Monday, August 21, 2017

Why mobile financial services matter for Myanmar

The government of Myanmar has an ambitious target for financial inclusion, with a goal of reaching 40 percent of people with financial services by 2020, and having 15pc using more than one financial services product.

Coming off a very low base of financial inclusion today, these goals will require financial service providers to greatly expand their reach in Myanmar. Technology, and particularly mobile telephony coupled with agent cash-in and cash-out services, will provide a significant accelerator to this development.

Mobile operators, partnering with banks, are best placed to expand the reach of financial services in Myanmar to those that are unbanked today, leveraging distribution networks already in place.

Banks and microfinance institutions must also play a critical role, and through partnership with businesses like our company Wave Money – a mobile money joint venture between Telenor and Yoma Bank – they can develop innovative credit and savings products that will reduce transaction costs, and enable the financially excluded access to a broader range of products.

Banks in markets such as Kenya are now seeing significant deposit mobilisation through partnership, not competition with mobile operators. Partnership is the future of mobile money in Myanmar.

Once mobile money networks are in place, there will be substantial benefits to the people and government of Myanmar, including the ability to pay wages, pensions and conditional cash transfers efficiently and transparently.

Research in other markets shows that when electronic channels are used for these payments there are considerable improvements in transparency and a reduction in leakage, with the potential for 100 percent of the benefit reaching the recipient every time.

Financial inclusion also helps individuals impacted by poverty manage the challenge of irregular income and occasional large bills. It can help to pull them out of poverty through improved education and healthcare.

If the Myanmar diaspora in neighbouring countries can easily transfer funds to family through mobile-based international remittance this will formalise the way these funds enter the country, and lower the cost of transfer.

For micro and small business, financial inclusion can provide capital for establishing and expanding trade. Removing traditional barriers through leveraging technology can improve access to credit, boosting economic growth.

Financial inclusion also draws more businesses into the formal sector, broadening the tax base for government which can increase funding for social services.

Research shows financial inclusion driven by mobile financial services in developing markets may increase GDP by up to 5pc in five to seven years. This growth is stimulated by employment as mobile financial services develop, and access to credit improves, prompting development of new business, formal remittances and increased savings.

As Myanmar continues its transition, it is critical that financial inclusion remains a priority and that industry collaboration occurs to develop business models that will be sustainable and beneficial to the financially excluded.

The government is playing an important role in ensuring that the right regulatory model is put in place to allow for mobile operators and subsidiaries to provide these services.

Myanmar was recently reported to be the third-fastest-growing mobile market in the world, after India and China. There is a similar opportunity for Myanmar to be celebrated as a global leader in the acceleration of financial inclusion, and we are excited about the opportunity to contribute to that vision.


Brad Jones is the CEO of Wave Money. He has previously worked at Visa on their emerging markets mobile strategy in Asia Pacific and was the founding MD of WING Cambodia.