Cambodia Investment Review
The Microfinance sector in Cambodia is making steady strides in embracing FinTech (Financial Technology) to enhance operational efficiency, reduce costs, and offer better deals to borrowers, according to Sok Voeun, Chairman of the Cambodia Microfinance Association (CMA).
“Cambodia’s FinTech industry is growing slowly but steadily due to rapid adoption of technology by Cambodians. We are working towards realizing the immense untapped market potential,” said Voeun. He highlighted the significant role of the National Bank of Cambodia (NBC) in introducing innovative technology backbones, contributing to the growth of both FinTech companies and traditional financial institutions.
According to the Cambodian Microfinance Associations’ (CMA), at the end of 2022 loan portfolios grew to $9.135 billion (23.8% annual increase) with 2 million clients while deposit at the 5 MDI has grown to $4.686 billion (20.1% annual increase) with 2.66 million depositors.
FinTech is improving financial inclusion
Voeun noted the recent emergence of FinTech companies have made strides in offering a variety of financial services. However, he emphasized the crucial role of technology adoption within the traditional microfinance sector in ensuring its survival amidst the changing global economic scenario. “Adopting financial technologies is vital for microfinance institutes to provide more efficient, reliable, speedier, and cost-effective financial services,” Voeun stated.
On initiatives to improve financial inclusion in rural Cambodia, Voeun highlighted several projects such as the Cambodia Shared Switch (CSS – ATM), Real Time Fund Transfer (RFT), KHQR and Bakong, all initiated by the NBC. “These projects have laid the foundation for financial inclusivity for the larger unbanked population of Cambodia,” said Voeun.
Tomas Pokorny, Board Director and Secretary General of the Cambodia Association of Finance and Technology (CAFT), outlined the challenges faced by members of the association in promoting FinTech adoption. “The rapid pace of digitalization has resulted in regulatory and technological gaps. This leads to internal competition among organizations and confusion for consumers,” said Pokorny.
Addressing high costs of quality tech
He also pointed out the high costs of quality tech solutions, leading to an imbalance in market competition. But Pokorny is hopeful, saying, “This is just another cycle in fintech market development in Cambodia. This time, it’s a cycle of consolidations and stabilization.”
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Despite these hurdles, Pokorny sees a crucial role for FinTech in promoting digital banking in Cambodia. “Fintech will lead to lowering consumer costs while accessing and utilizing digital banking solutions, as well as to the transparency, security, and overall accessibility of general financial products via digital means,” Pokorny asserted.
The rapid adoption of FinTech is reshaping Cambodia’s microfinance sector, with the promise of greater inclusivity, improved efficiency, and lower costs for consumers. Despite the challenges, industry leaders like Sok Voeun and Tomas Pokorny are optimistic about the ongoing digital transformation.
