The next three to five years will bring change to the banking and finance industry, according to Michael Lor, CEO of Canadia Bank.

“In the next three to five years in Cambodia, certain things will happen, certain things will develop, the industry will develop. It could be a different landscape,” he says.

He says today the use of and investment in alternative channels such as self-service terminals or electronic banking is still low. “But what you will realise is that these things will expand very fast in Cambodia especially,” he says.

According to Lor, the self-service terminals in Cambodia are predominantly ATM machines. In contrast to places such as Hong Kong or Singapore, the utilisation rate is low and they are not well distributed all over the country. “But I do expect that this will change very soon,” Lor says.

He says banks will need to invest much more into these alternative channels such as self-service terminals or self-deposit machines and make these alternative channels available

Lor says banks might start to charge for transactions over the counters, try to limit these transactions and start incentives for customers to use this machine. Banks will invest more into these terminals and migrate customers to them, Lor says.

Other alternatives are electronic channels, such as internet and mobile banking, that will get more traction and speed, according to Lor.

“The adaption of technology in Cambodia is almost at the same level as of countries in the region today,” he says. While mobile and internet banking already exists today in Cambodia, it is not fully functional and people use internet banking only to check their balance or so some transfers, Lor says.

He says in other countries in the region, people use the electronic channels much more and do not even need to visit a bank anymore. For example, they pay all types of bills through the internet through internet banking. Such capabilities in many banks offering internet banking in Cambodia are still a bit slow, Lor says.

“But some of these capabilities of mobile and internet banking will actually grow to be much more sophisticated in the next two to three years time,” he says.

“The capabilities of internet banking and mobile banking will be tremendous. And you will see that many of the capabilities that are not here today will be there,” he says. “If banks were to assume that the adoption of this would be slower in Cambodia than I think they would be badly mistaken. I think the adoption of technology, electronic banking, self service terminals, in Cambodia is going to be much faster, is going to be much more aggressive, than what you see in the development of such adoption in other countries.”

Cambodia’s banking and finance sector will also see changes in terms of products and services, according to Lor. He says today, a lot of loans in Cambodia are focused on SME lending and micro finance.

But in the future he says he will not only expect that the credit card business will grow significantly, but banks will begin to push for personal lending, for customers to do their personal loans, for travel, for marriage, for furniture, for renovations. “These are loans that are not related to businesses. They are purely for personal consumption. Today, you see very little of this in Cambodia,” he says.

He says he thinks banks will begin to realise that as the country grows richer and the income per capita improves over time, the demand for consumption loans will come up and “you will see many banks pushing aggressively into credit cards, into personal loans, into consumption loans, into car loans”.

Life insurance is another service that will enter the country eventually. “And today I think that a lot of the banks are basically preparing to go into life insurance,” he says.

While customer service is something many banks have not looked into yet and banks today have limited branches and only serve a close loop of customers, this will also change in the next two to three years, Lor says. “The thing that is going to distinguish a bank for customers eventually will be service and convenience,” he says.

Convenience will play a bigger role especially for customers who are working and where time thus becomes important. For example, the availability of a branch next to the office or house could play a role.

“So service and convenience will determine the difference in the banking sector in the next two to three years as well,” Lor says.

Despite these potentials, Cambodia’s banking industry will face challenges in the future. One challenge is the shortage of talents and the shortage of banking skills, Lor says.

He says to countervail the lack of talent, the banking sector needs to be able to do two things. One is being able to produce its own skills.

“And I think what is lacking in the country today is a proper institute if banking and finance, to train banking expertise for the country,” he says. The second issue is that the country needs to have a banking skills development fund to fund the training.

Lor says that the country also needs strong domestic banks. He says they are important for the stability of the banking sector but also to trigger access to banking services in the rural provinces,  where a lot of the people are underbanked. “Because a strong local domestic bank will find it as part of their community responsibility to expand out into the region, to expand out into the provinces, to make sure that all Cambodians have access to banking,” he says.

Michael Lor is Malaysian but started his banking career in Singapore. He graduated from NUS and joined DBS bank after graduation.

After spending 20 years in the banking sector working for different banks in Asia, he went into technology. But he went back into banking and eventually came to Cambodia to work for Canadia bank in July last year.