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Thailand’s Core Banking Market Trends and Outlook

Thailand’s banking sector is undergoing rapid digital transformation, driving growth in core banking software investments. Core banking software refers to the back-end systems that process daily banking transactions and manage accounts. Globally, this market is expanding at roughly 9–10% annually, reaching an expected $21.6 billion by 2030 (Core Banking Software Market to Reach USD 21.61 Billion by). In Thailand, growth is similarly robust as banks modernize legacy systems and new digital banks prepare to launch. According to PwC, most Thai banks have struggled to meet digitalization goals due to outdated, monolithic core systems that are costly and inflexible (Most Thai banks fall short of digitalisation goals, PwC Thailand says). This has created a strategic imperative to upgrade core banking platforms.

Market Size and Growth: While specific local figures vary, industry analysts estimate Thailand’s core banking software segment in the hundreds of millions (USD), with high single-digit to low double-digit percentage growth per year in the 2023–2025 period. This trajectory aligns with global trends fueled by digital banking and cloud adoption (Core Banking Software Market to Reach USD 21.61 Billion by). The table below provides an illustrative estimate of market size:

Year Est. Core Banking Software Market (Thailand) Annual Growth
2023 ~$140 million (estimated) –
2024 ~$155 million (estimated) ~+10% YoY
2025 ~$170 million (forecast) ~+10% YoY (Core Banking Software Market to Reach USD 21.61 Billion by)

Table: Estimated core banking software market in Thailand, 2023–2025 (figures approximate, assuming ~10% CAGR in line with global market growth (Core Banking Software Market to Reach USD 21.61 Billion by)). The overall banking IT spending in Thailand has been on the rise, and core system modernization constitutes a significant share of these investments. Multiple Thai banks have publicly announced large IT budget increases dedicated to core banking upgrades and digital platforms. With consumer demand for better digital experiences and pressure from fintech competition, Thai banks are accelerating core transformations to improve agility, reduce costs, and support new digital products.

Key Core Banking Software Vendors in Thailand

Thailand’s core banking market features a mix of established international vendors and newer cloud-native entrants (“neo-core” providers). Traditionally, large Thai banks relied on tried-and-tested core systems from global firms or in-house systems. Today, a range of vendors – from legacy platform providers to fintech disruptors – are vying for market share:

Vendor & Origin Category Notable Usage in Thailand (Examples)
Sunline (China) New cloud-native core Selected by SCB (Siam Commercial Bank) in 2024 to modernize its core banking system (Thailand’s SCB taps Sunline for core banking upgrade). Sunline’s platform will revamp SCB’s deposit and loan processing with improved scalability and efficiency.
Infosys Finacle (India) Modern core suite (traditional) Implemented for Line BK, the KASIKORNBANK–LINE Corp digital bank venture, supporting deposit and lending products (KASIKORN LINE achieved significant financial inclusion with embedded finance). Finacle also has a history in Thailand (e.g. EXIM Bank’s core system) and is known for its robust functionality.
Temenos (Switzerland) Traditional global core & wealth platforms Used by Kiatnakin Phatra Securities for a new wealth management platform in 2023 ([Thailand recent news
Silverlake Axis (Malaysia) Regional legacy core provider Supplies core banking systems to various ASEAN banks, including some in Thailand. For example, Silverlake’s platform was implemented at SME Development Bank of Thailand (Silverlake Core Banking Implementation for SME-Development ...). It has a long history in the region, though facing new competition from cloud-based systems.
10x Banking (UK) “Neo-core” cloud-native platform No announced Thai clients as of 2025. However, 10x’s next-gen core banking platform (the SuperCore) has attracted major banks globally (e.g. Westpac and JP Morgan’s Chase UK have selected it ([Building the future of core banking with 10x Banking
Thought Machine (UK) “Neo-core” cloud-native platform No known deployments in Thailand yet. Thought Machine’s Vault core is used by digital banks in Asia (for instance, Standard Chartered’s Mox in Hong Kong) and has backing from Thai investors (SCB’s venture arm participated in its funding). It’s a prominent competitor in the cloud core space (Success Of New-School Vendors Shows That Lean Core Banking Is ...).
Mambu (Germany) SaaS cloud core (API-driven) Not yet adopted by Thai banks, but active in Southeast Asia. Mambu’s SaaS core banking is popular with fintech lenders and digital-only banks regionally. Thai digital finance firms or upcoming virtual banks are likely evaluating such solutions to launch quickly with low infrastructure overhead (Success Of New-School Vendors Shows That Lean Core Banking Is ...).
Oracle FSS (USA) Traditional core (Flexcube) Oracle’s Flexcube system has been used by some Thai banks historically (e.g. certain modules at Bangkok Bank). While not recently publicized in Thailand, Oracle remains a competitor, especially for large banks modernizing from older Oracle/i-flex platforms.
FIS / Fiserve (USA) Traditional core (emerging cloud offerings) These U.S. vendors have limited footprint in Thailand’s retail banking but are expanding cloud availability. For instance, FIS’s core banking platform became available on Azure in Thailand (ANZ New Zealand selects FIS for core banking upgrade). They mainly serve international banks or niche Thai segments.

