Despite global economic downturn in 2022, the Kingdom’s banking system has shown resilience and retained trust from both domestic and international stakeholders, thanks to the efforts of the National Bank of Cambodia (NBC).
According to NBC’s 2022 annual report, the banking system comprised 59 commercial banks, nine specialised banks, five deposit-taking microfinance institutions, 82 non-deposit-taking microfinance institutions, 16 financial leasing institutions, 223 rural credit institutions, six third-party processors, 35 payment service institutions, one credit reporting service provider, six representative offices and 2,866 money changers.
The banking sector’s financial infrastructure has steadily developed, with a notable expansion in digital financial services, particularly the NBC’s blockchain-based Bakong interbank payment platform. However, a significant unbanked population still exists. According to the NBC, by end-December 2022, banks and financial institutions held 15.5 million deposit accounts and 3.7 million borrowers’ accounts.
Igor Zimarev, chief marketing and corporate social responsibility (CSR) officer at ABA Bank, spoke to The Post’s May Kunmakara about how the current development of the financial sector is helping to bridge the gap with the “unbanked population” and ABA’s contributions to this effort.
Given that Cambodia has a significant unbanked population, how has ABA been working to extend its services to this demographic?
ABA is dedicated to broadening its reach to Cambodia’s unbanked, ensuring accessible, affordable and dependable financial services for all. Here are our key initiatives:
Electronic Know Your Customer (eKYC) and Instant Account: ABA has implemented a robust and secure system for remote customer onboarding by verifying their National ID card and biometrics. This allows Cambodians to gain access to our services without visiting a branch. Through the eKYC and Instant Account features, available on smartphones, the need to travel and wait in queues is gone. The streamlined procedure means that opening a full-scale bank account takes just two minutes, and it’s immediately usable without any further branch visit for activation.
Mobile Banking Services: Our ABA Mobile app provides customers the convenience of accessing their accounts and conducting various transactions directly from their smartphones. This is especially beneficial for those in remote areas.
Expanding Network: Presently, ABA boasts 85 branches and 43 round-the-clock self-service spots, even in rural regions. We are also strategising to further expand our branch network nationwide.
Financial Education: ABA is committed to promoting financial literacy among the public, leveraging social media and community-based financial literacy programmes. Our ongoing FinLit programme in the rural areas of Ratanakkiri is an example of this. Through the initiative, we’ve educated hundreds in remote villages on managing family budgets, cultivating saving habits, making the most of bank accounts and sidestepping excessive debt. Our aim is to usher more Cambodians into formal banking, ensuring they benefit from the conveniences offered by ABA.
With ABA’s significant investment in digital technology, how do you envision this bridging the gap for the unbanked population?
Digital technology is critical in addressing the needs of the unbanked. Mobile banking applications, for instance, render financial services readily accessible, particularly in rural regions where bank branches might be scarce.
They further promote inclusivity, allowing individuals with disabilities and those with restricted mobility to pay bills and effortlessly transfer or receive money in a cashless and instantaneous manner.
ABA’s substantial commitment to digital technology is evident in the consistent rise of Instant Accounts being set up. Since their launch in 2021, our customers have established approximately 1 million Instant Accounts.
How is ABA collaborating with Bakong, the financial technology (fintech) initiative spearheaded by the NBC?
ABA is a staunch supporter of Bakong, the blockchain-based payment platform developed by the NBC, and we’re deeply involved in its progress and roll-out:
• Early adoption: We were among the first banks to introduce Bakong-centric services to our clientele as early as August 2020. The surge in transactions by ABA users via Bakong underscores its ease and trustworthiness.
• Promotion and education: We’re in close partnership with the NBC to champion Bakong usage and educate the public about its advantages in bolstering financial accessibility.
We believe Bakong plays a transformative role in financial inclusivity, serving as a user-friendly, efficient and secure medium for local and, recently, international transactions. Our outlook on its continued evolution is very positive.
Can you provide figures on ABA’s active subscribers and shed light on the transaction statistics?
As of September 2023, ABA proudly serves 3.2 million customers, facilitated by our extensive infrastructure of 85 branches, 43 self-banking spots and 1,500 self-banking machines across the country. We actively support the national currency, with our clientele holding more than 2 million accounts in Khmer riel.
It’s evident that nearly every ABA customer possesses and utilises the ABA Mobile app. In the first nine months of 2023 alone, ABA facilitated a staggering 579 million transactions via our mobile banking app, amounting to a transaction value exceeding $154 billion.
The growth of our ABA KHQR network has been rapid, underpinned by the trust of hundreds of thousands of merchants and millions of valued customers. In the first nine months of the year, we witnessed a 150% increase in the number of transactions when compared to the corresponding period in 2022.
What has elevated the importance of digital payments for individuals and how does this advancement foster financial inclusion?
The push towards digitalisation in the banking and financial sectors, both domestically and globally, has been underway for nearly a decade. The advent of Covid-19 merely expedited this shift towards digital finances. Cambodia, with its youthful demographic, proactive initiatives by the government and the inception of Bakong, has witnessed a tremendous progression in this arena.
Consequently, digital payments have gained in prominence within Cambodia, attributed to their ease, security and inclusive nature:
• Convenience: Digital payments are more convenient in terms of ease. They enable transactions on mobile devices, negating the need for physical visits to banks or shops. For merchants, there’s the added bonus of not worrying about holding cash, dispensing exact change or exchange rates, especially given our dual-currency operational mode.
• Security: The digital payment infrastructure offers augmented security via encryption and other safeguarding mechanisms. This method circumvents potential pitfalls like losing cash or theft.
• Inclusivity: Digital accounts, coupled with mobile banking applications, have opened up access to banking services. They enable seamless payments even for those in remote areas, thus elevating financial inclusion and bolstering their participation in the formal economic framework.
Overall, ABA is adopting a comprehensive approach to extend its services to Cambodia’s unbanked population. By investing in digital technology, partnering with mobile network operators and e-wallet providers and educating the public about financial services, ABA plays its role in bridging the gap and promoting financial inclusion.
