subsidiary delivery platform Robinhood. The company offers an electric motorcycle rental service to around 1,000 Robinhood drivers out of 30,000 total drivers on the platform.
Mr Arthid said the service allows the underserved segment to sustain their livelihood unlike auto loans, where the interest burden is too great for some borrowers.
In addition, the service allows drivers to reduce costs and cut carbon emissions. The business model is expected to generate a better yield and higher income for the company.
Roughly 60% of the Thai population relies on loan sharks, which charge exorbitant interest rates on a weekly or monthly basis, rather than the annual interest rate in the banking industry, he said.
With this new business model, SCB X expects to gradually expand the business to comply with the Bank of Thailand's regulation. The business has high growth potential as there are 4 million commercial motorcycles in Bangkok, said Mr Arthid.
Financial packages to encourage households to install solar rooftop panels is another business strategy that supports ESG, he said.
SCB X recently reported a successful debenture offering debut worth 50 billion baht.
"The funds raised will be used according to our plan to drive growth, aligning with our 'mothership' strategy to lead the SCB X Group to become the regional financial technology leader," Mr Arthid said.
