Prince Bank: the dawn of digital banking in Cambodia

Efma feature

04 July 2019

At the inaugural Efma Retail Banking Forum in Cambodia, Sorachna Honn, CEO of Prince Bank, caught up with Efma’s Anne-Laure Jozan for an exclusive interview on recent developments in the APAC region and the challenges of digitalization.

What main challenges is the retail banking industry facing in Cambodia?

The retail banking industry is about personalization, convenience, and, of course, security. However, most retail banking services and products are still delivered by the conventional network of physical branches. Big investment in new technology is the only means to this end, which will require a large customer base to justify the cost.

While well-established players with the most resources and often large customer bases face the challenges of legacy technology and processes, new players don’t have adequate capital to challenge the status quo. Therefore, the industry is still running at a sub-optimal level.

What are your views on the digitalization of retail banking? How is your organization confronting this trend?

The digitalization of retail banking is still at a very early stage in Cambodia. The most obvious form of digitalization is within the payment and money transfer space, which is dominated by third party processors or specialized banks rather than typical commercial banks. In trying to compete with such new players, some commercial banks have started to launch their own e-wallets.

As one of the newly-established commercial banks, evolving from a microfinance institution, Prince Bank has adopted digitalization at the core of our main strategies on business, product/service development, security and compliance. We have a long-term plan to invest in technology to digitalize retail banking, which is a long and uncharted journey, at least from the Cambodian point of view.

What other key trends are developing in the region and how do you plan to implement them in Cambodia?

A lot of key initiatives in the digitalization of retail banking have been pioneered by non-financial firms such as e-commerce platforms like Alibaba, Internet companies like Tencent, ride sharing companies like Grab or Uber, etc. The retail banking industry is no longer exclusive to banks or financial institutions. With new technologies being adopted at the fastest pace by consumers and different enterprises in various economic sectors, the digitalization of retail banking will accelerate rapidly. It’s just a matter of time before the digitalization of retail banking becomes a normal part of daily life.

As a financial institution, Prince Bank plans to develop a banking ecosystem which would allow our customers to manage every aspect of their daily lives. Our branch network is not adequate in reaching out to customers, and a large portion of the Cambodian population does not have the knowledge to carry out transactions via their mobile devices although they use them for social media purposes. In this regard, we see massive opportunities in expanding distribution channels through partnerships with other players.

What best practices from abroad do you take inspiration from?

The development of a separate standalone bank like Jibun Bank in Japan or the digital transformation of DBS Bank in Singapore are providing two successful case studies from different perspectives. While Jibun Bank has established itself without physical branches and could grow to compete with other older players, even DBS Bank’s impressive journey of digital transformation has a way to go.

You claim to be ‘promoting SMEs through the provision of professional bank services’. How are you achieving this and what main challenges are you facing in SME banking?

In order to achieve this, the bank has built strategies around (1) developing a sales culture focused on long-term relationships and deep knowledge of customer profiling and banking products/services among customer-facing staff (2) equipping staff with adequate banking systems to manage customer relationships and transactions.

First of all, SME banking is a middle spectrum between retail banking, which is once again about personalization and convenience, and corporate banking, which is more about structured and sophisticated products/services. From the compliance and correspondent banking perspective, retail banking is the least strict while corporate banking is the strictest.

While a vast majority of SMEs in Cambodia are not fully registered and are run by family owners, they often end up using retail banking services in order to carry out commercial transactions for their SME businesses, which are sometimes as sophisticated or valuable as corporate businesses. This has posed significant challenges from the perspective of customer relationship management, transaction handling, and system development.

Regarding the RGC’s vision of promoting a free market economy domestically, regionally and internationally, what role has your organization played so far and what are the next steps?

A free market economy is market-driven, free and competitive. The financial sector is one of the most highly regulated economic sectors everywhere, not just in Cambodia. Cross border investments – both foreign investment into Cambodia or Cambodian investment overseas – face a lot of challenges. However, technology and the integration of real economic sectors will address some of these challenges, and therefore, step up the competition.

Prince Bank recognizes the importance of healthy competition and is preparing itself via its five-year strategy plan based on people, systems and financial strength. In the meantime, the bank has been exploring the possibility of exporting its business model and system for expansion into regional or international markets.

How does your corporate social responsibility strategy align with the organization’s core values?

Our corporate social responsibility work is meant to contribute to making lasting positive impacts in the communities where we operate. As part of living our core values, we require our staff to act professionally and with integrity, take responsibility for their own actions, take pride in their noble tasks, be committed to their duties, and have esteem in what they do. Our work in giving back to the communities reflects our sense of responsibility, commitment and pride in our contributions.

What steps is your organization taking to foster financial inclusion and financial literacy in Cambodia?

Our long-term plan is to be able to offer banking products to the underbanked or unbanked population through an extended distribution network and making payments easy. It is acknowledged that small and medium businesses here lack access to financing, hence we target this segment of the market with products suitable to their needs.

Regarding financial literacy, Prince Bank is a strategic partner in the financial literacy program spearheaded by the National Bank of Cambodia. The goal is to promote awareness among the Cambodian population so that they can make informed decisions about their financials.

What services and products does your organization offer aimed at the younger generation?

At this infancy stage, our products are not yet youth-specific, although we have Kids Account facility encouraging parents to save for their children. However, the convenience of opening a bank account and inquiring about banking products through our mobile and internet banking offers the younger generation a new way of accessing financial services. In the medium- to long-term, we plan to look into student products and younger generation-specific solutions as our foundation and capability are being built.

Keywords : Digital/Mobile channels , Corporate social responsibility (CSR) , SME/Corporate

Geography : Cambodia