Logo of Phnom Penh Post newspaper Phnom Penh Post - Local MFIs’ high-tech investment

Local MFIs’ high-tech investment

Local MFIs’ high-tech investment

130226 09a
Prasac was the first micro-finance institution in Cambodia to launch an ATM service. Photograph: Vireak Mai/Phnom Penh Post

The first time Leang Horng, a resident of Kandal province’s Saang district, made use of a micro-finance institution, a loan was the only service he needed. At that time, Horng had no idea about deposits or money transfers.

But things have changed in the past few years, and his family’s standard of  living is getting better.

“Besides [taking] loans, I opened a savings account at a micro-finance institution,” Horng says.

His experience reflects a trend in the Cambodian MFI industry, as players have upgraded their tactics to remain competitive in the market.

Product diversification is becoming a key strategy to satisfy MFIs’ customers.

Technologies such as mobile banking and ATM services are becoming compulsory for leading MFIs.

Insiders say this is boosting competitiveness in the industry and opening up new sources of funding for micro-finance institutions.

“It’s definitely an emerging trend, and one that’s quite challenging for the Cambodian MFI industry when we talk about banking technologies like online systems [where financial information is stored in a central system], ATM networks and mobile phone [banking],” Sean Thornnin, a lecturer in economics at Limkokwing University and a management-team member at a leading MFI, said.

“Leading players need to consider more investment in banking technologies to maintain their position. Otherwise, they may lose out.”

This is already happening. Early last year, Angkor Mikroheranhvatho Kampuchea (AMK), a leading Cambodian MFI in terms of the number of borrowers, began offering mobile banking services that allow customers to deposit money, make payments and transfer money by phone.

“We have an agent in every village our mobile banking service operates in, so all operations are made through the agent,” AMK operations manager Mam Choeurn said.

Last September, Prasac, the leading MFI in terms of loan portfolio, launched an ATM service. It was the first local MFI to introduce this  relatively high-tech product.

These two MFIs are not exceptions, according to Dr Bun Mony, chairman of the Cambodian Microfinance Association (CMA). He said several leading Cambodian MFIs, including Hattha Kaksekar, Sathapana and Amret were also adopting the high-tech approach.

Mony said each institution had spent about $2.5 million  investing in core banking systems in order to set up centralised information management systems that record every transaction made at branches around the country.

“When they spend their big budget on core banking systems, it’s pretty clear they will soon launch an ATM service, mobile banking or some other banking product,” he told the Post.

“ATMs and mobile banking can help our customers access better financial services and attract more people to open  savings accounts with us.”

Mony’s view is proved by Prasac’s performance in 2012. By the end of last year, the deposit balance had increased 850 per cent, from $5.97 million in 2011 to $56.7 million, thanks to the launch of ATMs in September.

“Our clients can easily deposit and withdraw money though our offices, particularly our new ATM services,” Prasac Microfinance president and CEO Sim Senacheert said, highlighting the benefits of ATMs for deposit accounts.

Hattha Kaksekar Limited (HKL), another leading MFI that plans to become a commercial bank by 2013, has already installed 20 ATMs and plans to add 15 more by the end of this year.

HKL general manager Hout Iengtong said one of the  aims of introducing the latest technology was to be better positioned for the future.

“It [new technology] helps us to access cheaper capital locally and not have to rely so much on foreign funding,” Iengtong told the Post.

In Channy, the president and CEO of Acleda Bank, said MFIs’ use of ATMs and mobile banking was a smart move to meet the demand for financial services in the market.

For him, the adoption of clever technology means institutions can provide financial services at any time, even on a Sunday or a holiday.

“We realise Cambodian MFIs are developing human resources and infrastructure. It’s definitely a strong message for banks to avoid standing still in the same place,” Channy said.

“More competition is good, because clients will get high-quality products and services from suppliers.”


  • Kem Sokha’s daughters slam ‘liar’ Sam Rainsy over ‘smears’

    The daughters of former opposition leader Kem Sokha hit out at Sam Rainsy on Tuesday, accusing the newly nominated “acting president” of the Cambodia National Rescue Party (CNRP) of leading a “smear campaign” against their father and “repeatedly lying to the public”. The Supreme Court-dissolved

  • US Embassy urges reconciliation

    The US has urged Cambodia to restore the independence of the media, drop charges against Kem Sokha and other political prisoners, and end the prohibition of political activity by opposition parties. However, senior government officials see the request, issued by US embassy spokesman Arend C

  • Phnom Penh authorities ban march for Human Rights Day

    Phnom Penh authorities have banned a planned march as local NGOs and workers’ unions gear up to celebrate the 70th anniversary of the signing of the Universal Declaration of Human Rights on Monday, with a youth group leader saying they would march nonetheless. The UN

  • Government deports 235 Chinese scammers

    THE Immigration Department of the Ministry of Interior on Thursday deported 235 Chinese nationals, 35 of whom were female, via the Phnom Penh International Airport for their part in a Voice over Internet Protocol (VoIP) online money extortion scam. The deportees were arrested on November 26 over the