Mid-year risk outlook 2025: What Thailand’s financial services firm must watch

Based on our work with leading Thai financial services firms, here are the top risks to watch for the remainder of 2025.

1. AI Governance: Regulation moves from concept to compliance

In June 2025, the Bank of Thailand released draft guidelines for managing AI risks in the financial sector, covering all types of financial service providers, and inviting public comments through June 30. These guidelines build upon existing frameworks such as IT risk, third-party oversight, and data governance standards.

As Thailand also prepares national-level AI legislation and ethical standards, financial institutions must align strategy with emerging regulation.

Forvis Mazars’ insight: Assess whether AI models are explainable, data governance is watertight, and oversight structures are active,not theoretical. Early compliance will prevent costly course corrections later.

2. Global Minimum Tax (Pillar Two): Operational reality takes hold

Thailand’s implementation of OECD’s Pillar Two global minimum tax regime introduces a 15% tax for large multinationals. While BOI has offered transitional incentives such as qualified refundable tax credits, this regime adds significant layers to tax compliance, reporting, and financial accounting for cross-border firms. This won’t be a background issue but a headline risk.

Forvis Mazars’ insight: Review tax governance frameworks, deferred tax processes, and disclosure readiness particularly under compressed reporting timelines.

3. Monetary policy shift: Navigating a lower rate environment

On August 13, 2025, the BOT slashed its policy rate from 1.75% to 1.50%, marking the lowest level in over two years and the fourth cut in 10 months. The central bank cited weak consumption, ongoing negative inflation, high household debt, reduced tourism, and drag from U.S. tariffs.

This dovish stance, combined with anticipated political uncertainty and a change in leadership, means that firms must reassess asset valuations, funding strategies, and lending demand under prolonged low-rate conditions. Further easing appears possible.

Forvis Mazars’ insight: Review stress testing assumptions and scenario planning to reflect lower interest rate trajectories and their second-order impacts.

4. Virtual Banking: The disruption has begun

The BOT’s approval of Thailand’s first virtual bank applicants in June 2025 marks a structural turning point for the industry. While regulatory safeguards are in place,such as phased supervision and restrictions on integration with legacy banks,the competitive impact could be swift once operations begin.

Looking abroad offers a preview of what’s likely ahead:

Forvis Mazars’ insight: Test whether risk frameworks are prepared for intensified competition and whether digital transformation plans are more than marketing slogans.

5. Credit risk: The return of Non-Performing Loans (NPL) pressures

Thailand’s financial sector is seeing a marked increase in non-performing loans,especially in household, mortgage, and SME portfolios,as borrower stress resurfaces. The banking system’s gross NPLs rose to 548 billion baht in Q1 2025, driven by weakness in mortgages and SME lending. At the same time, household NPLs reached a record 1.23 trillion baht in January 2025, up 25% since late 2022. Housing sector NPLs jumped 16.5% year-on-year in Q1, topping 232 billion baht. Against this backdrop, household debt remains extraordinarily high,around 87% of GDP,creating sustained pressure on asset quality and provisioning requirements. Institutions must therefore be vigilant in recalibrating their credit models, tightening underwriting standards, and strengthening early warning systems.

Forvis Mazars’ insight: Recalibrate credit risk models, strengthen early warning indicators, and validate provisioning policies against expected credit loss methodologies.

6. Cybersecurity: Resilience as a regulatory imperative

With digital transactions surging, cyber incidents remain among the most disruptive operational threats. Regulators are raising the bar on incident response, third-party oversight, and operational resilience testing. No single cyber incident is only about technology,it’s about financial continuity, reputation, and regulatory scrutiny.

Forvis Mazars’ insight: Move beyond checklist compliance/commission penetration testing, simulate real-world attack scenarios, and track board-level reporting on resilience.

7. Digital Assets: Regulatory tightening in a volatile space

The digital asset sector remains a high-risk, high-volatility market, with regulators intensifying AML/KYC oversight and custody requirements. The BOT’s updated Quantitative Risk Monitoring framework extends scrutiny to crypto-related exposures.

Forvis Mazars’ insight: Test the completeness of digital asset risk frameworks,from onboarding and monitoring to compliance reporting. Internal audit must be equipped with the expertise to challenge these controls effectively.

8. TFRS 17: Data, systems, and assurance in the spotlight

The rollout of Thai Financial Reporting Standard 17 (Insurance Contracts) continues to challenge insurers, with data integrity, system readiness, and reconciliations under intense pressure. For many, 2025 is the first full year of reporting under the new standard, making upcoming year-end disclosures particularly significant.

Market participants are watching closely to benchmark how insurers have implemented TFRS 17 in practice,especially the impacts on profit volatility, capital requirements, and comparability across peers. The second half of the year will therefore be critical in identifying both technical challenges and industry-wide trends. We expect that by early 2026, the market will have clearer visibility on how TFRS 17 has reshaped insurer performance metrics in Thailand, offering valuable lessons for regulators, investors, and insurers themselves.

Forvis Mazars’ insight: Ensure finance, actuarial, and IT functions are aligned, with clear documentation to satisfy both internal and external audit requirements.

Conclusion

As Thailand’s financial services sector enters the second half of 2025, the risk environment is shifting faster than many institutions anticipated. Regulatory reform, economic headwinds, and rapid digital adoption are creating both opportunities and vulnerabilities.

For financial institutions, the implications are clear:

Compliance expectations are tightening : from AI governance and cybersecurity to ESG disclosures and digital asset oversight, regulators are raising the bar. Firms must ensure that risk frameworks and reporting processes are robust, transparent, and future-proof.

Operational resilience is being tested :whether through the entry of virtual banks, the rollout of TFRS 17, or elevated credit risks, institutions need stronger data governance, integrated systems, and forward-looking stress testing.

Strategic agility is becoming critical :shifts in monetary policy, global tax reforms, and market consolidation mean that leadership teams must stay alert and ready to adjust business models, pricing strategies, and capital planning.

The message for financial services firms is simple: the second half of 2025 will reward those who are proactive rather than reactive. Institutions that anticipate regulatory changes, strengthen digital resilience, and align with evolving disclosure requirements will be best positioned to safeguard compliance, protect trust, and capture emerging opportunities.

At Forvis Mazars, our integrated advisory, consulting, tax, and outsourcing capabilities position us to support clients not just in managing,but in mastering, these emerging challenges.

For a broader view of the key risks facing financial services firms worldwide, read our Global Insights here : https://financialservices.forvismazars.com/top-risks-facing-financial-services-firms-in-2025-key-highlights/

“For Thailand’s financial sector, resilience and agility are no longer optional—they’re the key to staying ahead, and we help our clients turn these challenges into opportunities.” Tippawan Pumbansao Audit Partner