The Coronavirus pandemic has made a massive impact on lending to companies, small and medium-sized enterprises and consumers, forcing Cambodian banks and microfinance institutions (MFIs) to restructure $5.5 billion of loans by July this year.
There has also been one benefit: a shift online has helped banks and MFIs to collect data which allows them to gain a better knowledge of their customers and protect against a rise in non-performing loans. That was the conclusion of a webinar organised by Credit Bureau Cambodia (CBC) and Cambodia Microfinance Association (CMA).
Central bank Director-General and CBC Chairwoman Chea Serey told the conference the pandemic had devastated the country not only on an economic front but also in terms of education, governance and social interaction. She said this had put severe strain on the system and made the role of lenders more vital than ever.
“As a financial industry more can be done and more should be done,” Serey said. “We must lend. We must do so responsibly to ensure that everyone will benefit – not just the bank shareholders but also consumers, the environment, society at large as well, so as to ensure the resilience and sustainability of our industry, country and the world in the long run.”
Serey said Covid-19 had been a catalyst in digital adoption, leading to a 250 percent increase in Cambodian e-commerce transactions and a 350 percent rise in their value since the start of the pandemic in February 2020, with more expected by the end of the year.
Representatives of local and regional banks and MFIs said the rise in e-commerce and the widespread adoption of the central bank’s Bakong digital wallet created a huge amount of data.
Khai San Banh, a partner at financial industry number-crunchers Sprint Milestone, said better access to customer information benefits both financial institutions and their customers.
“Data analytics is not just to be able to offer the right lending to the right customers but also to understand the impact it’s having on consumer behaviour.
“Some customers will be affected more than others so, when implementing measures, especially debt relief measures, it will never be a one-size-fits-all. In order to be able to customise the programmes you want to implement to different customers you need data. You need analytics to be able to guide you to make informed choices,” she said.
Customers also need to be able to make informed choices, not just lenders, according to the head of one of Cambodia’s biggest banks.
“Responsible lending begins with financial literacy,” said Raymond Sia, chief executive officer of Canadia Bank. There must be “teaching and making sure that customers are aware before they take a loan”.
Sia said lenders need to come up with an exit plan to deal with their debt burden when Cambodia’s moratorium on loan repayments stops at the end of the year.
“Come December 31 there will still be certain industries that could still possibly be suffering a lot more financially from the impact of Covid and this is where certain accommodation could be considered selectively, not across all industries. Covid has taught us closer engagement with the customer is one thing; the other part is customisation, where it’s not a one-size-fits-all,” he said.
Sia singled out tourism as an industry that will still require a lot of financial help when Cambodia starts to reopen.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.