A cash­less Cam­bo­dia?

South­east Asia Globe probes how fi­nan­cial tech­nol­ogy and the re­gional startup scene could change the way the King­dom pays for stuff

Southeast Asia Globe - - Advertorial - BY TOM O’CONNELL

ASin­vest­ments in fin­tech con­tinue to surge glob­ally and through­out South­east Asia, the re­gion may be on its way to solv­ing the di­vide between mo­bile con­nec­tiv­ity and fi­nan­cial in­clu­sion.

While the re­gion has a 133% mo­bile con­nec­tiv­ity rate (mean­ing some users own more than one SIM card or mo­bile phone), only 27% of South­east Asians have a bank ac­count. Cam­bo­dia en­joys the high­est mo­bile con­nec­tiv­ity in South­east Asia, at 173% – but only a 13% banked pop­u­la­tion, ac­cord­ing to a 2017 Asian De­vel­op­ment Bank re­port.

That presents a bar­rier to loans and sav­ing cash. But bank­ing apps and other fin­tech prod­ucts could pro­vide so­lu­tions for un­reached in­di­vid­u­als and smaller busi­nesses.

Glob­ally, it’s es­ti­mated that pay­ments made via mo­bile and con­tact­less sys­tems will reach $95 bil­lion by the end of 2018 and will lower the cost of ba­sic fi­nan­cial ser­vices by up to 90%, ac­cord­ing to a 2017 study by PwC and Star­tup­boot­camp.

Cam­bo­dian fin­tech guru Ros Khe­mera has seen an in­creas­ingly cash­less fu­ture for the re­gion and is pre­pared for big changes in how busi­ness is done and how peo­ple pay for ba­sic ne­ces­si­ties such as food and trans­porta­tion.

“I just came back from Pe­nang [in north­west Malaysia], where I saw a street ven­dor sell­ing co­conuts in his cart along the street ac­cept­ing QR code pay­ment,” said the busy fin­tech pro­fes­sional who is as­so­ci­ated with the Mekong Busi­ness Ini­tia­tive, the Asian De­vel­op­ment Bank and the e-com­merce startup Kiu Global. “In Vietnam, I saw a vend­ing ma­chine that al­lows peo­ple to buy stuff us­ing QR code or bio­met­rics... In Cam­bo­dia, cash­less trans­ac­tions are grow- ing too, with Wing [Cam­bo­dia] in­tro­duc­ing a tap-and-pay card – thou­sands of fac­tory work­ers signed up and used it to pay their pub­lic trans­porta­tion fee.”

Global fund­ing of fin­tech ven­tures peaked at $46.7 bil­lion in 2015 as ewal­lets and other fi­nan­cial plat­forms rushed to mar­ket, but it fell to $24.7 bil­lion by 2016. Sin­ga­pore is the re­gion’s fin­tech king, with a to­tal of 490 fin­tech star­tups host to $141m in in­vest­ment in 2017.

The rest of the re­gion shows prom­ise and in­ter­est in play­ing catch-up, said Khe­mara: “The next fin­tech uni­corn can come from the Philip­pines, Indonesia, Malaysia or even Vietnam or Thai­land. Maybe from Cam­bo­dia, too.”

500 Star­tups of Sil­i­con Val­ley is one en­tity in­vest­ing in promis­ing star­tups through­out the re­gion through its 500 Duri­ans plat­form. Coun­try-spe­cific ven­ture cap­i­tals are also pop­ping up to sup­port fin­tech – such as Cam­bo­dia’s Ooc­tane, launched in late June to sup­port lo­cal en­trepreneurs.

Still, fin­tech’s growth in Cam­bo­dia and the rest of the re­gion also de­pends on “cul­tural habits” and user ex­pe­ri­ence, ex­plained Matthew Tip­petts, the CEO and co-founder of Cam­bo­dian fin­tech startup Clik.

“A cash­less so­ci­ety al­ready ex­ists in China, but in coun­tries with very high bank­ing pen­e­tra­tion like Sin­ga­pore, 15% to 20% of pay­ments are still made in cash,” said Tip­petts. “It’s a cul­tural habit, so I doubt they will go com­pletely cash­less any­time soon.”

Ed­u­cat­ing con­sumers re­mains a hur­dle to mass adop­tion of dig­i­tal fi­nan­cial trans­ac­tions, in­sid­ers agree.

“The fin­tech sec­tor is ready, but one of the big­gest chal­lenges re­mains ed­u­cat­ing peo­ple to en­cour­age them to tran­si­tion from cash pay­ments to cash­less wal­lets,” To­mas Poko­rny, CEO of Cam­bo­dia’s Pi Pay dig­i­tal pay­ments startup, said at a con­fer­ence last year. “Step by step, peo­ple will adopt the new tech­nolo­gies.”

Po­ten­tial users just need to learn the ben­e­fits fin­tech can of­fer them, in­sisted Tip­petts.

“The pros of go­ing cash­less, when done prop­erly, is re­duc­tion in costs, risks, fraud, seam­less pay­ment – no more man­ual ef­fort, su­pe­rior user ex­pe­ri­ence [and] im­proved ac­count­abil­ity,” he said. “What will change is how we use cash, and its util­i­sa­tion will in­deed de­cline, but not dis­ap­pear.”

EFin­tech star­tups are driv­ing in­no­va­tions as they push to­ward acash­less so­ci­ety

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