The Royal Government of Cambodia released the Cambodia Financial Technology Development Policy 2023-2028 in October 2023 – so what should you know about the framework set out to guide the Kingdom’s fintech sector?
The Cambodia Financial Technology Development Policy 2023-2028 outlines the long-term vision of developing the fintech sector and promoting financial inclusion and forms part of the government’s transformation to achieve the “Cambodia Vision 2050”.
The preamble of the downloadable Cambodia Financial Technology Development Policy 2023-2028 says its vision is “building a vibrant digital economy and society by laying the foundations to promote digital adoption and transformation in all social actors including the state, citizens, and businesses, to accelerate new economic growth and promote social welfare in the new normal”.
There are several key goals and perceived benefits of the policy which is to be treated as a “live document and, address 52 policy measures which adhere to three approaches; adoption, adaptation and further innovation.
These measures are targeted to be achieved within 5 years. The development of policy enablers covers 19 measures; the development of digital enablers covers 12 measures; the promotion of the use and development of enabling technologies covers 12 measures; and the promotion of the development and innovation of FinTech activities covers 9 measures.
The policy will loosely adhere to the National Bank of Cambodia, the Non-Bank Financial Services Authority, and relevant ministries and institutions. but it is the Digital Economy and Business Committee that will be responsible for researching any newly emerging FinTech activities.
The policy is expected to have several benefits for Cambodia’s economy, including:
- Increased financial inclusion: The Cambodia Financial Technology Development Policy 2023-2028 aims to increase access to financial services for all Cambodians, including those in rural areas and those who are unbanked or underbanked.
- Improved efficiency: The use of digital technology in the financial sector is expected to improve efficiency and reduce costs for both consumers and businesses.
- Increased competition: The FinTech Development Policy is expected to promote competition among financial service providers, which could lead to better products and services for consumers.
- Increased investment: It is also expected to attract more investment in Cambodia’s fintech industry, which could lead to job creation and economic growth.
- Improved regulatory environment: It is intended to create a regulatory environment that supports innovation while maintaining financial sector stability.
Aun Pornmoniroth, the Minister of Economy and Finance, and the chairman of the Digital Economy and Business Committee, said at the launch of the policy, “I firmly believe that the implementation of the policy will help Cambodia to benefit from the digitalisation of the financial sector and it will provide opportunities to all parties to contribute to the development of Cambodia’s digital economy and society.”
What Technologies Are Being Targeted?
The Cambodia Financial Technology Development Policy 2023-2028 was formulated by the Digital Economy and Business Committee in July 2023 and forms part of the Royal Government’s efforts to transform all areas of Cambodia’s digital economy and society – both banking and non-banking.
Thus this policy is designed to serve as a strategic roadmap for advancing and harnessing the utilisation of cutting-edge technologies within the local financial industry and the potential of fintech and as a pathway for the government to transform all areas of Cambodia’s digital economy and society.
Among the 12 measures listed in the policy to promote the use and development of ‘Enabling Technologies’, are the adoption and use of artificial intelligence (AI), machine learning (ML), big data, cloud computing, blockchain technology, smart contract, natural language processing (NLP), virtual reality technology, and data analysis technology to drive innovation in the financial sector.
What Is The Value of Cambodia’s Fintech Sector?
According to the National Bank of Cambodia (NBC), e-wallet accounts increased from 13.6 million in 2021 to 19.5 million by the end of 2022.
The number of digital payment transactions reached one billion and is valued at USD $272.8 billion, which is nine times the gross domestic product (GDP) of Cambodia reported the NBC’s Banking Supervision Report 2022.
In 2023, digital payments are projected to experience the fastest fintech growth in Cambodia with total transactions expected to reach USD $4,374 million, while user numbers are projected to reach 8.76 million by 2027.
A lack of regulations and policies were seen as potential obstacles to the growth of fintech (as well as investment and funding), but the Cambodia Financial Technology Development Policy 2023-2028 will hopefully help address this.
The government has also encouraged fintech development by creating the FinTech Regulatory Sandbox to test new products and services and partnering with international organizations to provide technical assistance and support.
The policy itself says “If compared to other countries in the region, Cambodia’s FinTech status is not considered lagging behind, but among the countries that have not yet been able to take maximum advantage of FinTech.”
It is vital Cambodia remains competitive within the region in terms of digital solutions and payments as well as financial technologies. According to a report by Boston Consulting Group (BCG) and QED Investors in 2021, Asia-Pacific (APAC) is likely to outpace the United States and become the world’s top fintech market by 2030.
Investments in financial technology firms in ASEAN countries were worth more than USD $4 billion in 2022 and the region’s digital economy is projected to be worth USD $330 billion by 2025.
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