Tuesday 19 November 2013

Hard road for banks when infrastructure lacks

Poor infrastructure, internet penetration and low mobile phone ownership will continue to hinder the spread of banking in Myanmar, banking officials said last week during a seminar in Yangon.

Speaking at the Inya Lake Hotel on November 12, the deputy managing director of Kanbawza Bank, U Zaw Lin Htut, said challenges still confront an industry which only opened up two years ago.

“This is not just about financial services, but also the telecoms sector,” he said. “It’s not easy for us to create new banking products. Infrastructure is the main barrier.”

According to the McKinsey Global Institute, telecommunications infrastructure is needed to support mobile banking or e-commerce and to avoid the cost of building physical banks and shops as well as extending health and education services to even the remotest villages.

Myanmar has the second-lowest level of internet penetration of the countries covered by the World Bank’s development indicators, and mobile penetration is the lowest, McKinsey said.

Challenges included the need to upgrade capacity, to build customer satisfaction with their procedures, to create new products, and to provide branches and ATMs in convenient locations, said U Zaw Lin Htut.

Customer satisfaction in banking is currently the lowest in the region, he said. “Most customers complain about waiting times and slow service at ATMs” dependent on satellite and phone connections, he said.

Most state-owned banks and smaller banks had long waiting times for customers, and many had poor infrastructure and sales capability, he said.

U Than Lwin, former deputy governor of the Central Bank, said that though the Bank had become legally autonomous in July, bylaws and a new financial institution law had yet to be passed to enable domestic banks to integrate in the international banking system.

Economist U Aung Htun Thet, a member of the Myanmar Investment Commission, said that although the banking sector was not the main barrier to foreign investment, lending practices could be loosened up.

“It’s obvious we still need infrastructure, but some famous brands such as Coca-Cola and Nissan have entered our market already,” he said.

source: The Myanmar Times

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