The mobile financial services industry is growing in Burma. Kyaw Hsu Mon interviews Ma Pwint Htun, who currently lives in the United States and has 20 years of experience in financial services, about where the industry stands today.
Please tell us about your experience with mobile financial services and the services you currently provide.
I was born in Myanaung Township, Irrawaddy Division, and moved to the US when I was young. I have worked in the telecommunications industry for more than 20 years. I returned to Burma in 2012 to contribute to the country’s reform process. As my profession is in telecommunications, I wanted to contribute to reforms in this industry. At that time, the telecommunications sector was lagging behind and Burma needed mobile financial services. I thought about how I could provide the public with access to mobile financial services and have been engaged in that ever since.
People are familiar with the term mobile financial services, but many don’t know the procedures or how it can benefit people. Can you explain this?
When I say mobile financial services, what people imagine are mobile banking services. The two are different. The Central Bank of Burma has issued two regulations—mobile banking directives issued in Dec. 2013 for banks, and mobile financial services regulation, which was issued last March for organizations that are not banks to provide financial services. They are regulated separately.
In Burma, when we say mobile money, what most people think of is transferring money to their friends and relatives. And it is mostly used in Rangoon. What I envisage is that every mobile phone in the country can instantly transfer money to any other mobile phone in the country, no matter which telecom operator someone subscribes to. This will happen soon.
Again, a cash-in, cash-out agent network is a key part of mobile financial services. I want a minimum of 50 percent of the convenience agents to be female, because if the sender is a young woman, she probably will not be willing to give a male agent her phone number. I want to see an accessible mobile financial network for all.
When did mobile financial services begin in Burma?
The idea first began around 2012. At that time, Burma’s telecommunications index was ranked probably the third worst in the world. As the government was considering reforms, it was learning about mobile financial services, and we held talks with the President’s Office the communications ministry, and the Central Bank of Burma.
As the government was considering opening the telecommunications industry, we told them that it was important that telecom operators entering the market had experience in mobile financial services. They play an important role because they can set up human ATMs in townships across the country. If there are mobile top-up points of sale nationwide, these points can also become cash-in and cash-out locations. I want telecom operators to play that part.
Telenor has also introduced a mobile money service, which it calls Wave Money. It has thousands of outlets across the country. What do you think about the progress of the mobile financial services industry and how much people accept it?
The industry is still in its nascent stage. There are only around 1,000 agents in the country’s existing agent network. But I want to see around 100,000 in the agent network, and I want everyone to be an ATM. If everyone becomes a human ATM, the whole country will become a huge human ATM network. When it becomes easy to transfer and receive cash at any phone shop and when there are at least 100,000 agents, the country will see greater development.
Currently, only Telenor is providing that service and there are other telecom operators such as Ooredoo, MPT, and a fourth telecom operator, which is a joint venture with Vietnam’s Viettel Group. To what extent do you think their cooperation is important?
All of the telecom operators must cooperate. Both Ooredoo and MPT will provide mobile financial services soon, and all the three are ready to cooperate. Now, farmers in rural areas have access to smart phones. It is a long procedure for farmers to get loans from agricultural banks. Sometimes, when farmers can’t get money in time, they have to borrow money at high interest rates from private lenders. If agricultural banks use mobile financial services, they will be able to disburse loans to farmers quickly, and this will contribute to the country’s development. It will also save farmers from borrowing money from private lenders at high interest rates.
Can you explain the procedure? How can a farmer get mobile money from mobile financial services with his smart phone when he needs it urgently?
Mobile financial services are useful for farmers and grassroots people. Suppose a farmer needs money urgently. He can make a phone call to his friends or relatives even if they live far away. He can ask them to transfer money and receive it within minutes.
In Africa, mobile financial services help impoverished people. If a poor man desperately needs money, and he can’t get it in time, he may have to sell his cattle or withdraw his children from school. If he can get money in time, it creates additional social security.
