Fintech in the Kingdom of Cambodia

Updated On : August 2020

According to e-Conomy SEA 2019 reports, prepared by Google, Temasek and Bain & Company, the researchers by analysing current and future trends in six regions i.e. Thailand, Vietnam, Malaysia, Singapore, Indonesia, Philippines. It said "Southeast Asia's internet economy will reach US$100bn in 2019, representing a 39% increase from $72bn in 2018, and by 2025 it is expected to triple in size to $300bn."

Cambodia is yet to make most of the internet economy domestically and with Southeast Asia.

There is a large population of the unbanked segment that is yet to be served in Cambodia. Digital financial services offer a biggest opportunity to unbanked segment, who have limited access to financial services.

To encourage the growth and development in the fintech sector of Kingdom of Cambodia following are the initiative taken by Cambodian Finance Stalwarts and Government

• Cambodian Fintech Association (CFA) The Cambodian Fintech Association (CFA) was founded in the year 2018, with an aspiration to build Cambodia into the leading Indochine Country for Fintech Innovation and Investment in the region. The association is consisting of Fintech Start-ups, Hubs, Accelerators, VCs. It is a not-for-profit organization, run for the benefit for members of Cambodia.
• Cambodia Fintech Day 2019 The "Cambodia Fintech Day 2019" was organized by National Bank of Cambodia in Phnom Pneh, Cambodia. The governor of National Bank of Cambodia (NBC) deputy Neav Chanthana said at the 2019 Cambodia Fintech Day, "Fintech plays an important role as an innovation driver that contributes to enhancing the efficiency of the payment system in Cambodia". The conference highlighted in 2019 the digital payments through mobile applications in Cambodia accounted for less than 10 % of transactions.
  
  According to Mekong Strategic Partners Co Ltd (MSP) reports, it is estimated in late 2019, that the Kingdom's digital payment market is set to be worth $2.215 billion (a 37% increase from 2018), with the value in 2020 believed to be around $3.469 billion. So, there will be an increase in demand for digital payments in 2020 in Cambodia.

Let's have a look at some homegrown emerging of Fintech Start-ups in the Kingdom of Cambodia

• Spean Luy founded in 2016, that allows borrowers to apply for small loans ranging from the US $50 to the US $1000 online with the help of mobile application.
• Clik payments founded in 2016, aims to help Cambodia's fragmented payment industry by developing a payment processing application that will aggregate all payment methods and networks under its platform.
• Wing, it is a leading fintech in Cambodia for mobile banking-related services, the services provided are money transfers, bill payments, phone top-ups, online shopping, QR code payments.
• Pi Pay founded in 2016 is a cashless payment providing startup. The payment platform has a customer-facing application that incorporates merchant payment services. As of January 2020, the start-up had around 300,000 users and over US $ 350 million transaction values.
• BanhJi was founded in 2016, it is a start-up providing account solutions to micro and small businesses in Cambodia. Last year BanhJi had around 3000 SME customers using its software.

Following are some of the key strengths of the Kingdom of Cambodia

• Strong Economic Growth Potential Cambodia in 2015 attained a lower-middle-income status, with a growing middle class the spending power and consumer behaviours will give rise to adopt new solutions for developing payments, credits and mobile technologies
• Strong Government Support The most active regulator, National Bank of Cambodia (NBC) supports lending, and banks in Cambodia have continued to make credit available for consumers and companies in the country. The Cambodian Investment Board (CIB) offers incentives for investors, who are willing to support entrepreneurs that are starting a business in fields like technology, job creation, exports, tourism, environmental conservation, and rural development. This shows that the government has confidence in entrepreneurs. The government also provides an exemption from taxes, duties and application costs.
• Foreign Ownership allowed To encourage foreign entrepreneurs to venture in Cambodia, the government allows 100% foreign ownership. This will help to grow talent and innovate in financial services in the country.

The fintech ecosystem in Cambodia lags behind most others ASEAN countries, but with the efforts taken by the government, it has started addressing the pain points. They have searching for the ways that can help to onboard 80+% of unbanked consumers like the financial institutions can implement digital banking, customer onboarding, mobile banking, doorstep / agency banking software's.

Fill the funding gap, understand the potential of e-commerce, it can transform the way of doing business in the country. Increasing internet penetration, mobile-powered efficiencies have the potential to modify the finance industry.

The future of pandemic is digital, the financial institutions across the world have started adopting new technologies to serve their customer remotely. By leveraging the technology, the banks, microfinance institutions can provide contactless digital banking and payment-related services remotely.

We can conclude that with support from government, fintech will significantly help in the development of the financial and economic sectors in Cambodia and also fill the gap of serving unbanked segment.