Table: Major core banking software providers and their role in Thailand. The competitive dynamics show a two-pronged market:

  • On one side, incumbent core vendors (Temenos, Oracle, Finacle, Silverlake, etc.) have established relationships and localized functionality, but they often run on older architectures.
  • On the other, “neo-core” cloud players (10x, Thought Machine, Mambu, etc.) offer modern, API-driven systems that promise faster product launches and lower IT costs (Success Of New-School Vendors Shows That Lean Core Banking Is ...). These new entrants are gaining attention as Thai banks look to leapfrog to cloud technology. For example, Forrester Research notes that “new-school vendors such as 10x Banking [and others] enable quick transformation” with lean, cloud-native cores (Success Of New-School Vendors Shows That Lean Core Banking Is ...).

Vendor Selection Trends: Thai banks are increasingly open to non-traditional vendors if they meet local requirements. A notable example is SCB choosing China’s Sunline over more established Western vendors, signaling that performance, flexibility, and cost are key decision factors (Thailand’s SCB taps Sunline for core banking upgrade). Meanwhile, global vendors are tailoring their offerings (e.g. Temenos’ SaaS model, Oracle’s cloud version) to stay competitive. The next section explores how banks are adopting these solutions.

Both incumbent banks and new entrants in Thailand are actively upgrading their core banking infrastructure:

  • Large Domestic Banks: Thailand’s top banks (e.g. SCB, KBank, Krungsri, Bangkok Bank) have begun multi-year core modernization projects. Siam Commercial Bank (SCB), the country’s oldest bank, announced a major core system overhaul in 2024, partnering with Sunline to replace its decades-old core (Thailand’s SCB taps Sunline for core banking upgrade). SCB’s new core will handle deposits and loans with improved efficiency, stability, and scalability to support surging digital transaction volumes (Thailand’s SCB taps Sunline for core banking upgrade). The bank’s CEO noted this modern core will let SCB “quickly offer tailored solutions and seamless experiences” to customers (Thailand’s SCB taps Sunline for core banking upgrade) – a competitive necessity in the digital era. The integration is expected to take four years, positioning SCB as a “full-fledged digital banking” leader by project completion (Thailand’s SCB taps Sunline for core banking upgrade). Other large banks are observing SCB’s progress closely. It is anticipated that Bangkok Bank, Krungthai Bank, and Kasikornbank (KBank) will evaluate similar core replacements to stay competitive (these banks still run on heavily customized legacy cores).

