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Business Insider: Banking thrives on innovation

CIMB Bank Deputy Chief Executive Officer Neoh Sze Ming speaks to The Post last week in Phnom Penh.
CIMB Bank Deputy Chief Executive Officer Neoh Sze Ming speaks to The Post last week in Phnom Penh. Heng Chivoan

Business Insider: Banking thrives on innovation

Cambodia’s financial sector continues to deepen, with banks and microfinance institutions launching new products to serve their growing base of customers. The Post’s Hor Kimsay spoke with Neoh Sze Ming, deputy chief executive of CIMB Bank Plc, about product innovation in the local banking sector.

Cambodia’s banking sector is growing rapidly, but is this growth resulting in new banking products and services for consumers?
Cambodia has yet to reach the same level of product innovation in banking as its regional peers. Most commercial banks offer very basic products. The banking sector in Cambodia is not very mature, and banking penetration here is still under 30 percent.

Most innovations we have seen from other Cambodian banks are made with regard to transactional services such as mobile banking, internet banking and digital banking. These innovations focus on the means by which people do their banking – over their phones, over their computers, or at our branches. But we need innovations not just to our banking channels, but to our actual products.

CIMB aims to be a leader in product innovation, and as such it has been one of the first banks to introduce home loans and auto loans. Our most recent product, HomePro, combines our home loans with life insurance policies.

How does HomePro work?
CIMB is the first bank in Cambodia to provide free life insurance to its home loan customers. Under HomePro, customers benefit from up to $50,000 in life insurance coverage for 10 years. This programme gives our borrowers peace of mind.

We recognise taking out a home loan is a long-term commitment, not only for the borrower but also for his or her dependents and family members. With HomePro, CIMB combines the benefits of a home loan and life insurance. It is a great example of how product innovation can benefit the general population.

What kind of products are potentially to be created in Cambodia and what are CIMB’s strengths in this regard?
We are able to learn from CIMB Group’s core regional markets in Malaysia, Indonesia, Singapore and Thailand. We hope to introduce more products to the Cambodian market in the near future, but have to be careful to select products relevant to the Cambodian population. Soon we plan to invest in marketing and financial education, and in the short to medium term, we hope to introduce a suite of highly innovative wealth management products to the Cambodian market.

Cambodia’s government is planning to launch a depositor protection scheme in the near future. What do you think about that?
We truly encourage this concept. Having deposit insurance that is transparently managed by a reputable insurer or by the government will reassure Cambodian customers and encourage them to bank with us and increase our funds. With more funds the bank could offer more loans, which would stimulate the economy and encourage greater consumption.

How has CIMB performed in the first half of this year with regard to outstanding loans and deposits?
As of June 2017, CIMB has $340 million in outstanding loans, including about $110 million in home loans. Overall, loan growth is over 10 percent for the first half of the year and overall deposit growth is over 20 percent.

Home loans represent about one-third of CIMB’s overall loan portfolio, thanks to CIMB’s initiative in introducing home loans in Cambodia’s nascent market three or four years ago. We anticipate that loan growth will be stronger in the second half of the year, as it will likely be driven by both loan product innovation and an uptick in business acquisition loans. Our asset quality is expected to remain robust given the quality of our new loan acquisitions.

This interview has been edited for length and clarity.

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