The Companies Working To Serve Myanmar’s Unbanked Citizens

As fintech startups gain prominence across Southeast Asia, Yangon is poised to become a hub for the budding industry. At least, that’s how Red Dot Myanmar founder John Nagle sees it.

The Irish entrepreneur arrived in Myanmar four years ago, drawn by the many opportunities in the country’s financial space. Myanmar’s economy opened to foreign investment after decades of oppression, paving the way for unprecedented tech developments. Red Dot Myanmar’s payment network allows users to purchase mobile top-ups, pay bills, and purchase products at one of its 14,000 shop partners throughout the country. These partners include local pharmacies, convenience stores, and mom-and-pop shops that draw financially underserved consumers. A growing tech community has already produced startups working on everything from travel apps to freelance platforms, but now that Nagle has established Red Dot Myanmar’s payment network, he wants to spur even more entrepreneurial development.

He intends to launch a fintech incubator in Yangon this spring with an emphasis on innovative approaches to serving unbanked customers. Roughly 95% of Myanmar’s population does not have a bank account. However, Ericsson ranked Myanmar the fourth fastest-growing mobile market in the world in 2015 and the World Economic Forum categorized it as the fastest-growing economy in 2016. The need for reliable, user-friendly services is real.

“We’re not trying to be a sort of classic VC,” Nagle said. “We want to be very specific and target unbanked communities in Southeast Asia.”

Nagle expects to vet potential startups during the first quarter of 2017 and begin the program on April 1. He’s looking for entrepreneurs who think beyond traditional wallet or payment solutions and can create something truly unique in the market. For instance, a game with an innovative payment system that could apply to other products is something that would interest him.

The Red Dot team doesn’t want to be prescriptive in its search for participants.

“I want [entrepreneurs] who say, ‘I have a new idea and I need your network to help me,’” Nagle said.  

Red Dot Myanmar will not invest in the companies, according to Nagle. However, it will provide free office space and access to its 14,000 stores throughout the country. Nagle noted that they may also hold pitch sessions so that the incubator participants can connect with potential investors, who are more likely to be interested in companies that have a distribution network (such as that offered by Red Dot Myanmar). The incubator will also help entrepreneurs develop their skills, whether they need a boost in development abilities or sales acumen. Nagle said Red Dot plans to hold knowledge-sharing sessions about regulatory issues as well.

Serving the underserved

Ascend Money, a fintech company under Thailand-based Ascend Group, also focuses on underserved segments of Southeast Asian economies. The company announced earlier today that it now serves 20 million customers throughout the region, with operations in Thailand, Myanmar, the Philippines, Indonesia, Cambodia, and Vietnam. Its goal is to reach 100 million customers by 2020.

Punnamas Vichitkulwongsa, CEO of Ascend Money, said the company serves digital customers who have limited access to traditional financial products as well as unbanked individuals. Ascend Money’s offerings include debit and cash cards, a mobile wallet and other payment products.

The company’s biggest challenge in Myanmar is overcoming people’s suspicions about financial organizations, an obstacle other fintech companies have encountered there as well. Vichitkulwongsa said the need for financial education in Myanmar is great, as is the demand for safe, convenient options for moving and saving money. He noted that Ascend Money also offers international remittance services targeted at migrant workers from Myanmar who need to transfer money from Thailand and other countries home to their families.

“We believe that financial services are basic human rights,” he said.

Vichitkulwongsa added that Ascend Money also plans to facilitate alternative lending options, through its own system and through banking partners, by building credit profiles on its users. These will draw on bill pay records and other transactions conducted on its network, as well as social media contacts.

The theory is that if potential borrowers are connected to people who have good credit or reliably pay their bills, there’s a higher chance that they’ll repay their loans on time. Bill pay records indicate not only an ability to pay but also potential income range. Access to credit, investment products, and savings accounts could help people rise from poverty and build wealth for their families.

Vichitkulwongsa said that fintech is “hugely important” to Myanmar’s economy and to other Southeast Asian economies. “That’s our reason for existing,” he said.

Although Nagle envisions Yangon as a center of excellence for financial startups, he hopes to nurture companies whose approaches can be replicated regionally in countries such as Cambodia, Indonesia, Malaysia and Vietnam.

“[Millions of] people in Southeast Asia do not have a bank account,” Nagle said. “They want to be able to buy a game, they want to send money to their mother or father, they want to buy a bus ticket for their son who just ran out of money.”


Source: The Forbes

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