Myanmar seems to be the last large untapped market in the ASEAN region. Even though the country has seen a rapid increase in economic growth in recent years, there is much to be done to promote financial inclusion in Myanmar. The worldwide expanding financial technology (fintech) is likely to be the best way of tackling the problem.
Percentage of the unbanked in Myanmar
According to the 2018 research data provided by The United Nations Capital Development Fund (UNCDF), Myanmar is unique in being one of the few nations with the unbanked population making up more than 70%. On the one hand, this segment is represented by small enterprises, rural dwellers and farmers, but on the other, by low-income people living in urban areas, who have no urgent need to turn to a bank.
The state of Myanmar’s banking industry
The banking system of Myanmar is rather developed for such a small and newly emerged country.
The top banks in Myanmar
The unique feature of Myanmar’s banking sector is that one of the banks holds the lion’s share of the total market (about 40%). It is about Kanbawza Bank Limited (KBZ) holding the number one position for the financial inclusion. The rest of the banks have only about 10% or less of the total market share.
Being the nation’s central monetary authority the Central Bank of Myanmar functions to ensure price stability in the country supervising all financial institutions in Myanmar.
With the urban population making up 31% and the banked citizens of about 26% as stated in the recent Digital 2019: Myanmar report, it is fair to assume that Myanmar’s banks find it rather challenging to reach farmers and rural dwellers.
A highly promising solution for this seems to lie in catalyzing the robust collaboration between financial institutions and telecoms.
The market of Myanmar’s mobile providers
This fall’s stats presented by Statista showed a steady growth of smartphone users with nearly 114 registered mobile subscriptions per one hundred consumers in 2018.
The major telecommunication operators in the country are MPT, Telenor, Mytel, and Ooredoo. MPT (Myanmar Posts and Telecommunications) is the leading cutting-edge state-owned mobile provider in Myanmar supervised by the Ministry of Transport and Communications. Online media Nhan Dan revealed the following stats on MPT and its competitors:
▪ MPT’s market share makes up 44.5%.
▪ Telenor is a Norwegian-owned company with a share of 28.4%.
▪ Mytel is a Viettel’s mobile company in Myanmar that is ranked third (14%) after just merely a year of operations being supported by the government.
▪ The fourth player is Ooredoo, headquartered in Qatar with 13% of the market share.
How mobile financial services can reach the unbanked
Why is the cooperation between Myanmar’s banks and telecoms is mutually beneficial?
Talking of banking products and services, the first thing that comes to mind is that they are too complicated and intricate to deal with. People are known to have little awareness of financial matters and find themselves consulting with call centers, acquaintances, friends, and relatives while trying to wrap their heads around pricings. They just don’t know how these things work.
Telecom companies take advantage of a simple and clear approach. They offer the customer a comprehensive tariff plan, making available somewhere around 2–3 starting plans or packages. A telecom product is customized – there are packages for those actively using the Internet, surfing the net at night, for the youngsters enjoying the messengers or the elderly people making only calls. Therefore, telecom’s client acquisition model is more simple, progressive, technological, and easier to understand.
The percentages of core product penetration are markedly different. For a bank, no matter how good it is, this figure averages no more than 20-30% of the client base. A telecom penetrates totally, almost 100%. Being a telecom client means having, for instance, a Packet Voice or Internet data traffic and so on.
As a result, a telecom company has a large and loyal customer base. Making a telecom client base available for a certain bank enables it to reach far more customers and thereby to increase its financial inclusion.
But there must be a mediator to fulfil the coordination between the banks and mobile operators. More accurate to say there is a need for a reliable wallet platform for mutually beneficial collaboration.
Good news is that such a solution has already appeared on the market and it can be highly efficient in driving financial inclusion. It is about a digital wallet platform, a powerful Mobile Financial Services platform, that is unique in offering both technical and business development solutions. Wallet platform by Wallet Factory makes it possible to:
▪ choose the appropriate bank
▪ create appropriate customized products and logics
▪ create financial products unified templates
▪ make a product presentation through the application
▪ perform segmentation and scoring according to data provided by the client
▪ navigate the customer to an appropriate bank
All in all, adopting tech-enabled software solutions are highly likely to bridge the gap between banks and telecom companies, and therefore, to promote the financial inclusion in the country.
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