With Cambodia’s economy enjoying year after year of economic growth, it’s easy to see why more and more Cambodians are seeking access to credit to grow their own businesses.
Credit Bureau Cambodia Chief Executive Officer Oeur Sothearoath told Southeast Asia Globe that overcoming the information gap between borrowers and lenders was essential for ensuring responsible and sustainable practices.
“Customer insight is something that we believe is very good for bank and microfinance, because one of the challenges that banks and microfinance institutions are facing is the ability to know more from the consumer,” he said. “Customer insight is another tool that enables the banks, MFIs and leasing companies to know more about their consumers, to know about the performance of their consumers, whether they have a loan with another institution, whether they’ve had some bad experiences previously.”
Although Sothearoath stressed that only two out of every hundred customers in Cambodia defaulted on their loans, he said that it was important for banks and MFIs alike to be fully aware of their customers’ credit history.
“The benefits of having those customer insights is to allow the banks and MFIs to safeguard themselves – they can even disburse the loan based on the risk appetite of the particular customer,” he said. “That’s why we are framing customer insight as the ability of banks to know more about their consumers and make informed decisions before they decide on a loan.”
But while financial institutions stand to benefit greatly from greater transparency, they are far from the only ones. Sothearoath was clear that individual credit reports had to be easily available to customers as well as banks – especially for those living far from the capital.
“Previously, if a consumer wanted to see their credit report, they had to come to a CBC office,” he said. “Even people from the provinces had to come here to check whether they had loans with another institution, for example. At the end of last year, we announced our partnership with ACLEDA Bank and AMK Bank just to roll out our channels to the rest of the provinces. We’re in the process of expanding from five provinces to 25 provinces in the next couple of months. Our goal is to be country-wide by the end of this year – we want to make sure the general public can go and check their own credit report anywhere in Cambodia.”
And soon, it won’t just be individual customers who have full access to their credit reports. For the past year and a half, CBC has been working to establish commercial credit reporting, allowing the bureau to track loans taken out by companies looking to expand their business. Sothearoath said that greater access to reliable data was essential in giving financial institutions and their commercial customers a clear picture of Cambodia’s thriving business climate.
“From the credit bureau, we provide what we call data analytic solutions, which is an online tool that enables them to know their performance compared to the market performance,” he said. “So if they have one million account with ten million outstanding balance, what is their position in the market – whether they’re number one, whether they’re number two or if there are any problems happening within their institutions – or within the industry.”