  • Mid-Tier and Specialized Banks: Midsize institutions and state-owned banks are also upgrading. Kiatnakin Phatra Financial Group (which includes KKP Bank and Phatra Securities) recently adopted Temenos for wealth management tech (Thailand recent news | FinTech Futures), a step toward integrating modern core modules. Government banks like the Government Savings Bank (GSB) and Government Housing Bank have issued tenders for core system upgrades as well, aiming to improve service delivery. Niche players such as the SME Development Bank implemented a new Silverlake core to better serve SME lending (Silverlake Core Banking Implementation for SME-Development ...). These projects illustrate an industry-wide push: even banks outside the top-tier see core modernization as crucial for efficiency and future growth.

  • Foreign Bank Branches: Foreign banks operating in Thailand (e.g. Standard Chartered, HSBC, MUFG via Bank of Ayudhya) typically rely on their regional or global core systems. For instance, Bank of Ayudhya (Krungsri), majority-owned by Japan’s MUFG, leverages some MUFG systems alongside local solutions. These foreign banks often upgrade in sync with their group’s technology roadmap. As an example, when MUFG globally upgrades core platforms, Krungsri adapts locally. Notably, Krungsri has embraced cloud-based analytics on AWS to complement its core (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). Standard Chartered’s Thai operations are relatively small, but the bank’s global strategy (investing in cloud-native cores like Thought Machine for its digital banks) could influence its Thai branch in the future. Overall, foreign banks tend to modernize through global platforms but must also comply with Thai regulations (e.g. data localization), which could drive them to use local cloud regions for any core banking components hosted off-premise.

  • In-House Development vs Packages: Thai banks historically built many custom systems around their core (especially front-ends and middleware). Kasikornbank (KBank), for example, through its tech arm KBTG, has developed extensive digital banking applications internally. However, building an entire core in-house is rare due to complexity. The trend now is platform partnerships: banks like KBank augment core capabilities by integrating with fintech solutions (e.g. KBank’s LINE BK venture uses Finacle’s core engine (KASIKORN LINE achieved significant financial inclusion with embedded finance) rather than an in-house system). This indicates a preference for packaged core solutions that can be heavily customized, rather than starting from scratch.

Digital-Only and Neo-Bank Adoption

Thailand’s digital banking landscape is heating up, especially with new virtual bank licenses on the horizon. This is influencing core banking software choices in two key areas:

  • Digital Banking Units of Traditional Banks: Several incumbent banks have launched digital-only offshoots that operate on modern tech stacks separate from the legacy core. A prime example is LINE BK, a mobile-only bank launched in 2020 as a joint venture between KBank and LINE. LINE BK runs on a cloud-ready core (Infosys Finacle) that supports real-time services via the LINE messaging app (KASIKORN LINE achieved significant financial inclusion with embedded finance). In its first year, LINE BK acquired over 2.5 million users by offering quick account opening and loans within the chat app (KASIKORN LINE achieved significant financial inclusion with embedded finance) (KASIKORN LINE achieved significant financial inclusion with embedded finance) – something made possible by the flexibility of its modern core. Another example is TMRW by UOB, a digital-only banking service UOB introduced in Thailand (and the region) targeting millennials. TMRW leverages a cloud-native architecture and advanced analytics (UOB built this platform with various fintech partners). These digital subsidiaries demonstrate how Thai banks are piloting new core technologies on smaller scale before wider rollout. Their success (e.g., high customer uptake and faster product launch cycles) is making the case for broader core transformation in the parent banks.

  • New Virtual Banks (2024–2025): In a landmark move, the Bank of Thailand (BOT) announced it will issue licenses for virtual banks – branchless, digital-only banks – for the first time. Official guidelines were released in March 2024, with applications accepted through September 2024 (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow) (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow). The BOT’s aim is to increase competition and reach underserved segments via digital channels (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow). By 2025, up to three new virtual banks are expected to be licensed and preparing to launch. These new entrants (likely consortia of tech firms, telecom companies, and financial institutions) are unencumbered by legacy systems, so they are poised to adopt cutting-edge core banking platforms from day one. Indeed, across Asia’s virtual banks, a common pattern is the use of cloud-native core systems (for example, Hong Kong’s virtual banks mostly run on modern cores like Thought Machine or Mambu). We anticipate Thailand’s virtual banks will follow suit – selecting agile, scalable core platforms that can be deployed in the cloud. This will likely benefit neo-core vendors: a virtual bank startup is more inclined to choose a SaaS or API-driven core for speedy implementation. Additionally, the BOT’s licensing requirements emphasize technology capability and innovation (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow), implicitly encouraging applicants to have strong fintech partnerships. In summary, the arrival of virtual banks in Thailand is a catalyst for core banking innovation, as these newcomers will set a high tech benchmark that may spur incumbent banks to accelerate their own core upgrades.

