Where is the Myanmar banking system at the begining of 2021?
In recent years, people from all aspect of life might feel that the improvement of banking system in Myanmar. Although product offering are still limited, most of the basic features are already availble and functioning.
Let me go a bit details what features become available until end of 2020 (because recent months has changed a lot), starting from ATM as Myanmar was a prominent cash (printed notes, M1) economy society.
ATM — Automatic Teller Machine
ATM are around the corner in big cities and small town basically location must meet internet and electricity availability, but they are with security guards. ATM can only dispense paper notes, not the reverse of deposit action where ATM need to receive and count cash is unavailable, nor doing remittance to another account. It allow dispense of 1 million kyat (about $760 at 2021Jan rate) per day with limit to 300,000 per transaction, dispense only MMK5,000 and MMK10,000 notes. (some ATM inside the bank premise can handle up to half a million per transaction.)
Online banking, or some called it mobile banking which they refer to banking with mobile App or internet banking, are advancing so simple activities such as balance check, remittance can do without going to bank. Together with online banking available on mobile phones, cardless withdraw also become available. Telecommunication connectivity improvement solve the ATM connection issue a lot. In the past 3–4 years ago, it was the main topic people post about ATM on Facebook, “connection lost in the middle of cash dispensing” and account was deducted.
Not far from Myanmar was open for economic in 2012, ATM become link with VISA/MasterCard and their subsidiary Cirrus offering cash dispensing for major Credit card cashing service which is very convenience no-man banking service where traveller don’t need to que for currency exchange. At that time, domestic ATM cards issuing rate still low, and ATM are not that common.
ATM and bank cards become common especially for urban population. There are some banks like state own and regional still don’t has ATM service yet, due to lack of core banking. Per data, there are about 12,500 people for every ATM to serve.
Various Accounts & Counter Service
In average there are one bank branch to serve for every 16,000 population, luckily enough not all population have a bank account, otherwise image how long you have to wait at the counter. Bank branch service also got credit with service such as account administration, deposit, transfer in/out, foreign currency exchange, check clearance.
Most of the major bank has standard saving, fix-deposit where interest rate is higher than standard saving but need to wait that fix timeframe for interest maturity, call-deposit where interest are calculated per day, and checking account where there is no interest received but you can write check. FYI, interest rate offer to saving account regardless of consumer or corporate, is about 6% since Central Bank’s interest rate is 7%, which was down 3% to fight for economic effective by COVID19. Foreign currency account is separate account and only USD is allowed with checking account with a checkbook that mean you won’t get any interest.
Corporate banking have more features such as loan, financing, overdraft, but not that common for business and the process are a bit difficult to access. The ATM become part of service in bank account, where a few years back it was separate account for ATM and saving or check account, if you are not living in Myanmar, you might feel indifference about this.
Internet Banking, Mobile Banking
About 7 years ago, it was more funny that online, ATM and saving are separate accounts. ATM is not like in most of the bank nowaday if you apply for bank account, you can choose to have as option, but as another separate account. So you have 3 different accounts, if you have a saving account with online (e-commerce) feature, and also want a ATM card. Suppose if you want to buy something online at an online shopping site, and the balance in online account is not enough, then you want to move your cash in Saving to online account first, where it can only done at counter service. So, you have to go nearest branch during office hours in weekdays only to move your cash from saving account to online account, so that you can do an online shopping. By the way, why do we use online shopping?
At the end of 2020, with the help of international service providers, most major banks online app have feature to do basic banking like transfer cash in/out, plus pay utility bill, top up airtime, buy product or service online, buy insurance, donation, and even send pocket money which was debut on 2020 Thadingyut Myanmar Thanks giving festival. The approval and licenses of mobile banking allocating to bankers and non-bank is the very important part of Economic development, with this network of electronic transaction service, transfer of bank account (M2) to digital wallet (M3) become a piece of cake.
Myanmar Payment Union (MPU), which is formed by 20 members banks, host a switch that allow cross ATM card able to withdraw from any other bank’s ATM, limited to within member banks.
There is somthing about the use of cyber security, many internet banking is using CloudFlare CDN to be their entry point protecting mainly from spam and DDoS, but not for the purpose of distributed DC across different continents. Not all bank use Extended Validation or better for SSL digital certificate.
Credit Cards
VISA/MasterCard plays an leading role in Credit card service. Acutally can say Credit card service revisited after stop for more than a decade. Myanmar banks had issued their own credit cards back in 1996, where number of merchants are still limited. JCB, UnionPay also join the card issuer race, so the major cards are offering competitive plan and credit limit. Although there are double branded, like Telco brand card, but it was bank usually plays the issuer role and leaving many area to grow.
After the installation of Credit bureau, credit card roll out suddently accelerated as easier to access risk. There are debit cards version which is basically like an ATM card but operate by payment gaeway switch that allow you to use what you have in account.
Agent banking
With only about 28% of population has bank account or mobile wallet account, many people still have to rely on Agent banking, where agent are usually shops in neighborhoods. If there is no bank brunch nearby, with the help of agents, people can cash out or deposit for remittance. With the penetration of mobile phone and mobile money, the banking population doubled in 4 years. Noticeably, there were some fraud issues with a particular mobile wallet due to weak in KYC and technical requirement. But some also suspect those weakness are intentionally make it easier for market penetration.
QR Code
QR code payment transaction become available along with mobile banking & mobile payment. Merchant who operate various shop start displaying their merchant QR at their shop counter. as the competition drive, merchant who are at the prime business area have to host multiple QR code, some even has a wall to stick or a keychain to organize so many QR printed plastic card from different banks or issuer. This leads to requirment of real time transaction and unique QR where a merchant only need one QR that can use across different bank or platform.
Realtime payment transaction
As mention earlier, the ATM card use across different bank and ATM, or QR code use across mobile money platform need this realtime transaction scheme to work. Using information technology along with traditional banking switch, payable or receivable account are clearing in live, this will make your ATM card able to withdraw from any bank’s ATM, allow merchant to accept mobile money or any kind of pay, local or international issued wallet with a single QR. There were different approach but the latest one is one on going where Central Bank is leading the project with the financing support from World Bank.
Online banking API
Whenever the Shopping mobile App and online websites need a checkout process to proceed, the e-Commerce App or website will make a API call to banking service, which will take care the transaction and return back with result of trasaction. This facilitate payment service for e-Commerce, and become available in major banks, either by their own internet banking, online payment wallet or via payment gateway like MPU. MPU payment gateway is to provide e-Commerce service that let e-Commerce App or website accept MPU ATM card (debit feature) and VISA/MasterCard.
In summary, with the economic momentum gain during recent years, B2B, B2C or C2C payment options are at accessible stage, and the connectivity and App are encouraging cashless society though a long way to go, the whole banking system foster innovation and support economic growth.
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