Wing is well on its way to becoming a serious contender in Cambodia’s hyper-competitive finance sector, with the National Bank of Cambodia (NBC) recently granting the third-party payments provider a specialised banking licence.
According to Wing CEO, Anthony Perkins, the national banking regulator approved his company for a licence on September 10. The licence will allow Wing to have complete control and oversight of its own customers’ deposits and transactions.
“Historically, Wing has always been a third-party processor and never been recognised as a bank itself. It has always been underpinned by ANZ Royal to begin with and later Foreign Trade Bank,” Perkins explained.
Wing launched in 2009 with the help of Australia’s ANZ bank in an effort to supply payroll, electronic remittance and deposit solutions to Cambodia’s unbanked population – namely rural communities, farmers and blue-collar workers.
While ANZ sold the Wing business in November 2011, the Australian bank, along with Foreign Trade Bank, which became the second Wing licence sponsor in May 2013, remained a partner until the issue of this new licence; both, until the arrival of the new licence, were the primary and responsible holders of all Wing customer deposits, which are now estimated to total $35 million.
“That became a problem as Wing customer money was split between ANZ Royal and FTB and the regulation was not clear on how best to allocate those funds between multiple banks – leaving both in an unenviable position,” Perkins said.
Wing’s approval as a specialised bank in Cambodia allows the company to continue to provide payment services and also oversee and report its own customer deposits directly to the NBC, according to Perkins.
“By virtue of that, we now have our own specialised banking licence, and our customer deposits are now the full responsibility of Wing. They may still technically sit with ANZ Royal or FTB, but the liability for them no longer sits with ANZ or FTB. So if anything happens to Wing, the oversight of Wing has moved from ANZ and FTB monitoring Wing’s account levels, to Wing working directly with the NBC – a far better solution for all involved,” Perkins said.
The company currently has more than 2,200 Wing Cash Xpress outlets located in all provinces and districts of Cambodia, according to the CEO. Its coverage alone makes Wing the most widely accessible licensed banking firm in Cambodia.
“Wing has no bank ‘branches’ in the traditional sense. We use our Wing Cash Xpress outlets, which are these community-based Wing branded shops you see in the street here, instead of a branch network. It doesn’t cost Wing much to set up a Wing Cash Xpress outlet – they are approved to applicants with already mature businesses and good locations on a case-by-case basis, with plans to continue the growth of the network in line with the customer demand,” Perkins said.
Wing’s approval from the NBC marks a first in the specialised banking arena. Specialised banking applicants have historically been required to only specialise in deposits, loans or payment services, and must retain capital of $7.5 million.
While Wing met the capital requirements, the NBC approved the company to operate with more than one of the set specialised banking functions – payments and deposits.
“Wing is in a strange position. Our core business is in payments, but also over time we have accumulated customer demand deposits. So our position now is that we will still be able to take demand deposits and also be able to continue our market-leading payments services.”
However, Wing’s deposit product portfolio will be somewhat restricted, the CEO said. According to the NBC’s licence, Wing is not allowed to provide interest-bearing saving accounts, only interest on demand deposits, and is not allowed to provide loans to customers.
Despite the restrictions, Perkins said the relatively young company has plans to further expand its operations and offerings. Even a fully fledged commercial banking licence is in the cards, he said.
“For now, an existing Wing customer will see no difference, it is pretty much business as usual, with exciting new products coming under our revised mandate,” he went on to say, adding that all existing payment services, such as FTB Visa cards, Manulife insurance collections, MFI loan collections and leasing company collections, will be ongoing.
“The next step for us would naturally be to step up and become a full commercial bank. Now, depending on the growth and maturity of the company, and further investment, that may take anywhere from five to 10 years.”
Wing will need to increase its working capital to meet the NBC’s requirements for a commercial banking licence. Currently, firms are required to have $37.5 million in capital to be considered for a commercial banking licence, with that figure pegged to increase in the coming years.
“But there are certainly a few things that we can do now, like international remittance,” Perkins said.
“International remittance, for people abroad sending money to a Wing account will be available by the end of this year,” he added, citing two years of pre-emptive planning with banks in Thailand, Vietnam and South Korea and remittance companies in Australia, Canada, the US, the UK and France.
Perkins said that while Wing moves closer towards becoming an independent banking firm, the company’s network and services remains open to new partnerships with fellow finance industry companies.