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Myanmar’s Fintech Regulatory Challenges Hinder Potential for Financial Inclusion

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YANGON - Despite a significant surge in fintech adoption and digital payment usage in Myanmar since the Covid-19 pandemic, regulatory challenges remain a major hurdle to further growth and expansion of financial inclusion in the country.

Rapid Growth in Digital Transactions

According to data analytics company Statistica, digital transactions increased by 7.1% while the number of users rose by 19.7% this year alone. However, with only around one-quarter of adults having access to a bank account, industry stakeholders believe there is significant room for further expansion.

Smartphone Penetration and Fintech Adoption

  • Smartphone penetration stands at around 80%
  • Only 6% of adults use more than one fintech product
  • Significant opportunity for growth in the fintech sector

Regulatory Challenges

One major issue facing the sector is the lack of clear and consistent regulations governing fintech operations. While the Central Bank of Myanmar has taken steps to tighten legislation, industry experts argue that more needs to be done to facilitate growth and competition.

Quotes from Industry Experts

  • “Regulatory clarity is crucial for driving innovation in the fintech sector,” said Christopher Loh, CEO of local bank UAB Myanmar.
  • “The government’s efforts to improve regulation of the cashless payment environment will help boost the development of credit card and QR code technologies.”

Access to Credit

Another challenge facing fintech operators in Myanmar is access to credit for individuals and businesses. Traditional banks are forced to abide by interest caps imposed by the central bank, making it difficult for consumers to secure loans.

Development of Credit Analysis Tools

However, with the help of technology partners like Alibaba, some fintech companies are working on developing credit analysis tools that can use artificial intelligence to calculate the creditworthiness of prospective customers.

Recent Developments

In a recent development, Yoma Strategic Holdings announced plans to invest $76.5 million in Wave Money, taking a controlling interest in the digital payments platform. The investment is expected to help Wave Money diversify its services by providing loans to businesses and individuals via its app.

Quotes from Industry Leaders

  • “The banking and financial services sectors were definitely the major beneficiaries of the pandemic,” said Serge Pun, chairman of Yoma Strategic Holdings.
  • “The number of users switching to digital platforms, creating bank accounts and using mobile payment methods has grown exponentially.”

Conclusion

Despite these challenges, fintech operators remain optimistic about the potential for growth in Myanmar. With mobile money uptake increasing dramatically in recent years, industry stakeholders believe that there is significant room for further expansion in the country.