Logo of Phnom Penh Post newspaper Phnom Penh Post - MFIs extend reach with branchless banking

MFIs extend reach with branchless banking

A customer service employee finalises a transaction at a microfinance institution in Kampong Speu province in 2014.
A customer service employee finalises a transaction at a microfinance institution in Kampong Speu province in 2014. Hong Menea

MFIs extend reach with branchless banking

Branchless banking, including mobile banking, is one of the hottest trends in Cambodia’s microfinance industry, helping financial institutions deliver their products conveniently and affordably to people living in rural areas, industry insiders said yesterday.

Speaking at the Mekong Financial Inclusion Forum in Phnom Penh yesterday, Chea Phalarin, CEO of Amret Microfinance, said while financial institutions have expanded their branch networks into Cambodia’s provinces, many low-income families in remote areas still have limited access to financial services. He said branchless banking services were proving to be a game-changer, giving these families convenient access to a wide range of financial products.

Phalarin said Amret’s “mobile savings collection” service, where the microlender’s staff is dispatched to a customer’s home or business place to collect deposits or deliver cash withdrawn from their account, has been warmly received since its launch early last year. He said 34,000 customers are now using the service, with total deposits exceeding $3.1 million.

“By launching our mobile savings collection, those who have low incomes and just $10 or $20 to save but never save at banks, now they can deposit any small amount of money through our mobile tellers,” he said, adding that customers receive confirmation of the transactions and an updated balance in an SMS sent to their mobile phone.

Phalarin said extending financial services to this segment of the population benefits society, as it provides them with money for future investment, their children’s education or building a house, as well as other benefits that can improve their living standard.

AMK Microfinance offers a similar service through more than 2,400 agents stationed in villages nationwide to assist customers with their banking needs.

Its chief executive, Kea Boran, said providing branchless banking services to poor customers in rural areas is a major tool for promoting financial inclusion in Cambodia, as even with their extensive networks of branches, microfinance institutions cannot reach every village.

“Our agents provide more people, particularly low-income people in remote areas, with access to formal financial services,” he said.

To date, more than 100,000 customers have utilised AMK’s agent-based mobile banking service, with total deposits of about $500,000, according to Boran.

“If a customer has 1,000 riel to 2,000 riel and wants to deposit it at a bank, they don’t dare to do so because they feel shameful that it is such a small amount of money,” he said.

“We want people to save, even this small amount, so we launched our [agent-based] mobile banking system to encourage them to save.”

However, the cost of financial inclusion can be high, and microfinance institutions face steep operating costs for rolling out branchless services in rural Cambodia.

According to Phalarin, Amret lost $400,000 per in the first year of launching its mobile savings collection service and expects to lose $300,000 this year. Yet it remains committed.

“We expect that we will reach the break-event point after five years,” he said.

MOST VIEWED

  • PM imposes nationwide Covid restrictions, curfew over Delta scare

    Prime Minister Hun Sen late on July 28 instructed the municipal and provincial authorities nationwide to strictly enforce Covid-19 measures including curfew for two weeks from July 29 midnight through August 12 to stem the new coronavirus Delta variant. The instruction came shortly after he issued a directive

  • Two luxury hotels latest quarantine options for inbound travellers

    The Inter-Ministerial Committee to Combat Covid-19 has designated two luxury hotels as alternative quarantine options for travellers who wish to enter Cambodia through Phnom Penh International Airport – Sokha Phnom Penh Hotel & Residence and the Courtyard by Marriott Phnom Penh. In a notice detailing guidelines issued

  • Provinces on Thai borders put in lockdown amid Delta fears

    The government has decided to place several border provinces in lockdown for two weeks in a bid to prevent the new coronavirus Delta variant spreading further into community. According a directive signed by Prime Minister Hun Sen late on July 28, the provinces include Koh Kong,

  • Delta spreading in Kingdom

    Cambodia has so far detected more than 200 cases of the highly contagious coronavirus Delta variant, with 109 found on July 31 and August 1. The Ministry of Health has expressed deep concerns that the variant may have already reached communities and be spreading as some of the cases

  • China denies Mekong hacking

    As the US and its allies joined hands last week to expose what they allege to be China’s Ministry of State Security’s malicious cyber activities around the world, the attention also turned to Cambodia with the US Department of Justice claiming that four

  • US' Johnson & Johnson Covid-19 vaccines arrive

    The first batch of 455,000 doses of the Johnson & Johnson Covid-19 vaccine donated by the US touched down in Phnom Penh on the morning of July 30. They are part of the total 1,060,100 doses the US has pledged to provide to Cambodia through the World Health Organisation-led (