LOLC Cambodia drives financial inclusion with new technology

LOLC Cambodia, one of the leaders in the Cambodian microfinance sector, is embracing technological advancements to expand its reach and improve services. Chief information officer (CIO) Duleep Liyanage discussed how the institution is implementing new systems to better serve its customers and enhance financial inclusion throughout the country.

LOLC Cambodia has its majority stakeholders from LOLC Asia Private Limited, based in Singapore. Over the years, LOLC Cambodia has grown to become one of the largest microfinance institutions in the country, serving a wide range of customers, including rural communities, small businesses, and women entrepreneurs.

The microfinance institution has played a significant role in promoting financial inclusion in Cambodia, providing access to credit and other financial services to those who are often excluded from the formal banking sector. Its success in Cambodia has been driven by its commitment to innovation and its ability to adapt to the unique challenges of the Cambodian market.

Implementing advanced technology

LOLC Cambodia is upgrading to Temenos T24 core banking system to improve efficiency and customer experience. This technological upgrade is vital for the institution’s goal of enabling more digital services, enhancing efficiency and offering reliable financial services.

"Our focus has always been on financial inclusion," said Liyanage. "By adopting advanced technologies, we can offer better services to more people, particularly in remote areas."

The new technology also allows LOLC Cambodia to expand its range of services, including mobile banking and digital payments. These services are crucial for improving access to banking in rural areas where traditional banking infrastructure is often lacking.

"We’re leveraging technology to bring banking services to people who previously had limited or no access," Liyanage added. "This is a significant step forward in our mission to enhance financial inclusion."

LOLC Cambodia has grown exponentially, from serving a small number of clients to becoming one of the largest microfinance deposit taking institutions in the country. The institution’s expansion is partly attributed to its strategic investments in technology, which have enabled it to scale operations while maintaining high service standards. For instance, the deployment of Temenos T24 has greatly helped to manage large volumes of transactions, ensuring that services are delivered efficiently and securely.

The institution’s innovative approach includes developing tailored financial products for different customer segments. For example, LOLC Cambodia has been offering loan products for women entrepreneurs, which have been instrumental in empowering women in rural areas. These targeted services are supported by the institution’s robust digital infrastructure, which ensures that even the most remote customers can access banking services.

Challenges and strategic solutions

Despite the benefits, implementing new technology in Cambodia comes with its challenges. LOLC Cambodia has faced issues related to infrastructure and the digital literacy of its customers. However, the institution is committed to overcoming these challenges by providing training and support to both its staff and customers.

"We recognise that change can be difficult, especially in rural areas," Liyanage explained. "But with the right support, we’re confident that our customers will embrace these new technologies."

The institution’s approach includes extensive community engagement initiatives to educate customers about the benefits of digital banking and to build trust in the new systems. For instance, LOLC Cambodia has formed its internal resources to conduct financial literacy workshops in rural communities, helping to bridge the digital divide and ensure that customers can fully utilise the institution’s digital services.

National initiatives and regulatory impact

The National Bank of Cambodia (NBC) has been instrumental in promoting the digitalisation of the financial sector. The NBC’s introduction of the Bakong system, a blockchain-based payment platform, is one of the key initiatives that LOLC Cambodia has integrated into its operations. This system facilitates real-time payments and supports the country’s transition to a more digital economy.

"We’ve integrated the Bakong system into our operations to provide our customers with a more seamless payment experience," Liyanage said. "This aligns with our goal of making financial services more accessible and efficient."

The Bakong system has significantly increased the adoption of digital payments in Cambodia. LOLC Cambodia’s participation in this initiative has further solidified its position among leaders in the digital financial services space.

Looking forward

As LOLC Cambodia continues to grow, the institution aims to further integrate digital solutions into its operations. This includes exploring new technologies that can enhance service delivery and improve the customer experience. “We’re not just adopting technology for today; we’re building a foundation for the future," Liyanage concluded. "Our goal is to ensure that everyone in Cambodia has access to the financial services they need."

LOLC has been investing in digital banking and mobile services, which reduces the need for physical branches and paper-based transactions, significantly lowering its environmental impact. These digital solutions also improve financial inclusion by efficiently reaching low-income populations.

The institution currently provides cross-border transactions to Thailand, Vietnam, and Laos using NBC’s Bakong system with its appointed settlement bank. LOLC Cambodia is looking forward to further enhancing its cross-border transaction services for many other countries in 2025, following the regulator’s direction to support the country’s economic growth.

LOLC Cambodia’s investment in new technology is driving its mission to expand financial inclusion across the country. By implementing advanced systems and overcoming challenges, the institution is well-positioned to continue its growth and serve more customers in Cambodia. The bank’s efforts align with national initiatives and are crucial in supporting Cambodia’s transition to a digital economy.

Connect with senior banking decision-makers and industry practitioners at Finance Indonesia on 12 September 2024. This year’s theme, Innovation and regulatory excellence: Charting our future in banking, will explore the key trends shaping the industry. For more information, visit: https://theasianbanker.com/finance-indonesia-2024/