Cambodian banks are increasingly starting to incorporate online banking services into their product offerings, as they look to stay relevant with the Kingdom’s young, tech-savvy demographic, according to industry insiders.

With CIMB Bank’s announcement on Friday that it will provide corporate and valued customers online banking services, they enter a small pool of about a dozen banks – mostly foreign – offering internet banking products.

As per the National Bank of Cambodia’s supervisory report for 2014, there are 36 commercials banks currently operating in the Kingdom.

For its part, CIMB, in a release, said it is looking at readying itself to cater to the needs of businesses once the upcoming ASEAN Economic Community launches later this year.

“When the time comes for AEC and the need for Cambodian companies to expand in ASEAN, this will enable you to scale up and operate in other ASEAN countries, while still staying in control of your cash flow,” said Bun Yin, CEO of CIMB Bank.

The bank’s new service will allow customers to monitor their bank accounts, make local and international transfers, as well as manage automatic payments.

But despite this bevy of online services, Grant Knuckey, CEO of ANZ Royal Bank, one of the most advanced online service providers, said that customers are largely using basic functions online.

“ANZ has tens of thousands of customers on internet banking, but it is primarily used merely for balance checking,” he said.

According to Knuckey, while the market is still not ready for “highly functional” online banking products, it will come to the fore once electronic payments take precedence over cash transactions.

“That will inevitably happen – potentially quite quickly given the demographic profile and the penetration of internet and data plans – but we are some way from the tipping point,” Knuckey said.

However, Stephen Higgins, managing partner of Cambodia-based investment firm Mekong Strategic Partners, said the Cambodian market has been ready for such services for a while, especially in the corporate and “affluent retail segment”.

But, he added, these services would have to be coupled with a well-designed smartphone app, which will make it more applicable to a larger range of customers.

“As smartphones become more and more ubiquitous, a well-designed mobile platform will be essential,” Higgins explained.

Another roadblock to using internet banking, especially in developing countries, is apprehensions surrounding data security and misconceptions about loss of money on aborted or failed transactions.

The National Bank of Cambodia does have stringent regulations and monitors the use of online banking products, over and above the measures taken by individual banks, said Joe Farrugia, CEO of Hong Leong Bank.

“It is not just setting up services and rolling them out. You need approval,” Farrugia said.

“The security process [by the banks] for these platforms is very intensive,” he added. “So, it’s two factors that ensure the rollout.”

Hong Leong, which is one of the new entrants in the sector, has had 300 customers sign up for online services since May 1 – largely from the high income individuals, the “rising middle class” and entrepreneurs running SMEs.

The bank currently does not have online products that cater to high-end corporate needs.

According to Farrugia, while providing a new service is good, the bank is also looking at improving services for offline or branch customers.

Hong Leong will soon roll out a service that will take six minutes to open a new account and hand over a debit card to new customers.

“We are targeting tech-savvy and ‘time-poor’ customers,” he added