Analyzing the Risk Equation of Virtual Banks and the Case of CLICX Loans Amid Thai Cash Shortages vs. Debt Evasion Culture

The launch of CLICX, Thailand's first branchless bank formed through the collaboration of KTB, AIS, and OR, followed by two other players, SCB X and Ascend Money, expected to debut soon, is seen as a landmark event poised to permanently transform Thailand's financial structure.

However, the initial outcome when the CLICX banking app opened for loan applications revealed two contrasting realities: on one side, an overwhelming demand for capital caused system disruptions and intermittent outages; on the other, social media buzzed with catchphrases like “just bend it gently” or comments suggesting that Virtual Banks serve as new channels for circulating money without the necessity of repayment.

This phenomenon can be seen as the first stress test of Thailand’s Virtual Bank system, questioning whether the new lending models, proven successful abroad, will genuinely act as a "bridge out of informal debt" or instead become "fuel worsening household non-performing loans."

How do Virtual Banks differ from traditional banks?

For the general public unfamiliar with the term Virtual Bank, it is important to understand that this is not merely a rebranded banking app or a traditional bank moved to digital channels. Instead, it is a completely redesigned banking structure without physical branches, delivering services entirely through applications. This results in significantly lower operating costs as there are no expenses related to branch premises or permanent staff.

A key distinction lies in credit assessment methods: some Virtual Banks rely heavily on AI and alternative data—such as utility payment histories or mobile top-ups—instead of traditional paper statements or salary slips. This approach focuses on serving underserved individuals and freelancers often rejected by conventional banks, positioning Virtual Banks in Thailand as a crucial hope for a large segment of the population.

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On the other hand, financial data from Thailand’s credit bureau as of May 2026 indicates concerning household debt conditions. Preventive debt restructuring balances have surged to 1.70 trillion baht, while the non-performing loan (NPL) ratio exceeds 9.75%, equating to 1.33 trillion baht in bad debt.

As a consequence, traditional commercial banks have tightened lending standards, rejecting many retail loan applications. This has reduced the household debt-to-GDP ratio in Q1 2026 to 85.9% (from a total debt of 16.41 trillion baht). However, this decline does not imply improved financial health but rather that many Thais want to borrow but cannot.

Data from SCB EIC further reveals that some households have resorted to pawnshop loans, which have surged by 18.3%. Statistics show over 50% of indebted households lack sufficient income to cover expenses, especially those earning below 15,000 baht per month, whose debt burden and living costs reach 119% of their income.

Thus, digital loans like those offered by CLICX—with options for up to 260 weekly installments and applications accepted without salary slips—directly address the needs of financially squeezed small borrowers.

The easier the lending, the greater the risk? Two major questions for AI systems and repayment culture

Nonetheless, the real challenge for Virtual Banks seems not to be ensuring app stability to support millions of users but managing credit risk in two critical dimensions.

• Can AI accurately assess borrower intent? The use of alternative data such as purchasing behavior, AIS top-ups, or payments within the PTT OR network can expand loan access to those without traditional statements. However, the question remains: how precisely can AI distinguish between "struggling but willing to pay" borrowers and those "intending to default from the start"? If screening is too lenient, the NPL ratio for Virtual Banks could rise faster than traditional banks. As bad debts accumulate, banks may be forced to raise interest rates or restrict credit lines, ultimately impacting disciplined borrowers.
• The "gentle debt evasion" culture and structural risks The phrase “just bend it gently,” popular on social media, reflects a mindset among some groups that view loans not as financial obligations to be repaid but as rights or free money. If this attitude leads to widespread intentional defaults, bad debt will extend beyond individual lenders. An NPL surge would erode investor confidence, increase funding costs, affect shareholders, and jeopardize the credibility of the Virtual Bank model nationwide.

Academic perspectives: lessons and cautions from abroad

Before Virtual Banks emerged in Thailand, regulators and academics closely monitored the phenomenon, sharing several common concerns.

For example, the National Economic and Social Development Council referenced international studies noting that in China, online lending has fueled overconsumption and debt cycles. In the Philippines, statistics show digital banks have significantly higher NPL ratios than traditional banks.

Meanwhile, Professor Dr. Anat Limakdej from Thammasat University’s Faculty of Commerce and Accountancy has recommended that the Bank of Thailand consider setting quotas for productive loans alongside consumption loans to prevent Virtual Banks from focusing solely on consumption credit or Buy Now Pay Later (BNPL) models, which could become new economic time bombs.

Originally, Virtual Banks were designed as financial innovations aimed at addressing financial inclusion. But relying solely on convenience, fast approval, and branchless models may not be sufficient to build a sustainable financial system for Thai people.

With parts of society interpreting Virtual Banks as a "temporary escape without responsibility," the key challenge for providers is not just competing for new customers but proving that AI and alternative data can foster genuine financial discipline among Thais rather than opening the floodgates to rapidly increasing bad debt.

Sources: CLICX Bank, National Economic and Social Development Council, Thammasat University, SCB EIC, Credit Bureau, Bank of Thailand

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