Cambodia’s consumer lending sector has been growing steadily since the 1990s but it was relatively slow to establish a formal credit reporting database for the Kingdom’s financial institutions to report on client creditworthiness.
It was only in 2011 that the National Bank of Cambodia issued its Prakas on Credit Reporting requiring financial institutions to report, update and store their customers’ loan payment history.
In response, Credit Bureau Cambodia (CBC) was officially launched on March 19, 2012.
In only 10 years, the bureau now has 170 members including banks, microfinance, leasing companies, and rural credit institutions that rely on its database to determine whether customers are eligible for loans and what rates they may have to pay.
To reflect the company’s success, last year CBC won the “Excellence in Consumer Credit Reporting” Award from the Global Business Outlook.
The award recognizes CBC’s contribution to industry-wide credit risk management by promoting credit market transparency and efficiency which contributes to overall financial sector stability in the country.
Chief Executive Officer of Credit Bureau Cambodia Oeur Sothearoath joined Cambodia Investment Review – Leader Talks for an exclusive interview.
Oeur explained how the bureau is helping Cambodia increase financial literacy, further developing consumers’ rating scores, and embracing the rapidly moving financial technology revolution.
“Firstly, I want to highlight that it is vital for all Cambodian’s to regularly check their credit scores. This is so they can understand their financial health, monitor the score as they progress across their financial lifecycle and develop the country’s financial literacy,” Oeur said.
“Secondly, information is power and the same credit score that can be accessed from our database will be the same all our member financial institutions receive. Hence, for some, this may be an opportunity to put themselves in a better position to negotiate with any potential lender,” Oeur added.
Greater financial inclusion through digitalization
To increase financial inclusion, CBC has recently partnered with two of the biggest financial institutions – Sathapana Bank and WING Bank, to allow their mobile banking users to electronically request their credit reports and check their credit history necessary for loan requests at any financial institution.
Such collaborations complement the service to individuals consumers in addition to making physical visits to CBC and its authorized agent offices.
“The partnership with Sathapana Bank and Wing Bank will allow us to serve a broader community across Cambodia. It reflects our commitment to provide accurate and real-time credit reports to borrowers, helping them make better financial decisions and promote financial inclusion,” Oeur said.
“This is just one of the many digitalization initiatives we are currently undertaking. Digitalization is at the core of all financial companies not just in Cambodia but around the world is moving towards a blend between technology and finance,” he added.
Credit scores ranging from 100 to 1700 are derived from individual credit reports based on data from 170 financial institutions that are members of CBC. The scores are a combination of length of credit history, credit commitment, payment history, adverse information, and new credit applications. Individuals can request their credit score exclusively via CBC Mobile app in addition to credit monitoring alerts which notify consumers of changes to critical information in their credit history such as installment missed, on-time payment, new loan application, among others
Ensuring consumer data is safe and secure
Looking to the future Oeur indicated that the three main areas of growth are data source diversification, creating more strategic partnerships, and ensuring storage and security of its consumer and member data.
“Data source diversification is a key focus area to help mature consumers’ overall credit score and allow more Cambodian’s who have not taken out a formal loan to have a calculated score. Their score can be further enhanced by including phone, electricity, and potentially rental agreements for example,” Oeur said.
“Strategic partnerships allow more consumers to have easier financial accessibility and widen the easier access to financial health check service through our partner programs, Oeur added.
However, one of the biggest areas CBC has identified utilizing the latest technology is to ensure consumers’ data is stored securely and a focus on electronic -Know Your Customer (e-KYC) interface.
“As we embark on a greater utilization and reliance on technology we must also ensure that we are careful to properly protect consumers’ vital information from both internal and external threats that could cause security breaches,” Oeur said.
“In the future, CBC is hoping to collaborate with financial institutions and the central bank to establish the growing use of e-KYC which is already becoming the next stage for customer identification. We hope to also utilize this technology to facilitate instant verification for both our members and the Cambodian population, Oeur added.
‘Cambodia Investment Review – Leader Talks’ series interviews Cambodia’s most influential and important decision-makers so our readers can better understand current and future investment opportunities.