With only 20% of “banked” population, Myanmar is a country where citizens still carry wads of cash stuffed in pockets. But the wind of change is blowing from a burgeoning fintech sector. The 55 million-strong population offers a lot of potential for e-commerce growth thanks to a high mobile phone penetration rate.
Wave Money, one of Myanmar’s leading mobile financial services providers, is now used by over 21 million citizens—around 38% of the population—with an amount of capital equivalent to more than 2% of the country’s gross national product flowing through its systems, according to the company.
Just four years since its establishment as a joint venture of Norway’s Telenor and the homegrown conglomerate Yoma Group, it has seen transfer volume more than triple year-on-year, reaching USD 4.3 billion (MMK 5.8 trillion).
The company allows users to process financial services like bill payments, e-wallet top-ups, and local remittances through its mobile wallet application Wave Pay, or over-the-counter services at Wave Money shops scattered around Myanmar.
While the services may not seem especially high-tech, it is only in the past four years that the fintech business has taken off in a country where 8 in 10 citizens are unbanked.
Banking the unbanked
By offering a branchless banking service, Wave Money enables unbanked customers to conduct basic transactions. The system, which is accessed through a registered mobile phone or NRC number, relies on agents visiting or residing in the communities.
The itinerant agents are usually located inside small shops selling sundries or operate out of the shop owners’ homes. There are more than 57,000 now in both urban and rural areas, across 295 of 330 townships, covering around 89% of the Burmese population.
The small stores have become ever more vital parts of their communities and are key for the success of Wave Money’s business.
“Myanmar is quite unique in the mobile money world,” said Brad Jones, CEO of the company. “Over 80% of our agents are female. It becomes a very important insight, because generally, they tend to care more about the customers. This is what really helps our business.”
For Jones, financial inclusion is not a corporate social responsibility (CSR) project. “Everything we do is a financial inclusion program. One thing we look at about growth is how many people we bring to the financial system,” he said.
A perfect time to invest—and divest
Jones points out that the firm has seen a eightfold spike in transactions on its mobile wallet Wave Pay in the past three months, compared with the same period last year. He thinks now is a “perfect time” for investments to happen.
A month ago, Ant Financial, the fintech arm of China’s e-commerce titan Alibaba, spent USD 73.5 million for a minority stake. Shortly after, Singapore-listed Yoma Strategic announced it will take over Telenor’s 51% in a USD 76.5 million deal.
When asked about the reasons behind Telenor’s divestment, Jones said that Telenor saw an opportunity to focus on their core business, while still continuing its partnership with Wave Money.
A local investment manager with knowledge of the matter told KrASIA that Wave Money’s focus on financial inclusion might have diverged from Telenor’s expansion plans in Myanmar. “The deal, originally thought to be inspired by the success case M-Pesa in Africa, might not have lived up to its expectations,” he said.
Digital literacy lags
Although the investment into wide network coverage has proven to be a success for the fintech startup, disrupting traditional banking is far from plain sailing. The low digital literacy is the first problem the sector has to overcome.
“One of the things we’re doing all the time is to educate our customers on protecting their personal information,” said Jones. “Scammers will disguise as Wave Money staff in social media and encourage customers to send their passwords, pin card and IDP. As soon as customers do that, they will lose money.”
As payment businesses have boomed in recent years in Myanmar, competition has further increased. In the midst of COVID-19, mobile payment platform Onepay partnered with AGD Bank to offer interbank money transfer services. With other players like KBZ Pay, CB Pay, M Pitesan, and OK Dollar, a crowded field is racing to secure the dominant position.
There are other headaches too. A shortage of point-of-sale (POS) technology, lack of interoperability between different platforms, and an unassertive government are hampering growth.
Building a super app
Despite the hurdles, Jones feels confident about Myanmar’s payments market. His true ambition lies elsewhere.
“We have a vision of building a super app in Myanmar,” said Jones. “We want to do a lot more, like a loyalty scheme. We want to build more useful services for our customers, but what we really want is to be the center of our customers digital-wise.”