Saturday, October 1, 2022

Myanmar FinTech growth amid the COVID-19 pandemic

Myanmar FinTech growth amid the COVID-19 pandemic

Since the spread of the COVID-19 pandemic, Myanmar has seen significant growth in the Fintech market. To encourage social distancing, payments have been made through the internet. On April 27, 2020, the Myanmar Government launched, “The COVID-19 Economic Relief Plan”. Under this plan, the government distributed $22.78 to vulnerable households via Fintech applications such as Wave Money and OnePay, according to Oxford Business Group. Other financial dues – including social security payments and loans for farmers- were paid using digital platforms.

Data provided by Statistica shows that Mobile POS Payments and Digital Commerce in Myanmar have been seeing significant growth since 2018. The total transaction value in the Digital Payments segment is projected to reach US$951m in 2020. Moreover, the Mobile POS payments transaction value is expected to reach $308.7 m by 2024.

The COVID-19 pandemic has been considered a double-edged sword for Myanmar. Serge Pun, chairman of Yoma Strategic Holdings told Oxford Business Group, “The banking and financial services sectors were definitely the major beneficiaries of the pandemic”. Moreover, he added, “The number of users switching to digital platforms, creating bank accounts and using mobile payments methods has grown exponentially”.

In fact, 40 million or 70% of the local population in Myanmar remain unbanked, according to Tech Wire Asia. In 2016, the Central Bank issued a regulation on “Mobile Financial Services” under which mobile network operators and non-bank financial institutions can receive licenses to provide digital payment services and Fintech solutions across the country.

Amid the pandemic, investors have been interested in the Financial Technology markets. Around mid-September 2020, Myanmar Fintech startup NearMe raised a 7-digit US dollar funding from Japanese conglomerate Sumitomo Corporation. In a statement, the company said that it will use the money to expand digital solutions.

On September 21, 2020, Tranglo, a Malaysian-based cross border payment specialist, announced a brand new partnership with Kanbawza Bank of Myanmar. Stoney Hsia, KBZ Bank Head of Wholesale Banking said, “Through this significant partnership with Tranglo, we are addressing the needs of Myanmar migrant workers living abroad to send money home, quickly and conveniently. Instead of using traditional or informal means of remitting money, we encourage migrant workers to take up this reliable method of transferring money directly into the beneficiary’s KBZ bank account. This also presents time and cost savings for the beneficiary who does not need to travel to a bank branch or wait in line, according to Fintech News.

In May 2018, the financial service provider Wave Money received an investment of $73.5 million from Ant Financial as part of an initiative to promote financial inclusion for the unbanked in Myanmar, according to Finextra.

To support the Fintech industry, Myanmar is now working on improving its financial infrastructure as well as strengthening the legal framework related to the cashless environment.