Regulatory Factors Influencing Adoption and Innovation

Regulation in Thailand’s banking sector plays a pivotal role in core banking system decisions. Key regulatory and policy factors include:

  • Virtual Bank Licensing Framework: As noted, the BOT’s introduction of virtual bank licenses is a game-changer. The rules for virtual banks stipulate no physical branches, a focus on financial inclusion, and use of technology to reach underserved customers (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow). The licensing framework (2024) requires applicants to demonstrate robust tech infrastructure and digital service delivery capability (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow). This pushes both new entrants and existing banks (who may partner or compete with them) to invest in state-of-the-art core systems that can fulfill these requirements. By opening the market to new players, regulators are increasing competitive pressure – forcing all banks to innovate or risk losing ground. The BOT explicitly wants virtual banks to “strengthen the competitiveness of Thailand’s financial sector” (Latest Updates on Virtual Bank Business Licences in Thailand | Global Regulation Tomorrow), indicating regulatory support for modern, efficient banking platforms. We should expect regulatory scrutiny on the core systems of virtual banks (for security, reliability, etc.), but also a willingness to approve cloud-based and outsourced models, as long as risk is managed.

  • Data Residency and Cloud Compliance: Thai regulators historically required sensitive financial data to be stored onshore or within controlled environments. This influenced banks to keep core banking systems in local data centers. However, regulation has evolved to accommodate cloud usage. The BOT has issued guidelines that allow banks to use cloud services (including public cloud) for certain operations, provided they implement proper risk controls and the regulator is notified. One major concern has been data residency – ensuring customer data remains in Thailand’s jurisdiction. The upcoming local AWS region directly addresses this: “the new AWS Asia Pacific (Bangkok) Region will enable customers with data residency preferences to securely store data in Thailand.” (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore) This development aligns with government policy (the “Cloud First” initiative under the national digital plan) (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). Regulators, including the BOT and the Ministry of Digital Economy, have shown support for cloud adoption as long as compliance is met. In fact, Thailand’s Prime Minister welcomed AWS’s investment, noting it “strengthens our national infrastructure” and aligns with plans to make Thailand a regional digital hub (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). In practical terms, this means banks can now consider running even core banking workloads on public cloud infrastructure without violating data localization rules – a significant shift likely to accelerate cloud-based core systems.

  • Security and Operational Resilience Requirements: The central bank imposes strict standards on banks’ IT systems, particularly core banking, to ensure stability of the financial system. These include guidelines on uptime, disaster recovery, and cybersecurity. When adopting new core platforms (especially cloud or SaaS cores), banks must demonstrate to regulators that these systems are secure and can maintain service continuity. This has led to some cautious, phased approaches to core migration. Nonetheless, modern core providers have been actively working with regulators – e.g., by obtaining security certifications and setting up local support – to ease these concerns. Regulatory audits and sandboxes are commonly used in Thailand for new tech deployment. For example, a bank might run a new core in parallel for a while or launch it under a “sandbox” approval before full rollout, to satisfy operational risk checks. Overall, regulatory emphasis on stability means core banking transformations in Thailand are carefully planned with oversight, but regulators are not blocking innovation; rather, they are ensuring it’s done safely.