In our country, the telecommunications network still does not cover the entire country. Will mobile financial services be effective in remote areas?
The telecom network is key in mobile financial services. According to contracts, telecom operators are obliged to provide coverage in rural areas. Now, the mobile network reaches around 90 percent of the population. Much remains to be done. But, I expect that 94 percent of the population will have a reliable mobile network in the next two years. The telecommunications ministry is also taking various steps to ensure universal service. The telecom network will only improve. When rural areas are connected, mobile financial services will reform the banks and the economy.
What regulations should the Central Bank implement to assist the development of mobile financial services? There are companies that provide financial services in the market without licenses. To what extent can they impact legal mobile financial services and the industry? What protections should the Central Bank provide?
Companies that operate without the permission of the Central Bank can seriously deter national development. The Central Bank cannot know what unlicensed companies are doing. In the case of fraud or loss of money, licensed companies know how to take responsibility and what to do for their customers. But in case of unlicensed companies, the Central Bank won’t know how unlicensed companies will settle with their customers. If a customer loses trust in a company, it will affect the industry at large.
How can mobile financial services impact conventional banking? The banking industry has just started to develop. How will mobile financial services affect the banking industry?
Mobile financial services contribute to banks. Putting money into a mobile wallet is no different than putting money into a bank account. Mobile financial services contribute a great deal to banks.
You said mobile financial service providers needed to expand the network so that grassroots people can access services. But, there is a need to educate people as well. What should be done to help people use smart phones for greater benefits?
The mobile financial service industry, the private sector and the government should join hands to conduct digital literacy and financial literacy campaigns at the national level for all phone users across the country. We need to teach people how to use smart phones to change their lives. We need to systematically teach people how to use smart phones for self-development.
Regarding mobile banking and mobile financial services, it will not be comfortable for new smart phone users to use the mobile wallet. We need to teach them so that they get used to using it.
You said that mobile financial services could help increase job opportunities for women in rural areas. Can you explain how this will create more job opportunities?
Suppose that women from rural areas want to sell local or cottage industry products to urban areas. If they have access to mobile financial services, they don’t need to go to these areas to receive the money. This creates a wider market for them to sell their products, and their incomes will increase consequently.
In rural areas, women usually save money in a group. So, if such savings groups have mobile phones and access to mobile financial services, this will encourage members to save more. With mobile financial services, a woman can ask for money from her friends or relatives who live far away, and can sell things to larger markets. With mobile financial services, it is easier to transfer money from urban towns to rural places.
You started promoting the idea of mobile financial services in 2012. You have engaged in the industry under both governments. What is the view of the current government and concerned ministers on mobile financial services? Are they interested in it, and in using it to improve people’s lives?
The current government understands very well that mobile financial services need to reach rural areas and that it is crucial for development. I’m encouraging them to bring about a developed mobile services industry nationwide before 2020. I believe that everyone will be using mobile financial services in the next three years.
So you have confidence.
Yes, I do.
You said that everyone would be a human ATM. But as you know, we have certain problems with infrastructure, such as bad Internet connections and ATM malfunctions. There are still problems in traditional banking. How much more effective do you think human ATMs can be?
The ATM network cannot reach rural areas because of infrastructure requirements. But, people in rural areas have phones. So, if all of the country’s 54 million people become human ATMs, financial transactions will be easier. A human ATM network is not an impossible idea. When people understand that every phone in Burma can transfer money to another phone in the country, we’ll see rapid development.
Apart from telecom companies, what other companies can operate mobile financial services and are likely to get licenses? How does the Central Bank give permission to those wishing to provide mobile financial services other than telecom companies?
Besides telecom companies, mobile financial services contribute a lot to microfinance institutions. Microfinance institutions have to incur large travel expenses if they are to provide financial services in rural areas. But with mobile financial services, microfinance institutions and organizations like agricultural banks can send the money to farmers and grassroots people easily. The mobile financial services industry will only develop. I think microfinance institutions will also get licenses.
