The government of Myanmar has an ambitious target for financial inclusion, with a goal of bringing financial services to 40% of people by 2020, and having 15% of the population using more than one financial product within the same timeframe. There is a very low base of financial inclusion today, with only 6% of the population having access to more than one product, and these products often do not match customer requirements. These goals will require financial service providers to greatly expand their reach across Myanmar. Starting with technology – particularly mobile telephony, as well as agent cash-in and cash-out services – this can provide a significant accelerator to the government’s development goals.
Mobile operators that partner with banks are well placed to expand the reach of financial services in the country by leveraging the significant distribution networks that they already have in place. Microfinance institutions will also play a critical role, and through partnerships with mobile-money businesses, they will be in a position to develop innovative credit and savings products that will reduce transaction costs and give the financially excluded masses access to a broad range of products and services for the first time. Examples of these initiatives can be found in Kenya, where banks are now seeing significant deposit mobilisation through partnership with mobile operators. This example emphasises that partnerships will be essential to the future of mobile money in Myanmar.
Once these mobile money networks are in place, there will be substantial benefits to the people and government of Myanmar. It will enable the government and NGOs to pay salaries, social benefits, conditional cash transfers and pensions efficiently. Research in other markets indicates that when electronic channels are used for these payments there are considerable improvements in transparency and a substantial reduction in leakage, resulting in 100% of the benefit reaching the recipient every time.
Financial inclusion will help individuals cope better with poverty, especially the challenges of irregular income and occasionally large bills. It can also help to pull them out of poverty through improved education and health care schemes. The ability for the Myanmar diaspora in neighbouring countries to easily transfer funds to family through mobile-based international remittances will formalise the way these funds enter the country, and lower the cost of transfer.
For micro-enterprises, financial inclusion can provide funds for setting up and expanding businesses. Removing traditional barriers by leveraging technology can improve access to credit and boost economic growth. Financial inclusion will draw more firms into the formal sector, raising tax revenues and making workers eligible for better protection and benefits.
Research has estimated that financial inclusion driven by mobile services in developing markets may increase GDP by up to 5% within five to seven years. This GDP growth is stimulated by increased employment as a result of the development of mobile financial services; increased access to credit, which prompts new business creation; and the benefits of formal remittances and increased savings.
As Myanmar continues its transition, it is critical that financial inclusion remains a top priority and that industry-wide collaboration takes place, in order to foster the development of business models that will be sustainable and beneficial to those who remain financially excluded. By ensuring that the right regulatory model is put in place, the government is playing an important role in allowing mobile operators and subsidiaries to provide the right services. Myanmar was recently reported as the third-fastest-growing mobile market in the world, after India and China. Similarly, there is an opportunity for the country to be celebrated as a global leader in the acceleration of financial inclusion, and we are excited about the opportunity we have to contribute to that vision.
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