Just after midnight on a recent Sunday, two men on a motorbike whipped past Sok Sreypheap

and grabbed the gold chain around her neck. It broke as she was pulled off the bike

onto Phnom Penh's Sothearos Boulevard and the thieves sped off with their bounty.

Sreypheap, not her real name, escaped with mild grazing. But the chain, valued at

over $200, represented her personal savings.

Sreypheap, 23, a waitress, works two jobs and earns about $110 a month. After expenses

she sends about $20 a month home to her family in Kampong Cham province. The little

left over she had saved at home until she bought her gold chain.

"This is the kind of story I just hate to hear," said John Brinsden, vice-chairman

of Acleda Bank. "We come across this thing all the time and this is why we want

people to deposit money."

With new innovations, the banking sector is bracing for a quiet revolution. According

to the National Bank of Cambodia (NBC), total deposits in the Kingdom's banking system

grew by 40 percent in 2006, with a total number of accounts growing to nearly 300,000.

This is still a small proportion of the population, but significant growth in a country

where about 35 percent of people live below the poverty line and distrust of banks

is pervasive.

"[The growth] demonstrates that public confidence in the banking system has

been increasing markedly and banking operations have been fairly and efficiently

competitive," said Chea Chanto, the governor of NBC.

There are now 20 banks operating in Cambodia, with the major players reporting healthy

growth.

Since converting from a small micro-finance NGO to a fully-fledged commercial bank

in 2003, Acleda has enjoyed rapid growth with deposits doubling each year and that

trend is projected to continue in 2007. Brinsden said while the overwhelming majority

of Acleda's deposit growth is from first-time customers, it remains a constant battle

to win trust.

"People will still say they prefer the risk of being robbed than using the bank,"

Brinsden said. "That's the extent to which there is a lack of faith in banks."

After decades of conflict - and under the Khmer Rouge a period without money - a

series of sudden bank liquidations in the late nineties exacerbated a widespread

mistrust of banks. With a large number of depositors losing their savings, the banking

collapses reinforced a culture of in-home savings, where cash is often transferred

into gold or other assets.

But according to a study by the Canadian Cooperative Association, Cambodians' lose

15 percent of their at-home savings each year due to fire, theft and water damage

- or through debased gold and jewelery, or the loss of assets like livestock that

were marked for short-term savings. The study estimated the total loss to be $60

million - money lost not only to each family, but to the Kingdom's economy.

"We try to explain to people the risk of storing money in their homes,"

Brinsden said of Acleda's marketing division. "We explain that not only will

their money be safe in the bank but it will be used to provide loans to small businesses

to help economic growth."

ANZ Royal is the new player. Opening in 2005 the bank has been leading the way with

innovations in electronic banking. ANZ Royal was the first bank in Cambodia to introduce

24/7 banking services to customers with internet banking and a network of on and

off-site ATMs. ANZ Royal are yet to release results for the 2006 financial year,

but the bank states it is now the third largest in Cambodia in terms of deposits.

"We have brought trust, international standards of governance, convenience,

innovation and superior customer service to Cambodia," said ANZ Royal CEO Dean

Cleland.

Canadia Bank showed total deposits more than doubling from $8 million in 2005 to

$19 million at the end of 2006. Vattanac Bank also reported strong growth over the

previous fiscal year, with the number of customers doubling and deposits reaching

$36.7 million.

A senior representative at Cambodia Asian Bank (CAB), who spoke on condition of anonymity,

said growth at CAB was healthy but the number of accounts in the banking sector overall-

about 2 percent of the population-remained extremely low. Growth in the sector was

sharp, the banker said, only because it was founded on such a low base.

"The growth is coming from two main sources: increased overseas investment,

with money flowing into the country, as is the case across the region, and the boom

in the land market," the banker said. "People are buying and selling land,

the prices are rocketing and people are making money. It's the already well-off who

are getting more wealthy that are using are banks, not so much everyday Cambodians."

The major commercial banks are still largely concentrated in the urban centers, where

the Kingdom's economic growth has been founded. But Acleda's reach is more extensive:

from Oddar Meanchey to Svay Rieng, new banks are being built on Acleda-owned land.

"It's important to show that we are here for the long term. That's how you win

trust," Peter Kooi, a director of the bank, said. "If you rent a building

the people think you could pack up and leave tomorrow, which is what has what happened

before."

Acleda uses savvy marketing to sell their products to the rural population. In the

branches TVs play music videos of famous Chapei players singing songs that explain

to a largely illiterate rural population what a savings account is; what a loan is

and why the bank is a better bet than storing money in your home or borrowing from

a loan shark. "Deposit growth has been healthy and winning trust is the key,"

Brinsden said. "The next step is to get customers' salaries directly transferred

into their accounts."

But the revolution in the banking sector remains a quiet one and the tipping point,

it seems, is still some way off. Despite the loss of her savings Sreypheap, along

with millions of other Cambodians, remained unconvinced about the benefits of banking.

"I just don't have enough money to use a bank," she said. "I was just

unlucky."