The financial services sector in Cambodia has been developing at a rapid pace over the past few years. When Australia-based ANZ established its joint-venture with local Royal Group in 2005, there was only one automated teller machine (ATM) in the entire country. Now there are a few hundred, with ANZ Royal Bank’s 130-strong ATM network the largest.
This dramatic development in the country’s financial infrastructure is underscored by its economic growth. From 2004 to 2007, the Cambodian economy grew at about 10% per year, principally based on its expanding garment, construction, agriculture, and tourism sectors. The country’s GDP contracted by 1.5% in 2009 following the global financial crisis, but bounced back to more than 4% in 2010 driven by renewed exports. “The opportunities here are very significant for well-run companies,” said Stephen Higgins, CEO of ANZ Royal Bank, and responsible for both the bank’s retail and corporate operations.
Despite its economic progress, Cambodia is still a heavily cash-based society and electronic payments remain unfamiliar to most corporate customers, especially from the mid-market, though this too is beginning to change. “I’ve been here for three years and I’ve seen quite a significant increase in the sophistication of the client base at the top end, and that is flowing down into the middle market as well,” said Higgins.
ANZ Royal Group was also the first bank to introduce internet banking to the market (though other banks have more recently followed suit with basic offerings of their own). It recently began offering comprehensive cash management services to its clientele of mostly multinational corporations (MNCs), but also local large and some mid-market players, offering a full range of multi-currency services, bulk payments processing and sweeps. It cannot, however, offer real-time settlement with other banks owing to the lack of an adequate payments infrastructure.
The response to these more sophisticated cash management services has been encouraging, according to Higgins. “Given we only recently introduced the cash management platform late last year, growth has been pretty rapid albeit from a low base,” he said. “Take-up from our more sophisticated clients has been very positive. For MNCs and large local corporates, through our international network and cash management platform we have advantages that the other banks just can’t match.”
This has enabled ANZ Royal Bank to bank most of the MNC segment and become a significant player in the mid market as well. “A lot of our growth will come from supporting growth of the existing client base,” he added.
However, the country still faces serious economic problems. The country’s median age is 21.7 and more than 50% of its population of 14 million is less than 25 years old, and many people are poorly educated, particularly in rural areas which also lack basic infrastructure. The government is working to address some of these issues with a host of bilateral and multilateral organisations, including encouraging the private sector.
“Cambodia has a lot of opportunities, is fast growing, and probably has one of the most pro-business governments in Asia,” said Higgins. On the financial side, for instance, the central bank is looking at addressing the lack of an electronic payment system by implementing electronic settlement with assistance from the Asian Development Bank (ADB).
It is developments like these that will help the Cambodian private sector and the broader economy to continue to grow, and upon which the country depends to provide jobs to about 250,000 school leavers every year.