Myanmar at a glance
The
financial sector in Myanmar is small and underdeveloped. Foreign banks
currently are not allowed to operate in Myanmar. Use of the informal providers
of credit and transfer services in both urban and rural areas is widespread.
The
market is therefore large enough to attract financial technology that
could significantly improve outreach while contribution to innovation in the
sector. The scope for the branchless banking seems limited to the lack of
infrastructure and the high cost of capital investment.
The
consumer behavior of Myanmar is different from others, so that home growth strategy
would be the most effective and efficient business model as it’s awareness by
ASEAN countries investor in these days.
The Issues in Myanmar
Ø The lack of an educated workforce
skilled in modern technology contributes to the growing problems of the
economy.
Ø The country lacks adequate
infrastructure such as transportation, electricity, data communication.
Ø Energy shortages are common throughout
the country including in Yangon and
only 25% of the country's population has electricity.
Ø The potential for branchless banking is
limited because of the monopolistic and underdeveloped status from the
regulation of the communication sector.
Ø The people of Myanmar still believe in Cash is
still king, they can feel it, touch it and see it.
Ø The
Local people see as cash in hand would be more flexible to spend and carry it.
Ø Fake
Currency note are penetrating and widespread in many areas.
Market Analyst
Myanmar – mobile banking and mobile money market overview:
MNO-Led
Model
Mobile Network Operator acts as de facto “bank”.
This model
places most of the regulatory responsibility on
the MNO.
Bank-Led Model
Financial services offered
from a bank to their account holders through a network of agents.
Independent model
Independent
companies that often times establish a joint collaboration with MNO or Bank to
meet the consumer demand not currently being met.
Advantages
MNO-Led
Ø Brand recognition and trust
Ø Well-developed distribution market thought Top up channel
Ø Self-funded model
Ø Familiar market segments
Ø Extensive agent networks provide better access
Bank-Led
Bank as a driver of the service
Ø Path to full financial inclusion and financial footprint
Ø Service linked to a bank account at financial institution (i.e.: interest rate on deposit)
Ø Real time settlement of transactions linked to bank account
Ø May use POS, mobile as device, agent model and new financial products
Ø Deposit insurance
Independent
Ø Interoperability
Ø Rapid Product development
Ø Flexible partner
Ø Clear Mission
Ø Potential revenue driver
Ø Lower cost than branches
Ø Agents: typically look like MNO-led model small mom and pops, pharmacies, etc.,
Ø Clients- linked to bank account at special accounts for users
Ø Accessing new markets (client segment and geographies)
Ø New revenue stream (bill pay, G2P, cross selling etc.
Ø Cost savings (compared to bank’s branches and ATMs)
Challenges
MNO-Led
Lack of familiarity to financial services sector
Ø Regulatory barriers
Ø Heavy upfront short term profits
Ø AML/ ATF issues
Ø Heavy agent and end user capacity building costs
Ø Agents and end user training
Bank-Led
Depending on regulation, typically will be lower value account
Ø Many bank are also doing this a competitive and reactive measure
Ø KYC and requirement with high information
Ø More on the documentation
Independent
Often requires a bank partner
Ø Lack of distribution network
Ø Funding
Ø Brand control and building trust
Ø May be completely new, unfamiliar client segment-training
Ø Managing customer experience
Ø Potential for increase in Fraud
Ø Maintaining active accounts
Source: BizModel_v01
