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Fintech in Cambodia: An overview.

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The fintech landscape in Cambodia has been rapidly evolving over the past decade, transforming the country’s financial sector and offering new opportunities for both consumers and businesses. As one of Southeast Asia’s emerging economies, Cambodia has embraced technological advancements to drive financial inclusion, enhance efficiency, and promote economic growth.

This overview provides insights into the dynamic fintech ecosystem in Cambodia, highlighting key developments, regulatory initiatives, technological advancements, along with the potential challenges and opportunities that lie ahead.

Regulatory environment

The Cambodian government has been proactive in supporting the growth of fintech, establishing the National Bank of Cambodia’s (NBC) Fintech Steering Committee in 2018. This strategic move was aimed at facilitating the advancement and regulation of digital financial services, showcasing the government’s commitment to harnessing fintech’s benefits.

Aligned with this commitment, the NBC has led the creation of a supportive regulatory landscape for fintech innovation. A pivotal milestone in 2020 was the introduction of the Payment System Operator (PSO) licence by the NBC. This licence serves as a cornerstone in regulating payment service providers, underpinning the security and stability of digital payment systems. The framework not only propels innovation but also places emphasis on safeguarding consumer interests and maintaining public trust in financial technology solutions.

Digital payment and remittances

One of the key drivers behind fintech development in Cambodia is the surge in digital payment solutions. E-wallets, QR code payments, and peer-to-peer money transfer services have gained popularity, particularly among the younger demographic. Platforms like Wing, Pi Pay, and TrueMoney have successfully established themselves as leaders in the industry, offering a wide range of services including money transfer, bill payment, and online shopping. Most banks now have comprehensive QR code platforms for B2C and C2C payments.

Remittance services have also undergone a digital transformation, allowing Cambodians working abroad to send money back home efficiently and at lower costs through various fintech platforms. Remittance contributions play a significant role in the Cambodian economy, especially for rural areas or economically less-developed demographics.

Lending and microfinance

Fintech lending platforms have emerged as a significant alternative source of funding for individuals and small businesses with limited access to traditional banks. Through alternative credit scoring methods and digital verification processes, fintech companies are able to reach previously underserved segments of the population, promoting financial inclusion and economic growth.

The sector is not without complications, however, as Cambodia now has one of the world’s highest rates of microfinance lending. Some microfinance borrowers in financial distress are turning to informal financing – loan sharks and the like – to pay off these loans, and this problem is compounded by the high rates of lending.

Insurtech and digital insurance

Cambodia’s insurance industry has undergone a significant and impactful digital transformation catalysed by the rise of Insurtech, which refers to the integration of technology and innovation into the insurance sector. This transformation has been facilitated by pioneering startups such as BIMA and Joonak, both of which have introduced digital insurance solutions that have revolutionised the accessibility and affordability of insurance products for the Cambodian population.

Through the strategic application of technology, these companies have successfully extended their reach to even the remotest rural communities, effectively bridging the long-standing insurance gap and bringing essential coverage to individuals who were previously underserved and vulnerable to various risks.

Regtech and CamDX

As mentioned in the sections above on Cambodia’s regulatory environment and virtual banking, the government can claim to have made progress in digitising and democratising online financial security. This is one example of the government’s embrace of regtech – regulatory fintech solutions that foster better collaboration, innovation, and compliance in public-private relations.

A notable example is CamDX (Cambodia Data Exchange). This system allows secure data sharing and interoperability between individuals and public or private online service providers. These can include the government ministries directly serving Cambodian citizens and private entities that are awarded CamDX certification. CamDX is operated by Cambodia’s Ministry of Economy and Finance (MEF) and allows users easy access through iOS and Android apps. The scheme is expanding, with the MEF presenting 14 new financial and insurance entities with CamDX certification in April 2023.

Blockchain and cryptocurrency

Cambodia’s fintech landscape also includes the evolution of blockchain technology and its associated cryptocurrencies. While the adoption of blockchain is in its early stages, the potential impact on financial services, supply chain management, and even land registration is substantial. Blockchain’s transparent and immutable nature has the potential to enhance trust and security in various sectors. Some startups are exploring the use of blockchain for cross-border payments, digital identity verification, and secure data sharing.

Additionally, interest in cryptocurrencies, such as Bitcoin and Ethereum, is growing among tech-savvy Cambodians and investors seeking alternative assets. To further solidify this trend, crypto exchange Binance has signed a memorandum of understanding with the Securities and Exchange Regulator of Cambodia (SERC), which was announced on 30 June 2022.

Through this strategic partnership, Binance and SERC will collaboratively work together to develop comprehensive digital asset regulations in the country. Capitalising on Binance’s technical expertise and field experience, SERC is actively aiming to formulate and implement its own robust legal framework for the burgeoning digital asset market.

However, amidst these promising advancements, it is imperative to recognise that regulatory clarity and effective consumer education play pivotal roles in ensuring the responsible and sustainable development of the blockchain and cryptocurrency ecosystem.

Fintech challenges and opportunities in Cambodia

Despite the rapid growth of fintech solutions and services in Cambodia, several challenges persist. Limited financial literacy and a preference for cash transactions among certain segments of the population pose hurdles to more widespread adoption. Furthermore, fully ensuring data privacy, cybersecurity, and compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations remain critical concerns.

However, these challenges also present opportunities for fintech players willing to collaborate with government agencies and financial institutions to raise awareness, build trust, and design user-friendly solutions that cater to Cambodia’s unique needs. As the economy continues to digitise, fintech will play a pivotal role in expanding financial services to remote areas, empowering small businesses, and driving economic growth.

Summary

Cambodia is currently undergoing rapid modernisation and transformation. The government has placed a significant emphasis on advancing the digital economy as a key priority, with fintech playing a pivotal role in facilitating this transition. The population has readily embraced the evolving landscape of banking and finance, paving the way for businesses to now capitalise on the abundant opportunities within this sector.

How Acclime can help

Acclime is a premier corporate services provider in Asia and Oceania with presence in multiple jurisdictions including Australia, Cambodia, China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam. International corporates and private clients can rely on Acclime to seamlessly advance their businesses and interests in difficult-to-navigate markets in Asia and beyond. If Cambodia is on your investment radar, reach out to Acclime’s Cambodian team to begin exploring your options.

Contact our teams for expert support and further information about accounting & tax requirements in Cambodia to ensure you are compliant in the market.

Hugh Darwell, Director, Business Development, h.darwell@acclime.com
Seng Pov, Head of Tax, s.pov@acclime.com

Fintech in Cambodia: An overview

About Acclime Cambodia.

Acclime Cambodia helps established multinational companies and startups start and operate their business in Cambodia and the region. By seamlessly navigating our clients through the complexities of Cambodian laws and bureaucracy, we allow them to reclaim valuable time and fully focus on growing and developing their business.