A woman uses the Bakong system to transfer money. Heng Chivoan
Cambodian financial industry players are working to enhance cross-border payments with the landlocked African country of Rwanda, as well as promote the blockchain-based Bakong system and strengthen international digital and fintech (financial technology) partnerships in general.
A local delegation joined a fintech event in Rwanda from June 20-26 with the goal of showcasing the envisioned revolutionary potential of Cambodian fintech innovations, encouraging cross-border collaboration, and elevating the Kingdom’s fintech scene to new heights.
The team was led by the National Bank of Cambodia (NBC) and co-organised by the Cambodian Association of Finance and Technology (CAFT) and the Association of Banks in Cambodia (ABC).
At the event, CAFT chairman Remi Pell discussed how dominant he believed mobile wallets and payment firms have grown in the Kingdom, as well as the anticipated entry of new regulatory technology (regtech) and insurance tech (insurtech) players as well as digital-only banking platforms known as “neobanks” into the market.
“Notably, the exponential growth of e-commerce and contactless transactions has significantly fostered the widespread adoption of digital payment solutions between merchants and consumers,” he said.
Pell stressed the importance of blockchain technology and smart contracts to financial development in Cambodia, but conceded that the Kingdom lacks many of the required resources, including specialists, innovators, solution providers, entrepreneurs and investors.
There are “immense opportunities” in blockchain solutions, “including upskilling and training programmes, the development of transparent smart-contract solutions, and their application across various sectors such as finance, accounting and communication”, he added.
Meanwhile, NBC deputy governor Chea Serey at a seminar in western Kampong Thom province’s Stoung district last month revealed that the central bank has been working with Asian, African, Latin American and European nations to increase the scope of payment systems that are regarded as quick, secure and low-cost to promote cross-border economic activities.
Cambodia has been linked with Thailand and Malaysia through Bakong, with connections to Vietnam, Laos, Myanmar, China and India still in the works, she said.
Serey explained that the platform enables Cambodians in Thailand to scan and pay using riel-denominated accounts as well as Thais in Cambodia to scan and pay in the local currency, which she said would promote use of the riel.
She boasted that Bakong has made it possible for less-affluent rural residents to access and benefit from formal financial services.
Bakong has received several awards, with Japanese Prime Minister Fumio Kishida in May hailing the system as an example of “model” international cooperation, namely between the Cambodian central bank and a Japanese tech firm, she added.
For context, Bakong, a quasi-central bank digital currency (CBDC) launched on October 28, 2020, was developed by Japanese blockchain company Soramitsu Co Ltd.
According to the NBC, by end-2022, “the number of registered e-wallet account[s] increased to 19.5 million and the total number of transactions jumped from 708 million to one billion with a total amount of $272.8 billion (increased by 34 per cent), approximately nine times the [GDP]”.