  • Open Banking and Fintech Integration: While Thailand has not mandated open banking (as in EU’s PSD2), the regulator and government encourage banks to collaborate with fintechs. There have been industry-led standards for Open APIs under the Thai Bankers’ Association, and BOT has signaled interest in data-sharing frameworks to boost innovation. This indirectly influences core systems – banks are looking for core banking platforms that easily integrate with third-party services and APIs. The ability to plug into ecosystems (e.g., payment wallets, budgeting apps, or regional cross-bank QR payment networks) is increasingly important. Any regulatory moves towards formal Open Banking would further push banks to modernize cores for better connectivity. In 2022, Thailand and Vietnam launched a cross-border QR payment linkage (Thailand recent news | FinTech Futures), and Thailand’s PromptPay real-time payment system is expanding; these initiatives require cores that can handle real-time, API-based transactions. Banks with flexible, modular core systems will adapt to such regulatory-driven innovations faster.

  • Personal Data Protection Act (PDPA): Thailand’s PDPA (enforced from mid-2022) imposes data privacy requirements similar to GDPR. Banks must ensure customer data is handled with consent and protected. Legacy core systems often struggle to implement granular data controls or anonymization, whereas newer core platforms have more built-in compliance features (for example, better audit trails, encryption, and consent management). Thus, PDPA compliance has been another factor nudging banks to upgrade systems or enhance their core’s data management capabilities. Additionally, PDPA concerns made some banks initially hesitant about cloud (due to data control), but with proper agreements and local cloud regions, this hurdle is diminishing.

In summary, regulation in Thailand has become an enabler of core banking innovation, not just a gatekeeper. By opening the market to digital banks, endorsing cloud infrastructure, and prioritizing financial inclusion, Thai authorities are creating an environment where banks feel the urgency and have the permission to transform their core technology.

Impact of the AWS Thailand Cloud Region on Banking

One of the most significant recent developments in Thailand’s tech landscape is the arrival of a local AWS (Amazon Web Services) cloud region. This has direct implications for banking infrastructure modernization and digital banking:

  • Local AWS Region Details: AWS announced it will launch the AWS Asia Pacific (Bangkok) Region by early 2025, investing an estimated ฿190 billion ($5 billion) in Thailand over 15 years (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). This is AWS’s first full region in Thailand (following regions in Singapore and Indonesia in ASEAN). A local region means AWS will operate data centers physically within Thailand, offering the full range of cloud services on Thai soil. Crucially, this allows banks to use AWS cloud while keeping customer data and workloads in-country. AWS notes that Thai customers with data residency requirements will be able to store data locally and achieve lower latency for their applications (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore).

  • Bank Adoption of AWS Cloud: Even before the official region launch, many Thai banks and financial institutions have been leveraging AWS via its Singapore region or using services like AWS Outposts. Major banks have publicly partnered with AWS for digital initiatives. For example, Siam Commercial Bank has worked with AWS on advanced analytics and was one of the early Thai banks moving some workloads to cloud. Krungsri (Bank of Ayudhya) is “advancing its digital transformation by leveraging AWS” for data analytics, machine learning, and to optimize operations across the group (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). Krungsri’s Head of IT stated that AWS is their “strategic cloud provider” and a local region will “significantly expand the possibilities” of AWS’s partnership with the bank (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). Similarly, Kasikornbank’s tech arm (KBTG) has embraced AWS. KBTG’s CTO described building on AWS as “game-changing” for innovation, citing AWS’s breadth of services and scalability (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). He noted that with the new AWS region, KBank expects to further improve network latency, data synchronization, and security, thereby delivering even better services to customers (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore).

  • Modernizing Infrastructure: The presence of a local AWS region accelerates core banking modernization in two ways. First, it removes a key barrier – banks can now host core banking applications or core-adjacent systems (like digital banking platforms, payment gateways, APIs) on AWS cloud without breaching BOT regulations on data location. This is likely to increase cloud migration for core systems that were previously kept on-premises. Banks can gradually shift parts of their core (for example, customer databases, microservices for specific products) to AWS and take advantage of cloud scalability. Second, AWS’s rich toolset (containers, serverless, AI services, etc.) enables banks to re-architect core applications for cloud, rather than just doing a like-for-like migration. For instance, a bank might break a monolithic core into microservices and deploy them on AWS for greater agility. The new region offers low-latency connectivity, so even banks that keep the primary core in their own data center might use AWS as a hybrid cloud for backup core systems or surge processing capacity.

