Cambodia’s Central Bank is to launch the National Bank of Cambodia Platform (NBCP) tomorrow, a trading system that allows all financial institutions to make transactions online, in a move to develop interbank connections as well as the FinTech, or financial technology, sector.
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Chea Serey, director-general of the NBC, told Khmer Times that the existing infrastructure is outdated and the cost of making transactions is high – the old system involves financial institutions having to prepare paperwork, it involves many staff and is time consuming.
She said that before launching the NBC’s new online trading platform, the bank conducted a number of presentations to financial institutions, it conducted tests and sent NBCP related documents out to seek feedback from financial institutions.
The feedback gave the bank careful assessments, and whenever justified, this feedback was translated into the design and specifications of the NBCP.
“The introduction of the NBCP, which is an online trading platform, will allow participants to find out online who wants to do what transactions [buy or sell or repo transactions] at what price, negotiate online in a confidential manner and execute the transactions on a real time basis,” she said.
“They can also use it to bid for LPCOs [liquidity-providing collateralised operations] and subscribe to NCDs [negotiable certificates of deposit] online without the need to be physically present at the NBC counters. This initial version of the NBCP is still limited, but it does provide convenience, transparency and a fast channel for financial institutions to transact,” Ms Serey added.
Rath Youmeng, the treasury manager of Acleda Bank, said his bank had been testing the system and is preparing to register to use it. He said the new system will be more convenient and time saving for all financial stakeholders to engage with the central bank or other financial institutions.
“I think it is a good system because it is a contribution for our FinTech development,” he said.
“The NBCP will allow us to send any document to our regulator online which is very secure, time and cost saving.
“At the same time, we can also do any LPCO or NCD online without going directly to the National Bank of Cambodia,” he added.
Ms Serey said Cambodia’s interbank market is highly fragmented and barely active due to trust problems between market participants and the absence of a repo market.
By launching the NBC platform, financial institutions will benefit because of a more transparent and secure market, it will promote trust among market participants, make more active management of liquidity in financial institutions, is cost efficient and less time consuming.
She said that those using the system would be commercial banks, specialised banks, deposit taking micro finance institutions, leasing companies and money changers, who are now supervised and licensed by the National Bank of Cambodia.
According to an NBC report, in the first half of this year Cambodia had 39 commercial banks, 15 specialised banks, seven microfinance deposit institutions, 66 microfinance institutions, 267 rural credit operators, 12 leasing companies and six foreign bank representative offices.
The financial industry sector saw growth of 20.4 percent to $18.8 billion in outstanding loans, while deposits increased by 23.4 percent to $17.4 billion by the end of June.