Lack Of Awareness And Investment Hampering Local Fintech Sector

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Despite experiencing rapid growth in the last few years, financial technology services in the Kingdom are still underdeveloped and underused, insiders said last week during the annual conference of the National Bank of Cambodia.

A man transfers money through a Wing kiosk in Phnom Penh. Supplied

To fulfill its potential in the Cambodian economy, fintech must overcome a number of challenges, including lack of consumer awareness, a weak regulatory framework, and scant funding and investment.

Ouk Sarat, director of NBC’s payment system department, pointed out that the range of fintech services in the Kingdom is very narrow, comprising mostly digital payments, remittances, and online banking options.

“Other areas of fintech, like Artificial Intelligence and Big Data are still largely unexplored in our country.

“While smartphone and Internet-related technologies are flourishing, we are not seeing much of other fintech technologies. Unfortunately, I do not see much progress when it comes to fintech,” he said.

Mr Saret said that Cambodians generally lack awareness of fintech, and added that it was important to boost public awareness of the technology and its applications.

“A lot of Cambodian are using smartphones, mostly in urban areas, but they still lack understanding on fintech. At the same time, local investors do not seem interested in the sector either,” he added.

Kimty Kormoly, deputy director general of central banking, said fintech can help local financial companies enhance efficiency, improve the electronic payment ecosystem and lower transaction costs for customers.

“Fintech allows banks to reduce costs and deliver their services more efficiently,” he said.

In Channy, president and group managing director of Acleda Bank, said fintech will play an important role in developing the local banking sector and other industries in the Kingdom. He said the technology can help mitigate risks for banks and microfinance institutions while enhancing convenience for customers.

However, before this potential is realised, a number of barriers must be overcome, particularly a lack of public awareness and a low financial literacy rate.

A recent report for the National Bank of Cambodia notes that the development of fintech in Cambodia is still in an infant stage, mostly centred on services like e-wallets, mobile transactions, and cross-border transactions.

It says that fintech needs to be supported by creating the right ecosystem, adding that the Central Bank is now preparing the regulatory framework and other policies to boost the sector.

The report also points out that NBC is considering issuing its own cryptocurrency, a project known as ‘Bakang’. The Central Bank says the blockchain technology-based currency will boost e-payments, drive forward the development of a cashless economy, and enhance financial inclusion.

Last year 24 banks and financial institutions were providing online banking services, while only 19 offered mobile banking, the report notes. 800,000 transactions were conducted on internet banking platforms, accounting for a total value of $3.8 billion. Mobile banking, meanwhile, saw 12.3 million transactions for a total value of $5.7 billion.

This article was originally published in the Khmer Times.