  • Digital Banking and Innovation: Digital-only banks and fintechs stand to benefit greatly from the AWS region. They can run fully in the cloud with confidence that performance for local customers will be fast and reliable. Lower latency is particularly important for real-time banking transactions, fraud detection, and mobile app responsiveness. The Stock Exchange of Thailand (SET) already noted it uses AWS for a high-volume trading platform and looks forward to the local region to expand low-latency data offerings for investors (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore) (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore). In banking, a similar effect is expected: things like real-time payments, mobile banking, and AI-driven services (chatbots, personalized offers) will all improve with local cloud infrastructure. Moreover, AWS’s investment comes with training and ecosystem building. AWS is working with Thai partners (e.g. local IT firms, consultancies) and training talent (New AWS Region in Thailand to launch by early 2025 - About Amazon Singapore), which means more resources available for banks to execute cloud projects. This ecosystem effect reduces the risk and cost for banks switching to cloud-based cores.

  • Competitive Dynamics (Cloud Providers): While AWS is currently in the spotlight, other global cloud providers are also focusing on Thailand’s banking sector. Azure and Google Cloud do not yet have Thai regions (as of 2025), but they have increased engagement with banks via local partnerships and cloud nodes (e.g., Azure has a local “edge” location, GCP offers Bangkok sites via partners). The AWS region launch may spur competitors to consider Thai data centers as well. From a bank’s perspective, the AWS region gives AWS a significant edge – it’s likely many Thai banks will deepen ties with AWS for core and digital banking projects. That said, banks typically adopt a multi-cloud strategy for resilience and bargaining power. We might see core banking workloads distributed across clouds or kept portable. For instance, a bank could run its core banking on AWS but use Azure for Office productivity and certain risk apps. The key point is that AWS’s heavy investment validates the cloud-first approach in Thai banking. It sends a message: cloud is now a safe, accepted part of critical banking infrastructure in Thailand, rather than just for peripheral services.

In conclusion, the AWS Thailand region is catalyzing a shift in how banks think about their IT infrastructure. It has effectively aligned regulatory, technological, and market forces in favor of cloud-based core banking modernization. Thai banks can now innovate on par with global peers, using cloud-native core systems and cutting-edge services, all while meeting local compliance. This development is expected to accelerate digital banking offerings and perhaps even enable entirely cloud-native banks in Thailand in the near future.

Competitive Dynamics and Outlook

The competition in Thailand’s core banking software sector is intensifying, driven by both vendor rivalry and the strategic moves of banks:

  • Race to Modernize: With clear regulatory support and evident consumer demand for digital services, Thai banks are in a “race” to modernize core systems. Early movers like SCB may gain an advantage in agility – for instance, being first to market with new products that a modern core enables (rapid account opening, real-time personalization, etc.). Fast followers are likely; other large banks will not want to be left with a reputational image of having the “old, slow system.” We can expect competitive announcements in the next year: e.g., another top-5 bank revealing a core replacement project or a partnership with a cloud provider for core banking. Banks are also benchmarking against regional competitors: Singapore and Malaysian banks have been modernizing, so Thai banks feel pressure to keep up regionally.

