Gearing Up For NBC’s New Interbank Transfer System

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160715 - b2b - article - Gearing Up For NBC's New Interbank Payment System

The National Bank of Cambodia (NBC) launches today its much-awaited interbank transfer system, known as FAST in industry circles.

The new system aims at facilitating money transfer between banks, making them easier, faster and safer. According to an NBC announcement released on April, the system will also promote the use of the local currency, the Khmer Riel, and bolster electronic payments.

“[It will make] payment activities within both private and public sector safer, faster, more efficient and transparent. It will also allow timely fund availability for customers, which eventually enhances the public’s confidence in the banking system and modernize the payment system in Cambodia,” the statement reads.

Based on international best practice, and modelled after the UK FAST system, the NBC’s new transfer platform has created a lot of excitement in the banking and finance sector.

“It will enable all banks in Cambodia to leapfrog years in payment evolution,” comments Cynthia Liaw, CEO of Maybank Cambodia. “It will be a revolution for payments for the banking industry in Cambodia.”

The specifics

As expressed by NBC’s Director General, Chea Serey, in an interview with the Khmer Times, Cambodia will be among the first countries in Asia to enjoy its very own real-time fund transfer system.

The system will run 24/7. The maximum amount transferable at once using the FAST system will be 40 million riel ($10,000), which is indication that the system focuses on small retail transactions. Transaction fees will either be 4,000, 8,000 or 12,000 riel depending on the size of the transfer.

Cynthia-Liaw-Photo
Maybank’s Cynthia Liaw believes that FAST will revolutionise the way online payments are conducted in Cambodia

During the last few months, the system has been in the pilot stages, where it was being tested for possible flaws and weaknesses by a handful of selected banking institutions.

The official launch is today, July 15.

Facilitating interbank transfers

The FAST system allows customers to move or transfer funds across banks and microfinance deposit-taking institutions (MDIs). The purpose of the transfer can be anything: remittances, bill payments, bulk payments, payrolls, online payments, taxes, etc.

NBC’s Serey has also stated that it will grant customers access to their account balance and history in real time.

ACLEDA Bank, the nation’s largest commercial bank, is one of the banking institutions selected to test-drive the system. Dr. So Phonnary, ACLEDA’s Executive Vice President and Group Chief Operations Officer, speaking as one of the few people who has had access to the system prior to the official launch, praises the system as being “safe, reliable and quick”.

Moreover, he says the system comes with a host of added benefits for participating banks:

“Institutions can earn non-interest income (they get 50 percent sharing fee from the sender). People can clear cheques from banks in which they hold no account more quickly, as banks no longer need to bring cheques to the NBC’s clearing house. Institutions reduce costs by not having to buy chequebooks. There will be financial gain when converting from one currency to another. Lastly, deposit mobilisation through account opening by customers will increase.”

When asked about the strengths of FAST, Dr. So Phonnary brings to our attention some of the features of the system, such as the fact that “it is supported by different means of payments, like ATMs, IB and Unity”. Unity is ACLEDA’s mobile banking solution.

When discussing the weaknesses of the system, he brings up the fact that there is a limit on the amount of money that can be transferred (40 million riel), and that transfers can only happen between banks (as opposed to personal bank accounts).

Supporting the Riel

The FAST system was conceived to play a central role in the promotion of the local currency, the Riel, a declared policy goal of the central bank.

“NBC is encouraging all the banks to support KHR as the preferred currency,” says Maybank’s Liaw. “There are two major projects undertaken by NBC to drive this agenda including real time interbank funds transfers for micropayments (FAST) and the Shared Switch System”. The Shared Switch System is an integrated system currently being developed by the NBC to facilitate e-payments and make them more efficient.

Based on statements by the NBC, many analysts had assumed that the FAST system will deal exclusively with transactions in riel. However, according to Dr. So Phonnary, senders using the FAST system can transfer both dollars and riels.

Dollar transactions account for about 83 percent of all transactions, according to the most recent data from the central bank. The Thai Baht and Vietnamese Dong are also used in border trade and in border towns.

Opportunities for e-commerce

Banking experts have been quick to point out the benefits of the new transfer system to Cambodia’s nascent and buoyant e-commerce industry.

“Opportunities in the e-commerce front for C2C payments will kick in once there is ease of payment,” says Maybank’s Liaw. “This has happened in other countries with a more developed payment infrastructure like Singapore and Malaysia, and Cambodia is well enabled to capitalize on it with FAST.”

The e-commerce industry is flourishing in the Kingdom, with dozens of new ventures setting themselves up every month. Business-to-business and business-to-consumer e-commerce is thriving, with MAIO Mall, SnappyShop, Kaymu, Shop168 and MALL855 among Cambodia’s most popular local shopping sites.

As the FAST system becomes fully-functional, insiders are hoping to find out if the system lives up to the hype. The B2B team will continue talks with banks and users to see how the system fares.