Myanmar’s cash society turns to digital financial services as COVID-19 looms large.
By Helena Kerr
Myanmar’s financial technology, or fintech, industry has passed its embryonic stage and emerged as a regular feature in parliamentary agendas and business plans. Following the country’s political reforms in 2011, Myanmar invested heavily in telecommunications, reducing the price of SIM cards, smartphones and data coverage. This increased connectivity facilitated the rise in fintech services as a modern tool for financial inclusion.
Where does Myanmar’s fintech industry stand after its first decade?
Compared to fintech hubs like Singapore and Malaysia, Myanmar has only registered approximately 23 fintech ventures. These ventures mainly develop infrastructure for mobile and digital payments, providing services for Myanmar’s unbanked population.
This is making digital financial platforms more popular, as approximately 95% of people in Myanmar now have cell phones. The fintech industry is now moving towards making a greater impact on Myanmar’s economic development and modernization.
Last year, the DaNa Facility, the United Nations Capital Development Fund (UNCDF) and the Asian Development Bank (ADB) launched a joint venture named Fintech Challenge Myanmar. This venture aimed to increase use of fintech services and financial inclusion in Myanmar through partnerships with the Ministry of Planning and Finance’s Financial Regulatory Department (FRD) as well as the Central Bank of Myanmar (CBM). The program targets rural farmers, small businesses and low-income households in urban regions.
Despite growth, fintech services still have room for development
In 2003, Myanmar saw a banking crisis, triggered by the collapse of its formal financial infrastructure, and public trust in the financial sector plummeted. Ambiguous regulations and limited technological literacy also hindered the sector’s development. This increased reliance on cash, later making many people resistant to the nascent fintech industry.
Only 6% of adults in Myanmar use more than one fintech product. Although mobile money usage increased from 0.8% in 2016 to 80% in 2019, at least 7.5 million adults don’t use mobile financial services.
The COVID-19 pandemic accelerated Myanmar’s transition to digital financial services
Myanmar has reported a total of just over 300 COVID-19 cases. Nonetheless, the sheer impact of the pandemic on Myanmar’s economy is similarly to in countries with much higher rates of infection. Tourism dropped to zero as border restrictions were imposed and industries were disrupted due to production delays and declining demand.
The Myanmar government established a COVID-19 Economic Relief Plan to help its tanking economy. One of their COVID-19 response strategies included disbursing one-time cash payments of 30,000 kyats (US$21.36) each to roughly 441,000 women and elderly citizens.
However, despite Myanmar’s popular culture of cash reliance, the government’s main strategy in disbursing stimulus payments is through digital platforms, using fintech start-ups like Wave Money and OnePay.
Wave Money was Myanmar’s pioneer in providing digital financial services to people without bank accounts. At the onset of the pandemic, the venture partnered with government bodies and humanitarian organizations to assist individuals deeply affected by COVID-19. Wave Money pledged to waive all service fees for any transfer of funds to COVID-affected businesses or individuals.
Through its digital platform, the Myanmar government disburses “social security payments, loans for farmers, emergency funds for garment workers and cash relief for street vendors,” according to a company press release. Wave Money also raised money to support economically impacted businesses through programs such as “WavePay it Forward”.
During this rapidly evolving community response to COVID-19, Myanmar saw a spike in digital payment use as citizens opted out of cash to minimize physical contact. In addition to Wave Money, OnePay, a mobile application launched in April, is providing interbank digital services and cash-in services that do not require physical contact with bank associates or anyone else. The venture launched during the peak of COVID-19 restrictions and garnered massive support from locals. In just a month, subscriptions to its app rose to 150,000 users.
Where does fintech in Myanmar go from here?
The COVID-19 pandemic is driving Myanmar’s cash society toward a digital payment world, where everyone is able to use fintech services regardless of whether they have a bank account. Financial inclusion in the country is projected to increase from the current 48% to 60% by 2023.
Mobile payment users are also expected to rise to 7.5 million by 2024. As the world trawls through the uncharted waters of the pandemic, Myanmar’s future cash economy may evolve into a new, digital phenomenon.