Financial institutions lay the groundwork for Cambodia's digital economy while others look beyond fintech
Walking into a market or shop just about anywhere in Cambodia, it is easy to see the impact of digital tools on the local economy. Smartphones are ubiquitous. QR codes hang in nearly every market stall, ready to accept payments. Customers use digital wallets for everyday purchases. While these tools and services are an important part of Cambodia’s digital ecosystem, they only scratch the surface of the potential impact that technology can have on the national economy.
Thanks to high connectivity, a youthful demographic and favourable regulation, Cambodia’s digital economy has expanded rapidly in recent years. Yet the ecosystem remains dominated by payment service and e-commerce providers while other use cases for technology have yet to be fully realised. Today, driven by industry leaders, technology associations, and startups, there is a renewed focus on expanding the scope of Cambodia’s digital economy towards more innovative and cohesive solutions.
This need for broader functionality in the sector is echoed in the new government’s Pentagonal Strategy, specifically in the Development of Digital Society and Economy section. Along with investing in digital infrastructure, developing human resources and building trust in the environment, the government is committed to “continuing to develop the financial technology ecosystem to be more diverse,” according to the comprehensive policy document.
As stated by the National Bank of Cambodia (NBC), 34 payment service providers vie for Cambodia’s relatively small market – not to mention the dozens of banks and microfinance institutions operating in the country. A 2023 report from the NBC found that the number of e-wallet accounts across the country grew from 4 million in July 2019 to nearly 18 million by the end of 2022. While some homegrown players such as Pi Pay and Bong Luy continue to play a significant role in the market, experts believe the space is reaching saturation.
“It may not be the best environment to deploy your QR code [startup] to try and compete with this particular solution. It would be naive to think you can do it now with the big guys, because they keep adding new features, e-commerce solutions, multiple things,” explained Tomas Pokorny, Pi Pay co-founder and Secretary General of the Cambodian Association of Finance and Technology (CAFT).
Recognised by the NBC and partnered with dozens of financial institutions, payment service providers and fintech operators, CAFT plays a key role in supporting tech innovators and linking them with businesses and government agencies. Two of Pokorny’s “big guys” that continue to flex muscles in the digital financial space are Wing Bank and ABA bank.
As early proponents of Cambodia’s fintech transformation, these firms set the standard for digital services offered by financial institutions. Once revolutionary solutions like internet banking, stand-alone cash-deposit machines and mobile apps have become industry standards. Currently, 37 of Cambodia’s financial institutions offer mobile
banking and, according to NBC reports, the total number of digital payment service transactions reached 1 billion in 2022.
Today, both Wing and ABA are exploring the potential of new technologies – including big data analytics, machine learning and generative AI – and how these tools can be folded into their operations. Likewise, robust cybersecurity protocols are being continually refined by the firms.
“We have a digital team of 200 people working on in-house product development,” said ABA’s Chief Digital Officer Zokhir Rosulov. “Once you are on this path of product development, the process is unstoppable. You continue working on new functions, new features, new developments, expansion.”
A broader network
While hardware and software developments will continue to impact the sector, other meaningful advances are approaching the crossroads of technology and diplomacy.
“I think that Cambodia is too small to think about these things alone. We need to be part of much larger ecosystems,” explained Pokorny. “I think that digitalisation, tokenisation and cross-border integration will be on the top of the Cambodian ecosystem and across the region.”
To this end, a number of agreements have been signed both at home and abroad. Domestically, ABA has closed deals linking networks with Wing Bank and TrueMoney – another firm that started as a payment service provider and has since broadened its fintech services and established a strong presence in the country. According to Rosulov, this cooperation has further expanded his bank’s reach, allowing users to easily transfer funds between the three popular service providers. The deal also means that ABA customers are able to access their accounts from any of Wing and TrueMoney’s roughly 20,000 locations around the country, a development that significantly improves convenience in provinces far from the capital.
