During an interview with CoinDesk’s online web show, “Money Re-imagined”, the Director-General and Assistant Governor of the National Bank of Cambodia (NBC) Chea Serey explained how the central bank is working towards financial inclusion by encouraging the opening of formal savings accounts. She also spoke about the Bakong payment system’s role in meeting that objective.
Serey said the importance of that strategy became apparent during the establishment of the Bakong payment system when it was realised that the Kingdom’s payment system landscape was very fragmented. This was most noticeable in the differences observed between urban and rural communities, with rural community members being far less likely to have formal bank accounts and being more reliant on e-wallet payment system providers than their urban counterparts.
It was clear that the imbalance in the degree of regulation and scrutiny on the formal banking sector versus that on the e-wallet payment system sector contributed to that rural/urban split, she said.
Because e-wallet payment system companies are regulated as part of the technology sector rather than as part of the financial sector, using them is seen as easier in the rural areas because of the lower degree of due diligence involved in opening an account.
Serey added that the central bank saw this as a problem because customers in the e-wallet payment eco-system tend to cluster themselves, transferring funds only between other members of the same service provider. This makes using digital payments less effective as a means of achieving comprehensive financial inclusion because people are not able to transfer money to those using a different service provider.
“We thought, ‘How can we bring everyone on to the same page and allow bank users to send money from their savings accounts to e-wallet users’ accounts, and vice-versa?” she added.
Serey explained further that the NBC’s mission is to promote financial inclusion. She added that the goal is not having people open e-wallet accounts, but having people open formal bank accounts, such as savings accounts, and that keeping the industry disconnected only contributes to confusion. The director-general stated the view among some people that e-wallets are a platform for savings, which they are not, could lead them away from participating in the nation’s banking system.
Serey added, “We are trying to bring people into the formal financial system. We realise that getting them to open savings accounts towards developing credit is difficult.” She added that encouraging people to open savings accounts at banks in compliance with the Know Your Customer programmes’due diligence protocols, which increase monthly, is a challenge.
However, she added that because payments are something everyone does on a daily basis, that bringing people into the digital payment system begins to build a financial history for individuals quickly.
Serey said: “You may not have a credit history, but everyone has a payment history. If you can capture some of that information on digital platforms, you create payment histories that allow banks to know their customers better. That will lead to the eventual building of credit profiles of customers, which is why we are focusing on the payment system. We are working to promote access to credit and access to savings accounts, but access to payments, we realise, is something we have to focus on.”
She continued: “Ensuring access to digital payments was not our end goal. We want people to open savings accounts at banks and not just rely on an e-wallet accounts. This is why the central bank came up with the blockchain driven Bakong payment system.”
The system was launched last October. It enables banks and other financial institutions to work together, with an emphasis on safety, efficiency, cost-saving and, more importantly, financial inclusion.
Thus far 21 financial institutions have become members of the Bakong system and another 26 are slated to join.
Serey added that it is too early to evaluate Bakong’s progress but it has seen more and more transactions happening from banks to e-wallet users and this is a very good indication that Bakong is on its way to achieving its purpose.
“So far, if we count all the users of the member banks indirectly using Bakong, its base includes 5.6 million users. Downloads of the Bakong app are at 60,000, which is pretty good given the timeline since we introduced it and the low digital literacy rate.”
Source : From the Web