Mobile Banking Surges as Internet Banking Declines in Cambodia

Cambodia is witnessing a significant shift in its banking landscape, with mobile banking rapidly gaining popularity over traditional internet banking. Data from the National Bank of Cambodia (NBC) highlights this trend, showing a notable preference among Cambodians for conducting financial transactions via mobile apps rather than internet banking platforms.

In 2023, the total value of transactions conducted through internet banking fell by 7 percent to 74.5 trillion riel ($18.22 billion) from 80.1 trillion riel ($20 billion) in 2022. In stark contrast, mobile banking transactions surged by 11 percent, reaching 746.7 trillion riel ($164 billion) in 2023, up from 672.4 trillion riel ($183 billion) the previous year.

The NBC’s report underscores this shift, stating, “While payment through internet banking services slightly decreased, the use of mobile banking and card payment steadily accelerated.”

Corporate vs. Retail Preferences

Industry experts attribute this divergence in banking preferences to the distinct needs of corporate and retail clients. Richard HC Liew, CEO of Bridge Bank Plc, explained to the Khmer Times, “For internet banking, these are usually transacted by companies so it depends on the business flow. However, for mobile banking, it is transacted nationwide by the public with almost all individuals in Cambodia doing it.”

Liew’s observations highlight a crucial distinction: corporate clients continue to rely on internet banking for their business transactions, while the average retail customer overwhelmingly prefers the convenience of mobile banking.

The Role of Bakong in Mobile Banking Adoption

Both the NBC and the Association of Banks in Cambodia (ABC) have played a pivotal role in promoting mobile banking, particularly through the Bakong system. “NBC has been at the forefront of this with the ABC in promoting and educating the public in using mobile banking via Bakong, and the results have been very positive and encouraging,” Liew noted. He also emphasized the high mobile penetration rate in Cambodia, which exceeds 100 percent, indicating that many Cambodians own more than one mobile phone.

The widespread use of mobile phones is a significant factor driving the popularity of mobile banking. According to the Digital 2023 Cambodia report, in the first quarter of 2023, Cambodia had 22.16 million active mobile connections compared to just 11.37 million internet users. With a population of just over 17 million, this translates to an impressive 131.5 percent mobile connection rate per person.

Post-Pandemic Digital Transformation

The post-COVID-19 era has seen a substantial increase in internet usage in Cambodia, spurred by the need for online learning and remote work. However, while laptops are preferred for educational purposes, mobile phones dominate for everyday transactions such as food delivery, online shopping, and utility bill payments. Cambodians favor mobile payments through QR codes, further cementing the role of mobile banking in daily life.

NBC’s report highlights the growing confidence in mobile payment systems: “Payment amount through the QR code and Bakong system jumped by 7 times and 2.7 times, respectively, in 2023, reflecting the growing confidence and adoption among the public while also contributing to promote the use of the Khmer riel.”

Interoperability and Financial Inclusion

The interoperability of the Bakong system has been a game-changer for digital payments in Cambodia. Users can make payments to any merchant or bank from their home bank, enhancing the system’s efficiency and safety. This feature has driven widespread adoption and promoted financial inclusion across the country.

“Interoperability, efficiency, and safety of digital payment systems have attracted large adoption among the public to promote financial inclusion,” the NBC stated. “KHQR and the Bakong system have gained popularity and contributed to promoting the use of Khmer riel.”

Conclusion

The shift towards mobile banking in Cambodia is unmistakable, driven by high mobile penetration, the convenience of mobile transactions, and the successful promotion of systems like Bakong. While corporate clients may still rely on internet banking, the general public’s preference for mobile banking is clear, setting the stage for continued growth in this sector. As mobile banking becomes increasingly integral to daily life, Cambodia’s financial landscape is poised for further digital transformation.