With financial technology – fintech for short – in Cambodia largely limited to electronic money transfers through physical kiosks and agents, there is much talk of the massive fintech potential that the Kingdom has still not tapped into. So what new business models can fintech bring in? Post Supplement spoke with fintech entrepreneurs Matthew Tippetts and Darren Jensen who are gearing up to launch their startup early next year. The pair shed some light on how the mentality of the Cambodian consumer immensely influences the challenges faced by the nascent fintech market, which Tippetts and Jensen both agree is accelerating at an encouraging pace.

What will you bring to the Cambodian fintech plate?

MT: Basically, our target is to enable payments and bring value to all our customers. It’s relative to the services we offer and the capabilities we offer to the consumers, but also to the tools that we give to the merchants to do more than just payments, something which has a lot more value. We conducted a four-month extensive study and spoke to 1,800 point-of-sales and more than 1,100 consumers to understand how they do payments. What came out of it was that of all the merchants, on average, 77 percent of all their revenues are paid in cash. And that has a massive strain for these merchants in terms of dealing with cash, re-consigning it, the risk, the theft. A lot of these merchants need a solution to sort that out. The other vital thing we have to do is to support the policies of the central bank, to ensure safety, KYC (know your client), AML (anti-money laundering), and enabling people to use more riel while fostering financial inclusion.

But for us, one of the key things will be safety. We expect, thanks to the technologies we’ll be using, to be one of the safest, if not the safest, platforms in Cambodia. And we will be fully mobile.

Are there any other key things you’ve identified as crucial for your startup?

MT: Financial inclusion is imperative – effectively, our platform will enable anybody with a smartphone and photo ID to use us – anybody who has these two things can have access to basic payment capabilities and other nice things that make their lives easy. We also use some other technology that renders hacking of mobile devices ineffective.

DJ: About the security, from the technology point of view that we will be using, it is a secure cutting-edge technology that will securely encrypt any data that is entered. That is really our utmost priority, the safety of our platform.

MT: We don’t see the value in being first, we just want to provide the best service to our customers, and the great thing about the market right now is that there is a lot of innovation and a lot of new entrants into the fintech market. Bongloy, Pipay, and banks like Acleda and ABA are innovating – the country needs all these and it’s great that the market has all these new entrants. At the end of the day, the winners will be the Cambodian people.

Are the companies like Bongloy and also the banks your competitors?

MT: They’re definitely competitors, but I think the market is big enough to have these many competitors. Right now, the focus should not be about the percentage of the market share I can take, it should be how much I can grow this market. The market for advanced payments is tiny, the digital payments market is tiny. How do we get from people spending 77 percent of their purchases in cash to inverting that? It’s a long way to go, and technologies and business models are there to be able to grow this market to something much bigger.

What is the biggest challenge in Cambodia for fintech?

MT: The consumer. They are extremely tough and price-conscious.

You need to build something which solves a real problem for the consumer, and that the consumer will gladly use. There’s plenty of ways, incentives is one of them. But when we did our study, all of them had e-payment applications on their phone. 80 percent of the people we interviewed said they used Mobile Money Service providers like Wing or True Money, but only 18 percent of them used their app. It comes down to how you communicate and how easy or difficult these apps are to use. If the app is clunky and doesn’t look good, you’re not going to get them.

Who would your company benefit the most?

MT: Looking at fintech in general, the merchant would benefit greatly because it will massively reduce their risks and costs and improve their customer services. Cambodia customers are generally not loyal. The market is very aggressive, that is why there’s 180 percent SIM penetration – so many people have two SIM cards because they want the best offers from different telcos. It’s a challenge in the market but if you find the right formula to provide enough value, these customers will become more loyal.

How would you expect your own customer base to be loyal to you?

MT: Well, that’s our secret sauce. That has to do with our business model and how we deliver our services. If we look at the general concept of offering discounts and promotions – and this is not innovation that we’re bringing into the market – we need to engage customers, but do you get loyalty? Is that discount you’re giving coming back into your pocket? What is your return on investment? Telco companies right now are facing a highly competitive market with customers jumping from one telco offer to the other, with all telcos sending promotion messages to their customers all the time that it comes to a point that the consumer doesn’t even remember the offers because they are drowning in these messages.

I hope the fintech industry does not come to that. I think that if done properly, the merchant, consumer, and, of course, the provider of the service will benefit long-term.

What else would you like to say about the fintech market in Cambodia?

DJ: There are enormous opportunities in Cambodia and it’s a great place to see how this kind of nascent market can grow, to hopefully learn lessons from other regional markets and bring them into here. We’re on the edge of something very new and exciting, so it’s a great time to be here.

MT: Competition is good – if there is a lot of competition, the consumer always wins. When it comes to regulation, which is key, it’s imperative that it’s a level playing field which enables entrepreneurs to innovate and to keep the bar high in terms of standards. People should definitely look at what’s happening in regional markets and learn from that. With fintech, things are going to change dramatically in the sense that it’s not going to be just the traditional players like banks or telcos leading this change. It will also come from independent, innovative fintech companies like us.

What level is the fintech progress in the Kingdom at right now?

MT: The pace of innovation is accelerating. What we’re seeing now is just the beginning. Just in the Cambodian market over the last years, new mobile money service providers came in, banks are coming up with great products, there are good business models like Pay2Go and us coming in. Telcos are also going to keep coming up with new things.

How do you plan to make the Cambodian population aware of your platform?

MT: That’s part of the difficulty of the market. Advertising is everywhere. It’s how you grab attention and loyalty from people. Some people throw a lot of money at the problem to advertise massively, but others have to be very clever to reach these people. You need to reel the vast majority of the people in, but not intimidate them and make them think that the app or platform is too complex or not for them. The key is to capture the curiosity, and loyalty, of the Cambodian consumer with an outstanding experience.