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Logo of Phnom Penh Post newspaper Phnom Penh Post - The rise of electronic money

The rise of electronic money

Mobile money transfer systems such as WING profit as cell use skyrockets

UNITY will be available at the bank this year. It will also be soft launching for internal staff soon."

PRESENTED with a handful of cash after a hard day’s work under the glaring lights of a Phnom Penh factory, the thought on many workers’ minds might be “how do I get my wage back to my family”.

If, like an estimated 95 percent of the Kingdom’s 14 million-strong population, your relations do not have a bank account and prefer the
cash-under-the-mattress method of saving, the options could be: Putting the money on a provincial-bound minibus in Central Market for a fee of a couple of dollars; waiting a month or two for a chance to transport the money yourself on a social – but potentially expensive – visit; or buying a mobile scratch card with your wages, then texting the details to a contact in your home town who will exchange airtime for dollars in return for a small commission.

Such methods of cash transfer can be risky for the individual concerned. For the banking sector, they illustrate a potentially lucrative market that until very recently remained completely untapped.

Cambodia’s telcos and banks are targeting unbanked communities through their mobile phones. According to a quarterly analysis by financial consultants McKinsey & Co called Capturing the Promise of Mobile Banking in Emerging Markets, by using mobile phones the cost of serving customers is reduced by 50 to 70 percent, making it possible to offer financial services to a vast population once considered unprofitable.

For Brad Jones, Managing Director of WING, an ANZ-owned company which launched mobile transactions in Cambodia in late 2008, the potential is obvious.

“There are four billion cell phones in the world, but only 1.6 billion bank accounts representing a massive market opportunity for organisations that can develop business models to serve this group,” he said.

WING uses existing channels on mobile-phone networks – including Hello and Mfone – to transfer money from person to person through text. After a user sets up a WING account – for a subscription fee – their money is held by ANZ bank and moved between WING users by SMS.

In its first year of operation, the service attracted 100,000 users – an estimated 56 percent of which were previously unbanked. It is now working with microfinance institutions to expand to loan repayments.

According to Jones, for ANZ this provides them with a base of customers who, over the long term, could have more extensive banking needs. For telcos, it drives SMS traffic and revenue churn.

Mobile finance is quickly winning support amongst other domestic companies. Mobitel, owned by the Royal Group, is launching its own mobile banking initiative called VLOAD, under development with Refresh Mobile. When approached by the Post, a spokesperson for Mobitel declined to elaborate further.

ACLEDA bank is set to offer banking via mobile phone later this year, according to Senior Vice President and Head of Marketing Sok Sophea. He told the Post via email that the UNITY scheme will enable customers to pay bills and transfer money through mobile phone technology. It has been launched in a bid to provide greater convenience for people who want to manage their finances 24 hours a day and also forms part of the bank’s plan to launch new services to “make banking services familiar to everyone”, he stated.

“UNITY will be available at the bank this year. It will also be soft launching for internal staff soon,” he wrote, adding that anyone with a mobile phone will be able to qualify for the service.

Cambodia’s blossoming love affair with mobile banking has been largely driven by the experiences of markets in Africa.

Said to be the brainchild of Vodafone’s Nick Hughes, who helped implement the scheme four or five years ago in Kenya, it quickly became a successful business model.

Speaking in a June interview last year, he said that in excess of 10,000 customers were signing up to Kenya’s M-PESA service each day. That “remarkable” uptake has led Vodafone to launch similar services in Afghanistan and Tanzania.

“It changed the way that money moved around Kenya,” he said.

Other countries have also caught on to the trend, with the Philippines leading the banking revolution. Around 8 percent of its unbanked population has subscribed to mobile banking, McKinsey reported in February.

The sector is rapidly expanding. McKinsey estimates that 120 operators in 70 markets will deploy mobile-money offerings worldwide within the next six to 12 months.

Its report states: “Today, only about 45 million people without traditional bank accounts use mobile money, but we expect that this number could rise to 360 million by 2012 if mobile operators were to achieve the adoption rates of some early movers.”

Analysts at the firm added that by 2012 the sector has the global potential to generate US$5 billion in direct revenue, such as transaction fees and cash out, and $3 billion in indirect revenues, including telco provider churn and higher average revenues per SMS.

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