The first time Leang Horng, a resident of Kandal province’s Saang district, made use of a micro-finance institution, a loan was the only service he needed. At that time, Horng had no idea about deposits or money transfers.

But things have changed in the past few years, and his family’s standard of  living is getting better.

“Besides [taking] loans, I opened a savings account at a micro-finance institution,” Horng says.

His experience reflects a trend in the Cambodian MFI industry, as players have upgraded their tactics to remain competitive in the market.

Product diversification is becoming a key strategy to satisfy MFIs’ customers.

Technologies such as mobile banking and ATM services are becoming compulsory for leading MFIs.

Insiders say this is boosting competitiveness in the industry and opening up new sources of funding for micro-finance institutions.

“It’s definitely an emerging trend, and one that’s quite challenging for the Cambodian MFI industry when we talk about banking technologies like online systems [where financial information is stored in a central system], ATM networks and mobile phone [banking],” Sean Thornnin, a lecturer in economics at Limkokwing University and a management-team member at a leading MFI, said.

“Leading players need to consider more investment in banking technologies to maintain their position. Otherwise, they may lose out.”

This is already happening. Early last year, Angkor Mikroheranhvatho Kampuchea (AMK), a leading Cambodian MFI in terms of the number of borrowers, began offering mobile banking services that allow customers to deposit money, make payments and transfer money by phone.

“We have an agent in every village our mobile banking service operates in, so all operations are made through the agent,” AMK operations manager Mam Choeurn said.

Last September, Prasac, the leading MFI in terms of loan portfolio, launched an ATM service. It was the first local MFI to introduce this  relatively high-tech product.

These two MFIs are not exceptions, according to Dr Bun Mony, chairman of the Cambodian Microfinance Association (CMA). He said several leading Cambodian MFIs, including Hattha Kaksekar, Sathapana and Amret were also adopting the high-tech approach.

Mony said each institution had spent about $2.5 million  investing in core banking systems in order to set up centralised information management systems that record every transaction made at branches around the country.

“When they spend their big budget on core banking systems, it’s pretty clear they will soon launch an ATM service, mobile banking or some other banking product,” he told the Post.

“ATMs and mobile banking can help our customers access better financial services and attract more people to open  savings accounts with us.”

Mony’s view is proved by Prasac’s performance in 2012. By the end of last year, the deposit balance had increased 850 per cent, from $5.97 million in 2011 to $56.7 million, thanks to the launch of ATMs in September.

“Our clients can easily deposit and withdraw money though our offices, particularly our new ATM services,” Prasac Microfinance president and CEO Sim Senacheert said, highlighting the benefits of ATMs for deposit accounts.

Hattha Kaksekar Limited (HKL), another leading MFI that plans to become a commercial bank by 2013, has already installed 20 ATMs and plans to add 15 more by the end of this year.

HKL general manager Hout Iengtong said one of the  aims of introducing the latest technology was to be better positioned for the future.

“It [new technology] helps us to access cheaper capital locally and not have to rely so much on foreign funding,” Iengtong told the Post.

In Channy, the president and CEO of Acleda Bank, said MFIs’ use of ATMs and mobile banking was a smart move to meet the demand for financial services in the market.

For him, the adoption of clever technology means institutions can provide financial services at any time, even on a Sunday or a holiday.

“We realise Cambodian MFIs are developing human resources and infrastructure. It’s definitely a strong message for banks to avoid standing still in the same place,” Channy said.

“More competition is good, because clients will get high-quality products and services from suppliers.”