2017 is positioned to be an exciting year for the development of Fintech in Thailand. Over the past year, we have seen several key indicators that lead us to believe that a FinTech revolution will start this year. We have identified six areas to watch closely:
Thailand 4.0 – The Thai government has placed substantial resources in developing Thailand into a digital economy. Creativity and Innovation in this digital economy is the main drivers of this initiative. We predict that the government will roll out several programs that will see knock on effect to the FinTech Sector in a positive way.
BOI Promotion of FinTech Firms – The Board of Investment (“BOI”) has announced that it will be promoting Digital Services as a new sector that is available for promotion. This means that FinTech and related services such as big data and data analytics will now be available for foreign ownership. Recently we have witnessed the BOI putting substantial resources into the digital sectors in anticipation of further Thailand 4.0 initiatives.
Equity Crowdfunding – We have been watching the Securities and Exchange Commission (“SEC”) develop equity crowdfunding (“EQF”) regulations and the first ECF licenses should be issued in the first quarter of 2017. We estimate that deal flow will increase throughout the year as there is need for education of the public on how ECF works and quality deals become more available to potential investors. We are somewhat cautious to deal fundamentals and the quality of investment. We view ECF as an alternative mechanism for SME financing and should not be viewed as an investor or last resort.
Regulatory Sandbox – The Bank of Thailand (“BOT”) is working towards a model of implementing a Regulatory Sandbox that allows industry participants a ‘safe space’ in which FinTech businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences. Regulators across the region have taken this approach and it seems to be an excellent way of creating innovation.
RegTech – As with both EQF and companies participating in the Sandbox, there is ample opportunity for the development of Regulation Technology companies that will innovate to reduce the burden of complex regulation and compliance. Thailand is currently behind in this growing sector, where in other countries that have a more mature FinTech ecosystem, it is becoming one of the hottest sectors for investment this year. We anticipate to see several RegTech startups start this year.
FinTech Associations – We predict that there will be the development of strong industry associations that will allow members and interested parties to develop industry representation and allow collaboration of information and knowledge. We see this just not as a Thai initiative, but cooperation among ASEAN countries and international companies and investors. For proper development of the Thai FinTech ecosystem, participants must take a regional or global view on their products and services.
Silk Legal is committed to the success and development of FinTech in Thailand. We represent several emerging companies and work with industry participants. Silk Legal is developing a dedicated FinTech practice that will offer all legal and regulatory services to FinTech firms.
