Even in today’s digital age, there is a large unbanked population that remains a concern for banks. Manu Rajan, Division Chief Executive Officer, Wing Bank (Cambodia) Plc and Dinesh Elango, Associate Professor, American University of Phnom Penh on Wednesday provided insights for a better understanding of how it impacts financial inclusion.
“Traditional brick and mortar banking practices are expensive and not economically viable beyond a certain scale for developing economies and under-developed economies. Neither are the solutions brought out always relevant to an unbanked person with much smaller disposable income in a developing economy. This had led to the large unbanked population across the world,” said Rajan.
Digital banking can help increase financial inclusion, Rajan explained, with low-cost, convenient, relevant and secure access to payment services, credit, insurance, and savings products. The primary driver of all the changes that we have witnessed in the past two decades is a small handheld digital device called the mobile phone.
Currently the mobile penetration in the Kingdom is in excess of 130 percent. This means that a majority of the population owns a mobile phone number. This mobile phone number can be used as their unique identification number for a digital wallet. Reportedly, the smartphone penetration in Cambodia exceeds a hundred percent.
He cautions that this may be a misleading statistic as access to a digital device does not always translate into the ability to perform a digital financial service transaction.
“Millions of Cambodians still may not be ‘digitally able’ to carry out a transaction even though they do own a smartphone or a mobile phone,” said Rajan.
Despite being in possession of the ‘Poor ID card’ many citizens in Cambodia may not even be the owner of a mobile phone. Thus financial inclusion at the bottom of the income pyramid remains an uphill task.
Lacking the self-confidence to independently carry out a digital transaction on their own does not necessarily mean that the digital divide will not be addressed. If the transactions are carried out by a third party using their unique identifications credit worthiness can still be made for access to cheaper credit.
The convenience of digital loans, explained Rajan, is firstly timely, in terms of availability at the moment. They require no paperwork thanks to advanced artificial intelligence techniques that ensure eligibility in less than a minute. The around the clock availability of digital loans gives you access to money at your fingertips when you need it most. It helps you avoid evils like loan sharks.
The loan limit is calculated by the bank according to the past transaction history of the customer with the bank.
Financial inclusion in Cambodia depends on a variety of factors, said Dinesh Elango, Associate Professor, American University of Phnom Penh. These include infrastructure, digital literacy, digital devices (digital divide) and financial literacy. “But in future it will be good to implement digital banking in Cambodia. Already people are experienced in mobile app transactions and QR payment methods, so creating awareness works for more,” he added.
However, he cautions that certain considerations have to be made like cyber security, privacy, threats and legal issues.
- Tags: digital banking, Wing Bank