KResearch assesses that, as of 2020, digital lending service in Thailand is still in its infancy and modest in scale as digital lenders lack sufficient customer data for risk profile assessment. Therefore, digital lending service during this initial period is seen mainly as an alternative for existing borrowers. Digital credit providers tend to grant short-term loans (1-3 months on average) with small credit lines and at high interest rates. These loans are suitable for general customers seeking emergency cash for consumption, or micro enterprises that need emergency funding as working capital for their businesses. By and large, the digital lending market value in Thailand remains insubstantial. KResearch projects that Thailand is likely to see digital lending outstanding of approximately THB 12.0 – 12.5 billion in 2020, which represents 0.2 percent of total retail loans in the system. Meanwhile, non-performing loans in the digital lending market have yet to become a pressing issue as the market is still at an early stage of development.
Large commercial banks continue to be major players in the digital lending market in Thailand as they have a large customer database and benefit from Thai people's confidence in the loan services offered by commercial banks and their ever-increasing familiarity with online banking applications. Furthermore, major commercial banks have partnered with their business allies and other service providers on prominent online platforms like e-marketplace and large online food delivery platforms with a vast network of retail stores and restaurants – giving these financial institutions an edge in expanding their digital lending customer base to new target customers.
Going forward, KResearch perceives that digital lending services in Thailand will likely expand at a faster rate, but that is dependent on two major factors, namely, expanding the scope of data usage in granting loan approval further into alternative data, and investment in related technology by operators in the digital lending market, especially non-bank service providers and fintech companies. Ultimately, expansion of the digital lending business still depends on economic circumstances. KResearch views that opportunities in the digital lending market will become more evident once Thailand's economy begins to emerge from the present COVID-19 crisis.