CBC’s CEO Talks Digitalization, Alternative Data and Financial Health Checks
By Marissa Carruthers on July 10, 2023
Cambodia cemented itself as a regional leader in the finance sector when the nation signed a deal with Singapore in March to exchange consumer credit information. This marked the region’s first cross-border initiative between two countries' credit bureaus.
“We want to act as a role model,” Credit Bureau Cambodia’s (CBC) CEO, Oeur Sothearoath, told Kiripost. “In the region, there aren’t any other countries that do this, apart from in the EU. This signing has encouraged other countries to explore similar agreements and implement the same cross-border credit information sharing.”
Sothearoath added that since the signing of the Memorandum of Understanding (MoU), Thailand, the Philippines, and Korea have expressed interest in inking similar deals. Under the agreement, Cambodians residing in Singapore can now access their Cambodian credit history in Singapore and vice versa.
“We want to empower end consumers to have better access to finance,” he said. “The difficulty for the end consumer is if you live in Cambodia and have built a credit history in Cambodia, when you move abroad and request a loan you have to start a new journey in which you cannot bring the credit history from your home country to your host country, so that’s a challenge.”
Sothearoath said CBC and Credit Bureau Singapore have been in negotiations for seven years to bring the MoU to fruition, with both countries’ central banks backing the move by drawing up new prakas and regulations.
“The signing of the MoU indicates that both countries agree to share credit reports. So, if a Singaporean living in Cambodia wants to go to the bank and request a loan or credit card, for example, previously, if they checked their credit report with CBC, nothing would come up. Now, they can directly request their credit report from Credit Bureau Singapore. It’s the same for Cambodian citizens living in Singapore”.
First installment of the interview with Credit Bureau Cambodia’s chief executive officer, Oeur Sothearoath, about access to finance
Tapping into Alternative Data
Currently, CBC works with its member financial institutes to access consumer credit information. However, the private entity is looking to take it to the next level. This includes accessing personal data from telcos, pawn shops, insurance companies and utilities.
“We’ve already been discussing this with some government agencies but there are still challenges as a private sector body,” Sothearoath said. “In Cambodia, there are no laws or regulations about data sharing, so this is a problem that we face.”
In addition to the need to introduce regulations on access to this data, the CEO added that another issue is engaging with the private sector so they understand the importance of sharing data. He said another element to consider is who owns the data and whether consent is needed to share it with third parties.
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Digitalizing the Sector
Recent years have seen digitalization transform Cambodia’s finance sector, especially with regard to payments.
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“Digital transformation is happening,” Sothearoath noted. “We can clearly see it is transforming the whole financial sector. However, there are still a lot of banks that need to modernize their system to tap into other opportunities.”
With regard to mobile payments, he said the National Bank of Cambodia (NBC) introducing the Bakong system was a huge game-changer. The all-in-one mobile payment and banking app combines e-wallets, mobile payments, online banking and financial applications into an easy-to-use interface for any bank accounts, serving as a backbone of connectivity within the banking sector.
“The adaptation from end consumers has been quick and we have seen lots of consumers quickly adapt to digital channels. We see the possibility that the payment gateway will go international,” he said, adding that Cambodia has already forged deals with Thailand, Laos, Vietnam, and Korea to use cross-border mobile payments. “This is the way NBC is trying to go.”
He noted that the microfinance sector needs to take extra measures to increase the use of data for loan decision-making, rather than the traditional method, which is based on subjective judgment. “The sector needs to move away from decisions based on their judgment to decisions based on data. If you have enough data, you know the profile of the consumer quickly.”
Sothearoath said the issue of loan decisions is a challenge across the entire sector. “Still, the majority of loan decisions are subjective. We want to see banks move to more data-driven decisions and statistical scoring,” he added.
Despite this digital journey, Sothearoath said there remain challenges with the banking sector and using digital channels to improve operations. “There is a difference between digitalization and digitization. If banks don’t understand and try to simply digitize the existing process, however, digitalization goes beyond that.”
Importance of Data Health Checks
In June, CBC inked a deal with ACLEDA to enable ACLEDA customers to access a free finance health check via the bank’s mobile app. This is the latest in a series of moves to encourage citizens to check their credit history.
“Previously, the public would have to come to the CBC office to access their credit report, which was an issue for those living in rural areas,” Sothearoath said, adding that in the last five years CBC has partnered with two of its members, AMK microfinance and ACLEDA, meaning that people can visit their offices to request their credit report.
CBC then partnered with Wing Bank and now ACLEDA to enable customers of these banks to request their credit history directly through their mobile banking apps. CBC is now seeking to do the same with other financial institutes.
This follows the launch of CBC’s financial health check campaign, which is encouraging all citizens to access their free credit report.
“Why not be a little more proactive? People go to the doctors for a health check-up once or twice a year, why not do the same with your finances and make sure everything is clean and clear? If there’s anything wrong with your creditor, then you can fix it first before applying for credit.”
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