The central bank’s innovation has revolutionised digital payment in the country with its first digital currency. BAKONG
More than three years have passed since the National Bank of Cambodia (NBC) introduced the blockchain-based interbank payment network known as Bakong, which combines e-wallets, mobile payments, online banking and financial applications into a single, user-friendly interface, linked to any preferred account.
The central bank’s innovation has revolutionised digital payment in the country with its first digital currency.
By 2019, the project had advanced from proof of concept to prototype development.
The pilot phase commenced in October 2020, developed in collaboration with Tokyo-based blockchain technology startup Soramitsu.
As of early January 2024, Bakong boasted over 10 million user accounts and included 70 financial institutions as members, with 49 actively participating.
In the first six months of 2023, the system processed over 35.4 million transactions, totalling more than $12 billion.
The figure represents approximately 67% of the Kingdom’s gross domestic product (GDP).
Digital payment transactions during the period accounted for 892% of the country’s GDP, according to the central bank.
NBC governor Chea Serey stated on November 14 that the bank had been exploring the concept of a digital currency since 2016, leading to the introduction of Bakong in 2020.
“Bakong promotes interoperability and connectivity across various financial institutions in the country,” she explained.
“It also enhances payment efficiency in terms of cost, transparency and security. The network facilitates financial inclusion among the unbanked population and, importantly, encourages the use of local currency in electronic payments,” she added.
Igor Zimarev, chief marketing officer at the Advanced Bank of Asia Limited (ABA Bank), noted in late October that ABA was one of the first institutions to adopt Bakong-centric services, implemented in August 2020.
In 2023, ABA facilitated 824 million transactions through its mobile banking app, with a total transaction value exceeding $207 billion.
“The trend towards digitalisation in the banking and financial sectors has been ongoing for nearly a decade, both domestically and globally,” he said.
“The outbreak of Covid-19 simply accelerated the shift towards digital finances. Cambodia, with its youthful demographic, proactive government initiatives and the inception of Bakong, has witnessed tremendous progress in the field,” he added.
Toch Chao Chek, CEO of Cambodia Post Bank Plc, told The Post on January 16 that his bank has been a part of Bakong since September 2019.
He noted that since the system’s inception, it has significantly contributed to interbank connectivity and bridging the gap for the unbanked population in the country.
“Bakong enables our customers to easily use mobile banking across different [institutions] without any charge. This has contributed to financial inclusion in the country, as we can see from the rapidly growing number of transactions since its launch,” he added.
He reported that the bank processed over 12,000 transactions via the network in 2020, more than 120,000 in 2021, over 330,000 in 2022 and nearly 800,000 in 2023.
“We can see that the number of transactions via Bakong from our bank has nearly doubled year-on-year. This highlights the important role Bakong plays in promoting financial technology [fintech] development and financial inclusion in the country,” he said.
During a conference on the sidelines of the ASEAN-Japan commemorative summit on January 8, Serey was quoted by Tokyo-based media outlet Nikkei as saying that the number of Bakong users “has reached approximately 10 million accounts out of [Cambodia’s] total population of 16 million. However, I don’t want to be complacent”.
Serey stated that the central bank is focused on achieving “financial inclusion”.
“I think we could do more [to increase the number of Bakong users] by concentrating on consumer protection and cybersecurity,” she said.
“We have already initiated cross-border payment connectivity with Thailand, Laos and Vietnam,” she added, noting that the blockchain-based currency is also in the process of being introduced to China via UnionPay.