  • Vendor Competition: The core banking vendors themselves are competing vigorously for Thai deals, knowing that a wave of replacements is coming. Traditional vendors are leveraging their local experience – for example, Temenos and Oracle can point to decades of Thai language and regulatory support in their systems – while new vendors leverage success stories and cost benefits. The case of Sunline winning SCB’s core contract highlights that even a less familiar name can win if it meets the bank’s needs (Thailand’s SCB taps Sunline for core banking upgrade). This has likely alerted Western vendors to up their game on pricing and cloud readiness. Additionally, Chinese and regional tech firms (like Sunline, Huawei’s fintech arm, and Silverlake) represent new competition with potentially lower costs. On the other hand, Western neo-core providers (10x, Thought Machine, Mambu) may try to enter via partnerships or pilots with the upcoming virtual banks or smaller firms first, then scale up. We might see joint ventures or alliances form – for instance, a global vendor teaming with a local IT services firm to reassure banks on local support. Everyone is aware that once a major bank picks a core system, that vendor is locked in for many years, so each deal is high-stakes.

  • Innovation vs. Risk: Competitive dynamics also revolve around how boldly each bank moves. Adopting a cutting-edge core early (innovation) has to be balanced against the execution risk. Some banks might take a more conservative stance, waiting to see proven results from others. However, there’s a cost to waiting: running a legacy core yields higher IT costs and can impede launching new features. Competitively, a bank that delays too long could lose younger customers to more nimble rivals. The likely scenario is a staggered approach – a few leaders overhaul their cores by 2025, others follow by 2026–2027. Those that move slowest might find themselves forced into action if they start losing market share, especially once virtual banks begin operations. In any case, all banks are modernizing in some form; the difference is speed and scope.

  • Customer Experience as a Differentiator: Ultimately, the core banking system upgrade is a means to an end – delivering superior customer experience and products. We see Thai banks positioning their digital capabilities as part of their brand. For example, SCB’s slogan “Digital Bank with Human Touch” emphasizes combining tech with service (Thailand’s SCB taps Sunline for core banking upgrade). Banks are competing on who can offer the most seamless mobile banking, the fastest loan approval, the most personalized insights – all of which trace back to core system capabilities. As core upgrades take effect, we’ll likely see feature-based competition intensify: offering things like 24/7 instant loan disbursements, fully digital onboarding, multi-currency accounts, etc. Banks that have modern, flexible cores can iterate these offerings quickly. Those on older cores may struggle or have to create complex middleware workarounds. Thus, in the next 2–3 years, one could see a divergence where tech-savvy banks pull ahead in service innovation, pressuring others to catch up technologically.

  • Consolidation and Partnerships: Another dynamic to watch is industry consolidation or partnership. If some banks find it too costly or risky to transform alone, they might seek partnerships. There is precedent in other countries of smaller banks pooling resources for a shared core banking platform (sometimes via their association or a fintech provider). In Thailand, where the top five banks dominate ~80% of the market, smaller banks might band together for technology if needed to compete. Alternatively, bigger players might acquire smaller ones partly to absorb their customer base and modernize them on a single core. We have already seen consolidation like TMB merging with Thanachart Bank (forming TTB) – and post-merger, a unified core system was needed. Competitive pressure could thus indirectly drive more consolidation, as banks with superior tech capabilities become more attractive partners (or more formidable competitors).

Outlook: By 2025, Thailand’s core banking software market is expected to be markedly transformed from just a few years prior. We will likely see at least one or two major banks live on new core platforms (or in advanced migration), the first virtual banks gearing up with fully cloud-based cores, and possibly even a foreign digital bank entering via partnership (for example, an international fintech could team with a Thai firm under the new licenses). The market size will continue to grow as banks invest heavily in software licenses, cloud infrastructure, and integration projects. Growth forecasts remain strong – double-digit expansion – as both license sales and ongoing subscription revenues (for cloud/SaaS cores) accumulate.

Competition among vendors will probably yield benefits for banks in terms of better pricing and more innovative features. Banks, in turn, competing for customers will push the envelope on what their core systems can do, driving further innovation by vendors – a virtuous cycle. Regulators are expected to maintain a pro-innovation stance, while keeping an eye on systemic risks. All signs point to Thailand’s core banking systems becoming more modern, agile, and cloud-enabled over the next couple of years, supporting a vibrant and competitive banking sector.

References and Sources