Cambodia held its first financial technology (Fintech) forum last week to discuss trends in the nascent sector.
According to a report from the Asian Development Bank (ADB), Cambodia is “facing one of the biggest windows of opportunity enabled by more than 24 billion dollars’ gap between financial services needs and formal supply, accelerated technological advancement and adoption, and lower barriers to entry on the supply-side.”
“Like we see many places in the world, people in rural areas have the wish to access [finance]” Tom Moyes, project manager of the ADB’s Mekong Business Initiative, told the forum.
“So we have got a big job to do, to bring financial inclusion to the rural areas. Like I said, while another system is not going to do it, let’s move to Fintech.”
The ADB predicts that Fintech can help boost Cambodia’s gross domestic product by 6 percent. Its main market leaders in Cambodia are large corporations and banks, such as Acleda, RHB Group, ABA Bank, Wing, Smart and Metfone.
Sim Chankiriroth, CEO and founder of Fintech startup Banhji, told VOA Khmer that its business model was aimed at improving the financial inclusiveness of small- and medium-sized enterprises.
“We see one of the national priorities is to help the SMEs access finance and have proper digital records. We can’t reach the goal with only regulations and without tools, so we are providing the tools.”
Employing some 10 software engineers, Banhji offers free and localized accounting software.
Chankiriroth says that the real challenge lies in building credibility with clients in a country where the majority of people exclusively rely on cash payments and paper records.
Only about 13 percent of Cambodian adults have a bank account, while only some 4 percent have savings with financial institutions.
A pervasive lack of trust also dominates the sector due to a lack of knowledge, speakers told the Fintech forum.
Gordon Peters, an analyst with Mekong Strategic Partners, said in an email that the research predicting a 6 percent boost to the economy from Fintech “seems very optimistic”.
“It would take significant policy change and new business growth in the Fintech space,” he wrote.
“There is a lack of Fintech funding and a clear regulatory framework for Fintech to grow versus regional neighbors, and The Smart Digital Innovation fund that Mekong Strategic Partners manages is looking to solve some of these issues by funding top Fintech startups” he added.
Chea Serey, director general of central banking at the National Bank of Cambodia, told the forum that a national policy had been drafted to deal with the shortfall and was expected to be released later this year.
“We are beginning the process,” she said. “We need to discuss with other stakeholders and the private sector. Now we have more players who will compete in the market, which will also lower the cost of services, which is good.”
Ros Khemara, the country manager for the Mekong Business Initiative, insists that “now is too early” to focus on strict regulations of the sector, which could stymie creativity.
“There will be a certain level of impact where Fintech influences the country’s economics, and that is when the government, later, should regulate the system, for example, giving licenses for new business models.”