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FinTechs belonging to this category provide identification services, which are required for most banking services.
Introduction
Attitude of the country towards identification services
The Royal Decree on Supervision of Service Businesses Relating to Digital Identification and Authentication Systems That Are Subject to Licensing, B.E. 2565 (2022) (Royal Decree on Digital Identification and Authentication Systems) which was issued under the Electronic Transaction Act, is the main regulation governing identification services in Thailand. One of these developments is the National Digital ID (NDID) platform for authenticating identity authentication, also known as e-KYC. NDID allows the customer to conduct transactions 100% online, such as bank account opening, digital lending, and so on. It also allows entities to rely on customer information collected by a third party to conduct the customer identification.
Legal affairs
Obligations and requirements to provide identification services
According to the Royal Decree on Digital Identification and Authentication Systems, any service relating to digital identification and authentication with the following characteristics must obtain a license: (1) an identity proofing service; (2) an authenticator lifecycle management service (3) an authentication service; (4) a service for exchanging data for digital identification and authentication, which is a network or system that connects and exchanges data related to digital identification and authentication, excluding a service of an intermediary.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
Both BOT and the Electronic Transactions Development Agency (ETDA) recognise that identification services are important for the execution of various financial transactions, so digital identification and authentication service in Thailand are now governed by the relevant regulations, as described above.
Economic conditions
Market size for identification services and biggest companies in this business area
After the Royal Decree on Digital Identification and Authentication Systems became effective, some commercial banks and other financial service providers have obtained their own license to provide digital identification and authentication service to authenticate their customers, including Bangkok Bank, Kiatnakin Phatra Bank, Government Housing Bank, and Krung Thai Bank, True Money and Counter Service. Notwithstanding, the list of licensed the identification services business in Thailand is very limited and the market in Thailand is quite small.
Additional comments regarding the economic situation for identification services or what FinTech’s must be aware of in this business area
Authentication and identification service business should monitor the progress of the draft royal decree and any further regulations regarding identification services, as the need for these services is strong and growing, and changes in the regulatory environment could reshape the market for these services.