Internationally, deals with major players like Visa and Mastercard have expanded interoperability and brought ABA customers closer to the global market. Government efforts could take this to the next level.
“A milestone initiative is the Bakong National Payment Gateway by the National Bank of Cambodia,” said Wing Bank CEO Han Peng Kwang. “Using blockchain technology and open APIs, Bakong has improved interoperability amongst many local financial institutions, streamlining transactions and benefitting all stakeholders.”
Launched in 2019, the NBC’s blockchain infrastructure, built on the open-source Iroha Hyperledger backbone, marked a significant step towards unifying Cambodia’s fractured digital payment service landscape. With 60 partners, from payment service providers to microfinance institutions and commercial banks, Bakong brought much-needed interoperability to the ecosystem, allowing merchants and customers to pay and receive funds from any group registered on the framework. The distributed-ledger technology, coupled with know-your-customer (KYC) protocols, can also reduce the threat of cybersecurity risks.
Alongside Bakong’s unifying impact domestically, the NBC is working to establish channels of interoperability within the region, broadening the scope of Cambodia’s digital economy through cross-border payment structures. A national QR code built on Bakong, called KHQR, was launched in July 2022 and quickly gained traction. With deals struck between the NBC and.major players in Vietnam and China – including Alipay’s Ant International – and discussions with the Japanese government, Mastercard and Visa in the works, Cambodia’s network of partners continues to grow.
Visa is also partnering with Paypal, Venmo, TabaPay and other firms to build an international peer-to-peer network while Mastercard is developing a platform to tokenise central bank digital currencies (CBDC) like Bakong for trade across networks.
As these trends continue, the NBC and private sector’s push for interoperability could have even more significant impacts in the coming years.
“You will be able to have any application in Cambodia, regardless of whether you have Visa card or Mastercard, and you will be able to go to any Union Pay QR merchant, any Visa QR merchant, any Mastercard QR merchant – which means pretty much the entire world including China – and pay using Bakong. That is game changing,” said Pokorny.
Levelling the field
While the influence of government regulators and big players capable of investing millions on technology is undeniable, other firms in Cambodia’s fintech market have taken a different strategy to find success.
“There are banks that have good tech talent and good tech products,” said Gordon Peters, co-founder and CEO of Boost Capital. “But we think there is a good opportunity to level the playing field so that a greater number of banks have that type of technology advantage and can compete for customers digitally.”
Launched in 2018, Boost, along with such other firms as Morakot Technology, represent another side of Cambodia’s fintech sector. Recognising the opportunity presented by the growing demand for tech-forward services, Cambodia’s abundance of financial institutions and the challenge of competing with bigger players in the industry, these firms zeroed in on a Software as a Service (SaaS) model that leverages data analytics tools and other technologies to fill an important niche in the industry.
For Boost, a Facebook Messenger-inspired onboarding platform using chat services to ease the loan application process has become a core service offered to clients. By adapting a framework that users are already comfortable with – according to DataReportal, there were 11.65 million Facebook users in Cambodia in 2024 – Boost created an intuitive process that is well suited for the local population.
The chat-based format was also designed with financial education and inclusion in mind, as it offers customers lessons on budget planning, personal loans and other financial strategies.
Initially working with financial institutions to streamline business procedures, Boost is expanding the scope of its focus and is currently planning its entrance into Cambodia’s growing insurance field. Offering electronic KYC functions as well as leveraging technologies like facial recognition, natural language processing, and utilising AI services from Google, Amazon and OpenAI, Boost provides digital solutions to more than 20 clients with plans to double that number by 2025. Since launch, the firm has processed over 2 million loan applications in Cambodia, the Philippines and Singapore and is in contract discussions with partners in Indonesia, India and Thailand to expand services in the coming years.
SaaS is likely to continue levelling the playing field for smaller operations and emerging businesses looking to go digital. Peters believes that firms like his and Marakot have had a significant impact on the fintech space. However, he sees the growing role of technology within Cambodia’s economy reaching beyond financial institutions and banking software.
