● Electronic payments and mobile banking in Cambodia began to expand rapidly in 2010s, but at the same time, the issue of digital exclusion arose.

● The National Bank of Cambodia(NBC) introduced ‘Bakong,’ a payment and remittance system to improve financial accessibility and transaction efficiency, and to break away from dollar-dependent economy in the long term.

● Blockchain-based ‘Bakong’ began services on October 2020. This system connects participating companies and end-users on a secure platform.

- Participating banks and payment companies (e.g., fintech companies) can easily integrate their apps with the Bakong app through open API without developing their own system.

- End-users can make a Bakong account in the app easily and transfer money regardless of whether they have a bank account or an electronic wallet from a payment company.

● Bakong has been successfully established and settled, which leads to several positive results. It increased financial inclusion and expanded use of Khmer riel(local currency), and created a fair, competitive, and productive financial environment.

- 57 banks and financial companies have participated in Bakong system, and within three years of its official launch the majority of the Cambodian population uses it directly or indirectly for transactions.

- Based on the central payment system, financial companies could have a strong foundation for fair and productive competition and focus on their inherent responsibilities such as strengthening security(e.g., customer information management and KYC procedures) and develop new technologies and products

● Cambodian financial companies actively participated in Bakong and cooperated with NBC. Especially Large banks such as Maybank and ACLEDA contributed to the overseas expansion of Bakong.

● Bakong is a successful example showing that financial exclusion that may occur during the rapid digital transformation especially in emerging markets could be overcome through a country-led system. 

● Financial companies in Korea need to refer to local companies’ response to Bakong and find ways to improve the convenience of remittances and payments between Korea and Cambodia by using Bakong.
 

Author : Hyeon-jeong Sim / Principal Research Analyst of Management Strategy Research Department (+82-2-2173-0585)