Fintech companies have been a critical driver of socioeconomic development in Cambodia, particularly during Covid-19, helping the Government to provide financial assistance to millions of people, boost social welfare, and spur economic growth.

During the pandemic, Cambodia faced economic and social challenges, increasing poverty and job losses. Asian Development Bank’s (ADB) 2022 report estimated job losses of between 390,000 and 570,000 people, representing about three percent of the country's population.

To address this dire situation, the Government immediately took proactive measures to protect the well-being of its citizens by launching the Covid-19 Cash Transfer Program (CTP) in June 2020. The initiative aimed at providing financial support to those affected by the pandemic.

Over $1 billion disbursed digitally

Spearheaded by the National Social Protection Council (NSPC) under the Ministry of Economy and Finance, the program ran for three years. It concluded in July 2023, and it was recently reported that the program successfully disbursed $1.1 billion to vulnerable citizens.

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This provided essential support to more than 700,000 vulnerable households, or nearly three million people across the Kingdom, during these challenging times – preventing many from starvation, falling into debt, or losing their family assets.

Challenges posed by unbanked population

According to the National Bank of Cambodia's annual report for 2022, about 67 percent of Cambodian adults utilized formal financial services. Notably, a considerable proportion of the country's population, estimated at about 75 percent by the European Commission, resides in rural areas, while about 30 percent of the population is under 30-years-old.

Hence, numerous individuals residing in rural parts of Cambodia continue to encounter challenges when it comes to accessing financial services.

Considering these factors, financial literacy remains low and people primarily rely on cash-based services, such as person-to-person payments, to fulfill basic financial needs. Despite these challenges, the Government has sought to facilitate money transfers using digital methods, even individuals with limited knowledge or access to digital technologies.

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Various solutions were put forward to overcome the challenges and ensure that funds were transferred successfully. One of these solutions was the creation of the CTP, which aimed to be fair, transparent, provide equal opportunities, and be effective.

Additionally, steps were taken to improve the readiness of the IDPoor database and provide training to local government staff. Lastly, implementing digital payment systems for beneficiaries where Wing Bank played a significant role in making this solution a reality and ensuring its success.

Wing Bank, one of the fastest-growing digital banks in Cambodia, was entrusted with an exclusive partnership by the Government to serve as the primary cash transfer gateway. This collaboration enabled Wing Bank - through its extensive network of more than 11,000 locations countrywide - to efficiently and securely deliver financial relief to those in need. The project started in June 2020 and ended in July of this year.

"Our commitment to supporting Government initiatives goes beyond banking; it is a commitment to the nation's well-being," said Han Peng Kwang, CEO of Wing Bank. "We are honored to play a vital role in these programs that made a real difference to beneficiaries during challenging times."

To benefit from the program, beneficiaries registered for an IDPoor card at their local Commune Council, where their identity was verified, a picture taken, and an account activated.

Then, all they needed to do was to visit a Wing location and set up a personal identification number (PIN) along with their IDPoor cards. This enabled them to collect funds from a Wing location every month.

Additionally, beneficiaries were required to have their photos taken at a Wing location as part of the verification process with their IDPoor cards. Thanks to Wing Bank's instantly automated process to the relevant fields in the IDPoor database through an application programming interface, each account can be linked to its holder's IDPoor number, ensuring the direct receipt of Government funds in real time.

Eligible households in rural areas were provided a monthly amount of up to $50. In contrast, those residing in the capital and other urban areas received a monthly payment ranging from $80 to $100.

Wing Bank's commitment to supporting the Government's initiatives extends beyond the Covid-19 CTP. For instance, since 2017, Wing Bank has collaborated with the National Social Security Fund (NSSF) to collect monthly contributions for occupational risk and healthcare schemes. This partnership streamlines contribution payments, enabling employers to fulfill their obligations efficiently.

Benefits for pregnant women and mothers

Furthermore, in 2018, Wing Bank extended its support by facilitating the distribution of additional allowances to female employees who give birth, enhancing social welfare for working mothers.

Chham Layheng, 40, a garment worker in Phnom Penh, said she will receive subsidies from NSSF for being pregnant from October onward through digital bank transactions.

After receiving the NSSF card between 10 days to half a month, the expectant mother will receive $20 every month through digital bank transactions, according to Layheng, who received her card in September.

“I used to get medicine when I got the flu and get a serum injection; they don’t charge us with an NSSF card,” the seven-month pregnant woman said.

She started to use the NSSF card since the initiative was launched; however, she did not realize the full benefits that the card can provide to her during pregnancy until August when her factory recommended she used the NSSF card for her pregnancy.

In October, she will receive $20 from the digital bank transaction application until the date that her baby is born.

"Wing Bank is proud to be a catalyst for change, working hand-in-hand with the Government to uplift vulnerable populations and create a more inclusive society," said the bank’s CEO.

Digital payments

Orn Katta, Ministry of Labour and Vocational Training spokesman, told Kiripost that today, the use of digital payment services, such as mobile banking, has become popular among modern people with modern technology from almost all walks of life. It has also become a factor in driving the financial sector in Cambodia to grow and progress further.

“For the operations of the NSSF both contributions and payments are made using digital banking since it is very convenient,” he said, adding that digital bank transactions help to reduce costs and save time without having to travel to the NSSF office.

“It is convenient, fast and highly secure with banking transactions. It reduces payment-related risks, including overdrafts and counterfeit money and there is no need to carry a lot of cash in hand. This is a huge benefit. There is no need to worry about losing cash and no need to carry a lot of cash, bringing difficulties and risk,” Katta said.

In addition, it provides instant access to account information and money transfer transactions anywhere and at any time via mobile phone.

NSSF, of the Ministry of Labor and Vocational Training, is in charge of providing Government subsidies to pregnant women and children under two-years-old. As of September 27, 2023, 416,499 women received prenatal and immunization allowances and 404,134 children, at a budget of 163,943 million riels.

Through the provision of additional Government subsidies, this helps promote the health of mothers and young children, contributing to solving the problem of malnutrition of unborn children to two-year-olds. It also promotes the growth of the physical and mental health of young children.

Poverty alleviation leads to socio-economic prosperity

The Covid-19 CTP provided immediate relief and contributed to Cambodia's economic growth. According to a study by the United Nations Development Program (UNDP), the program boosted economic growth by 0.55 percent in 2020 and 0.45 percent in 2021. It also played a role in reducing unemployment rates by 0.57 percent in 2020 and 0.62 percent in 2021.

The program's impact extended to poverty reduction, with a decrease of approximately 2.7 percent in 2020 and 3.4 percent in 2021. Household spending patterns revealed that a significant portion of the assistance went towards essential needs such as food and stabilizing families during challenging times.

High beneficiary satisfaction rates further underscored the success of the program. An overwhelming 99 percent of recipients expressed contentment with the cash transfer mechanism.

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