Smartphones Could Help Myanmar Dial Up Financial Inclusion

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As Myanmar works to build a more open economy, a number of recent developments in the country’s financial sector underscore those efforts.  For one, the growth in technology has made it possible for banks, including CB Bank, to offer more digital services especially to younger citizens.  As Vered Konijnendijk and Joep Roest of CGAP noted, smartphone penetration “rocketed to a whopping 80 percent, and data use is on par with what we see in developed European economies.”  A new law permitting foreign retailers to enter Myanmar has led to Alibaba’s recent acquisition of a popular e-commerce platform, which could accelerate growth in the development and, possibly, the adoption of digital financial services.   



Yet data from the Global Findex shows that account penetration is 26 percent, up only a few percentage points from 2014, the last year data was collected.  More to the point, Findex data found that mobile money account penetration remains below 1 percent and only 7.7 percent of adults made or received digital payments (though this nearly doubled since 2014).   So should financial inclusion boosters be skeptical of the potential of digital financial services to improve access and, eventually, usage?  It seems there is reason to be bullish on mobile money in Myanmar. 



With generous support from MetLife Foundation, our team at MIX was able to map financial access points in Myanmar against a number of demand-side indicators to get a full picture of the state of financial access in the country.  This Interactive Dashboard for Myanmar helps users understand the geographic distribution of access points and determine which areas are underserved.  Jon Heibert of Proximity Finance describes the benefits of this tool: “With [the] lack of information for financial inclusion in Myanmar, such tools help us with desk research, complementing our field research for new initiatives and products.”   



Looking at the recent data in the visualization, an interesting pattern emerges around the usage of Cooperative access points.  Service Cooperatives have a higher share of savings in the eastern states while Agri-Livestock Cooperatives have the majority share of savings in western states.  It is unclear what is leading to this disparity but policy makers and financial service providers could use this finding as an opportunity to learn more about this East-West divide. 



Another obvious takeaway from the data visualization is the impressive growth of mobile money agents in Myanmar.  Mobile network operators (MNOs) are present in every state in Myanmar, aside from Chin.  However, drilling down to the district-level it becomes apparent that their agents are not evenly spread within each state.  While MNOs are present in 62 of the 77 districts, policy makers could encourage further expansion of digital finance outlets to underserved districts and locales. 



As is the case in several countries and regions, mobile money agents are heavily concentrated in urban populations.  In Myanmar, 52 percent of all mobile money access points are located in Mandalay and Yangon. While these states have only 27 percent of the total population, they account for 49 percent of the total urban population.  Additionally, in Yangon province, access points are closely tied to the districts with the largest populations.  The expansion opportunity for MNOs across both urban and rural areas is significant, especially given the high penetration rate of smartphones and the expectations of clients. 



While mobile money and digital financial services offer a path to greater inclusion, stakeholders in Myanmar must ensure rural populations are not left behind.  Unsurprisingly, Yangon accounts for nearly 16 percent of all access points in the country, while states like Shan, Rakhine and Tanintharyi have large rural populations but relatively few access points.  In order to ensure rural populations can also benefit from financial services, donors could work with local stakeholders to expand access in rural areas.  In fact, according to the CGAP Funder Survey (conducted by MIX) the top 23 international funders of financial inclusion reported a total of 647 rural and agricultural finance projects globally, representing close to 25 percent of all their active financial inclusion projects and adding up to 5 billion USD in 2016.  



Though these developments in digital finance are encouraging, there is still plenty of room for growth in a country known for its preference for cash.  But as the economy continues to open and enable the types of digital services people in Myanmar have come to expect, the country seems to be on solid footing.