Kakao Bank has secured approval from the Thai government to establish a virtual bank, marking the foray of a South Korean bank into Thailand in 25 years.

The Thai Ministry of Finance has selected a consortium led by SCBX, which includes Kakao Bank and Tencent-backed WeBank, as one of the three operators for the upcoming virtual banking system, reported The Korea Herald.

The Bank of Thailand announced the recipients of its virtual banking licences, choosing three applicants from five contenders, with ACM Holding Company and a consortium led by state-run Krung Thai Bank also receiving licences.

The initiative aims to deliver financial services solely through digital platforms, similar to South Korea’s internet-only banking model.

The central bank expects these digital lenders to enhance customer experience, improve efficiency, and foster healthy competition through innovation and competitive pricing.

Kakao Bank plans to serve as a “bridgehead” for South Korean banks and businesses looking to enter the Thai market, as per Yonhap News Agency.

The approved entities must establish a corporate entity by the third quarter and begin operations within a year, with full-scale operations expected to commence in the latter half of 2026.

Kakao Bank CEO Yoon Ho-young was quoted by the news publication as saying: “This license is a crucial step in exploring new markets and a valuable opportunity to showcase the excellence of Korea’s digital finance technology.”

This development follows a memorandum of understanding (MoU) signed in June 2023 between Kakao Bank, a subsidiary of Korea’s IT conglomerate Kakao, and SCBX to collaborate on Thailand’s first digital bank, reported The Korea Herald.

This venture marks Kakao Bank’s second international expansion, following its launch of Superbank in Indonesia in partnership with Grab, making it the only South Korean internet-only bank operating abroad.