Mobile Banking Race heats up with myKyat

DEC 24, 2014

The firm’s “myKyat” mobile banking service will be launched in conjunction with First Private Bank. It will be an advanced form of mobile banking, allowing the unbanked to have wider access to financial services, according to Tim Scheffmann, CEO of Frontier Technology Partners.

“More people are going to be able to do financial transactions without being dependent on the banking system,” he said.

The service will eventually be available using SMS, USSD, an app and a web portal, with an SMS receipt provided after each transaction. The firm is using SAP technology for myKyat.

There is no shortage of firms eyeing mobile banking-type services in Myanmar. Innwa Bank-tied Myanmar Mobile Money has already launched, while a number of other companies, such as a joint service from Telenor and Yoma Bank, are also planning to enter the market.

Most of these services are expected to start by offering digital remittances. Currently many domestic remittances in Myanmar use formal banks, which are secure but particularly in rural areas can require travelling some distance to get to a branch, or use informal methods such as trusting friends or bus drivers to deliver cash.

Offering digital remittances is an obvious business model many mobile banking services are keen to pursue, though some are planning other services as well.

Mr Scheffmann said myKyat will try to be innovative when it launches in the first half of 2015.

“Only cash-in-cash-out and remittance cases will not be enough to fund the business. So you need to go one step further and provide value to the end customers and consumers, those who are using myKyat,” he said.

Items like bus tickets could be purchased using myKyat, assisting companies with cash-handling problems by making the purchases digital, with buyers being rewarded through convenience and possibly a gift like a cold drink. It is possible other options will be added, such as paying utility bills or conducting salary disbursements, using mobile phones.

Still, Mr Scheffmann said it is not yet likely that cash will be displaced altogether, but rather that mobile banking-type solutions and cash will co-exist.

“Cash is actually our biggest competitor,” he said. “You must have a reason why you’re switching to mobile money or money via your phone [rather] than to pay with cash.”

It will take time to convince users to keep money on their accounts, rather than simply withdrawing it at cash-out points as soon as a remittance or a payment is received.

Mr Scheffmann said studies in other markets show there is often a two- or three-month period at the beginning where users hold no balance in their accounts other than for small tests. Over time, trust is built up, encouraging people to use the technology.

“It’s very hard to build trust. The only thing we say is ‘test it out’. If it fits your needs, please go ahead. If you find out it’s not for you, that’s okay too,” he said.

Part of the firm’s business operations are expected to be instructional, according to Mr Scheffmann.

“We want to educate the end users about financial matters, so we need to help everyone to build up a budget, we need to educate. This is our driving force.”

By Jeremy Mullins
Myanmar Times, 22 December 2014