“The fintech space has been broadened out a lot by the large players, but it’s both big and small players that are helping to develop it. Firms like ours are helping to do that,” Peters said. “I think all of the other sectors that you see in tech and other spaces have some tangential fintech elements, so fintech growth is accelerating different markets as well.”
Beyond finance
At Phnom Penh’s Techo Startup Centre (TSC) – a government partner working to create a favourable environment for startups and promoting digital businesses through research, entrepreneurial support and technology – agriculture is just one these different markets being explored.
“Cambodia is an agrarian country. We produce a lot of agricultural products, but we still import a huge amount of vegetables from neighbouring countries. This is a problem,” explained Ratha Hem, resident agricultural value chain expert at TSC. “We are trying to introduce technology that is available, affordable and useful, so that we can supplement human labour.”
According to a 2021 report from the Cambodian Development Research Institute, “technology in agriculture such as AI, drone, and farm-based technology is immensely needed.” Under the Ministry of Rural Development’s overarching Sustainable Assets for Agriculture Markets, Business and Trade (SAAMBAT) programme, aimed at reducing poverty by increasing productivity and incomes in rural communities, TSC is exploring these use cases.
One project laying a foundation for the sector is the Khmer Agriculture Suite (KAS). An open digital platform, KAS will serve as the base layer upon which “satellite applications” can be connected in order to develop a comprehensive and unified agritech ecosystem. Producers, startups, service providers and community associations are just a few of the stakeholders that will be linked on the platform. One element of the programme that is currently operational and gaining traction is the KAS Portal. This is an e-commerce marketplace in the style of Facebook that, similar to Boost Capital’s strategy, leverages the familiarity of the social media platform to reach new users.
“Many people may not know how to use a lot of digital tools. But they can buy something from Facebook,” said Vutha Kuong, Digital Technology Coordinator at the Ministry of Economy and Finance and the TSC. “Based on this, we built a portal that is easy to use so that people can place orders with a seller, they can negotiate, they can sell. They can send voice messages if they don’t know how to write.”
While developing an easy-to-use e-commerce system is important to increasing the profitability of the nation’s millions of small farmers, this is the tip of the iceberg of the agritech developments being explored at TSC.
Two of four grantees from SAAMBAT’s Digital Agriculture Accelerator Challenge Fund developing new solutions to common problems in farming and food production are Solar Green Energy (SOGE) and Chalatex.
Both companies are exploring the ways that internet of things (IoT) can be used by farmers across the country, with some promising results.
Chalatex is working together with farmers to solve their water-usage issues through technology. Using sensors to measure soil moisture, temperature and humidity in real time, the firm creates smart irrigation systems that can be scheduled, monitored and controlled through an app on farmers’ smart phones.
Similarly, SOGE offers solutions incorporating renewable-energy that are already demonstrating their value for small-scale producers. A solar-powered electric pump fitted with a programmable SIM card has allowed a community in Kampong Chhnang province to ensure equal access to water for every household and farm plot.
With more startups exploring agritech, and thanks to the support of partners like TSC, there is hope that the strategic use of technology can be scaled up and expanded to energise Cambodia’s underutilised agricultural sector. And while much of the groundwork for Cambodia’s digital transformation has been laid by big players in the financial space, the overwhelming popularity of these solutions demonstrates the potential of broader use cases for digital tools. Eventually, new technologies could be leveraged across every important industry in the Kingdom.
“Currently we are seeing the adoption of fintech; we are finding new and easy ways to do traditional actions,” explained Kuong. “Even if we are a little bit behind in terms of the development, if we cannot follow the path of innovation and technology in fintech, agritech, cleantech, our economy will be left behind.”
Correction (June 06, 2024): A previous version of this article incorrectly cited the Asian Development Bank as the authors of the 2023 report that found that the number of e-wallet accounts across the country grew from 4 million in July 2019 to nearly 18 million by the end of 2022. This has been correct to reflect that report was from the National Bank of Cambodia (NBC).
