Automatic teller machines (ATMs) and the planned launch of domestic credit cards mark a turning point for retail banking in Cambodia, as money becomes more readily available – and not necessarily in cash.
On the back of rising personal wealth and economic growth, Cambodia’s small retail banking industry is taking off, fueled by rising trust, access and confidence in the stability of the Kingdom’s financial sector.
“The number of people coming into the Cambodian banking system far exceeds population growth,” said Steve Higgins, CEO of ANZ Royal.
According to Higgins, the outlook for Cambodia’s retail financial sector is overwhelmingly positive, and he expects it to continue growing steadily in the coming years.
“If you look at the proportion of credit to GDP in Cambodia, it’s still far lower than other Asian markets, so there’s plenty of scope for natural growth,” he said.
“A hallmark of developing economies is that financial services increase far more rapidly than the general economy. It’s happened everywhere, and it’s happening in Cambodia.”
ANZ Royal, established in 2005 as a joint venture between Australia-based ANZ and the local Royal Group, has pioneered electronic and internet banking in Cambodia.
In addition to its suite of personal accounts, ANZ Royal was the first bank to install ATMs – it now has 120 across the country – and plans to soon launch its first Cambodian credit card.
Acleda Bank president and CEO In Channy has also witnessed a rapid expansion in retail banking since Acleda was first licensed in December 2003.
“We’ve built from being an NGO with five offices to having 213 offices across the country,” he said.
By April this year, Acleda was opening 770 new bank accounts per day, and the growth shows no signs of abating.
According to Channy, Acleda plans to double the number of ATMs from 30 to 60 in the coming year, and build on the 300 point-of-sale systems already present throughout the Kingdom.
Personal loans and credit cards are also seen as a strong potential growth area. Of the $438.8 million wrapped up in Acleda loans, only $10.5 million were personal, Channy said.
“This is a very small amount but in the future this [sector] will be part of our growth,” he said, adding that the bank also plans to introduce credit cards as its retail services expand.
“In Cambodia, there are few banks that issue real credit cards,” he added.
Paul Guymon, general manager of local market research firm Indochina Research, said that this growth has been underpinned by a sharp increase in the trust shown by Cambodians in the domestic banking sector.
“There is now a lot more trust in the banking system, and consumers are willing to put more of their money in banks,” he said. “Even just four years ago, there was an ingrained distrust of banks.”
According to Guymon, this confidence is reflected by the rise in the number of ATMs in Cambodia since the first ANZ Royal unit was installed in 2005.
“The key thing in terms of the use of banking and financial services is the increasing number of ATMs,” he said. “ATMs are a major spur to the use of retail banking [since] money is readily available, yet secure .”
One challenge to the further expansion of retail banking is the large proportion of the rural population either too poor to afford traditional banking services or who live too far from bank branches.
“Lower income groups are locked outside the banking industry, not only because of distrust, but also because their money is being spent on a day to day basis,” Guymon said.
Channy foresees the entire retail banking sector eventually embracing greater competition.
“We are trying to provide a convenient infrastructure to all of our customers,” he said. “Acleda and the other banks are each doing this, which will further improve the trust in the banking industry.”