In an in-depth interview, Rath Sophoan, chairman of the Association of Banks in Cambodia (ABC) and CEO of Maybank Cambodia, along with vice chairman Raymond Sia, CEO of Canadia Bank, shared their views on ABC’s central mission. They outlined ABC’s commitment to promoting financial literacy, responsible lending, and consumer protection, as well as addressing industry-wide concerns like cybersecurity and sustainability. Their insights revealed how ABC is helping the Cambodian banking sector navigate a competitive and increasingly regulated landscape.

Enhancing consumer protection and financial literacy

A major theme of the discussion was consumer protection. Sophoan emphasised that consumer trust is essential for a healthy banking sector, and that ABC prioritises educating consumers to make informed financial decisions. “Our primary objective is to create a banking environment where consumers feel safe and are well-informed,” he explained, noting that financial literacy is central to this mission.

Sia echoed this view, emphasising that financial literacy helps consumers make empowered decisions. “A financially literate consumer is empowered to make informed choices, which builds trust in our banks and promotes responsible use of financial services,” he noted. ABC supports initiatives to help consumers understand loan terms to address allegation of increasing over-indebtedness among hitherto underserved consumers and prevent exploitation from high-interest loans and hidden fees. Through these efforts, ABC seeks to foster a well-informed consumer base that can confidently navigate Cambodia’s banking services.

Expanding financial inclusion and responsible lending

Following financial literacy, financial inclusion remains a core objective for ABC. While bringing more Cambodians into the formal banking system is essential, ABC encourages responsible lending practices to protect consumers and ensure sustainable growth. “Our goal is to bring more people into the banking system, but it must be done responsibly to avoid unnecessary debt burdens,” Sia stated.

ABC provides training programmes that help banks improve their credit risk assessments and lending practices. Sia highlighted that responsible lending not only benefits consumers but also contributes to long-term industry resilience. “We work with our members to ensure their lending practices align with regulatory standards and consumer needs,” he noted.

Cybersecurity, anti-fraud and compliance

With digital banking on the rise, cybersecurity and anti-fraud measures have become critical issues for Cambodia’s financial institutions. Sophoan and Sia emphasised the need for banks to protect customer data and adhere to anti-money laundering (AML) regulations. Sophoan explained, “Digital transformation offers tremendous potential, but it requires robust cybersecurity frameworks to protect our customers.”

ABC supports banks with resources and training on cybersecurity and AML compliance. Sophoan noted that ABC organises regular workshops on anti-fraud techniques, AML regulations, and digital compliance standards to help member banks stay ahead of digital threats. “Our role is to help banks navigate these risks effectively while providing secure services,” he added, highlighting that cybersecurity and fraud prevention are now critical parts of ABC’s agenda.

Promoting sustainability and ESG initiatives

With global interest in environmental, social, and governance (ESG) principles on the rise, Cambodia’s banking sector is beginning to explore these values. Sophoan highlighted that ABC encourages banks to consider sustainable finance options, especially as environmental challenges become more pressing. “Promoting sustainability aligns with our commitment to responsible banking. We’re seeing more banks taking an interest in green finance and projects that support sustainable development,” he said.

ABC’s role includes promoting ESG transparency and fostering conversations around sustainable practices. Sophoan added, “As Cambodian banks grow, integrating sustainable practices aligns with both local and global goals”.

Industry consolidation and capital requirements

Cambodia’s fragmented banking sector—with over 50 banks and various microfinance institutions—has led to discussions on industry consolidation as a means to strengthen financial stability.

The National Bank of Cambodia (NBC) has established specific minimum capital requirements for various financial institutions to ensure stability and resilience within the sector. Commercial banks are required to maintain a minimum capital of KHR 200 billion (approximately $50 million), with foreign branches holding investment-grade ratings. Specialised banks must have a minimum capital of KHR 60 billion (around $15 million). Microfinance deposit-taking institutions (MDIs) are obligated to hold at least KHR 120 billion ($30 million) in capital, while non-deposit-taking microfinance institutions (MFIs) are required to maintain a minimum capital of KHR 6 billion ($1.5 million).

Sia emphasised that prudential regulations including capital requirements are necessary for stability, explaining, “Adequate capital buffers allow banks to manage economic fluctuations and shocks, and financial stress more effectively.”  He added that ABC supports discussions on mergers and partnerships, helping smaller banks meet capital requirements through strategic consolidation. “Consolidation could help banks achieve stability by reducing competition in an over-saturated market, enabling a stronger financial base,” he noted.

ABC fosters these discussions, guiding members to consider strategic partnerships that support resilience and align with NBC’s regulatory framework. This support is particularly valuable for smaller banks navigating capital requirements in a challenging economic landscape.

Embracing digital payment transformation and fintech partnerships

ABC leaders discussed the importance of digital payment transformation as part of Cambodia’s evolving banking landscape. Sophoan highlighted NBC’s Bakong payment system as a significant step in enhancing digital accessibility, a system that ABC actively supports for its potential to make financial services more accessible and efficient, and promote the local currency, Khmer Riel. “The Bakong system is a model for improving digital payments in Cambodia, creating more seamless transactions for consumers, both domestically and cross-border, while stimulating transactions in local currency through its functions,” he remarked.

Sia echoed the potential for innovation through collaboration with fintech companies, particularly in underserved areas. “Traditional banks bring stability, while fintechs offer innovation that can bridge gaps in financial services,” he explained. ABC sees open banking application programming interfaces (APIs) and fintech partnerships as an opportunity to expand financial access, while also emphasising the need for secure, compliant systems to protect consumer data. As digital transformation continues, ABC remains committed to supporting its members in embracing technology responsibly and securely.

Leadership transition at the National Bank of Cambodia

In July 2023, Chea Serey was appointed as the governor of the National Bank of Cambodia (NBC), becoming the first woman to hold this position. Prior to her appointment, she served as the deputy governor and director general of central banking at NBC, where she led initiatives to modernise Cambodia's payment systems and promote financial inclusion. Under her leadership, NBC introduced the Bakong Project, a national payment system aimed at enhancing financial accessibility and efficiency. Her tenure as governor is expected to further NBC’s commitment to financial innovation and regulatory enhancement, guiding Cambodia’s financial institutions towards sustainable growth and stability.

Sophoan and Sia agreed that the ABC has a history of close collaboration with the NBC to enhance the country's financial sector. Under the leadership of Governor Serey, this partnership is expected to continue and potentially strengthen, given her extensive experience and previous initiatives.

Collaborative approach to building a sustainable banking sector

Under the leadership of Sophoan and Sia, the ABC is actively supporting the nation’s banking sector through initiatives focused on consumer protection, financial literacy, cybersecurity, and sustainability. By fostering collaboration among banks and providing essential resources for compliance, ABC plays a vital role in building a stable and resilient financial environment. As the sector faces evolving regulatory demands and competitive pressures, ABC’s guidance and advocacy help Cambodia’s financial institutions remain responsive to both local and global economic challenges.