Despite its political unrest and economic challenges, Myanmar has shown significant progress in the fintech sector, bringing financial services to underserved populations. But how has this development unfolded and what is the current state of fintech in the country?
Myanmar, formerly known as Burma, has faced significant difficulties in recent years. In 2021, the military overthrew the elected government of Aung San Suu Kyi and her National League for Democracy party, sparking ongoing protests and unrest. Western nations have imposed various sanctions on the ruling junta, including restrictions on their access to financial services.
Economically, Myanmar remains one of Asia’s poorest nations, with a gross domestic product (GDP) per capita of $1,149, according to the World Bank. The country is also a member of the Association of Southeast Asian Nations (ASEAN).
Many key sectors in Myanmar, including banking, insurance, foreign trade and domestic wholesale trade, have been nationalised since 1962. Agriculture, however, remains the largest contributor to the economy, accounting for nearly half of the GDP and employing two-thirds of the labour force.
Developing region
As with many developing economies, Myanmar’s informal sector plays a crucial role. Access to capital is a significant challenge for micro, small, and medium enterprises (MSMEs), despite high demand. Although the government permitted microfinance companies in 2011, the number of microfinance institutions remains low.
Recognising the need for financial inclusion, the government, in collaboration with the UK-funded DaNa Facility and the United Nations Capital Development Fund (UNCDF), launched the Financial Inclusion Roadmap in 2013. This strategy, known as Making Access Possible (MAP), significantly boosted the percentage of adults with access to formal banking services, increasing from a fraction of the population in 2013 to nearly 50 per cent by 2018.
In 2016, the Central Bank of Myanmar (CBM) issued regulations for mobile financial services (MFS), creating a safe regulatory framework. Wave Money, a joint venture between Norway’s Telenor, Yoma Bank and First Myanmar Investments, became the first MFS provider in the country. Wave Money played a key role in increasing mobile connectivity, with penetration rates soaring from 10 per cent in 2014 to 95 per cent by 2019.
In 2019, the Fintech Challenge Myanmar was launched as an innovation program by the DaNa Facility, UNCDF, and the Asian Development Bank’s ADB Ventures, in collaboration with the CBM and the Financial Regulatory Department. The initiative aimed to promote financial inclusion by encouraging collaboration between fintech companies and financial institutions. However, it is unclear whether this program remains active today.
Joint effort
A significant milestone in 2020 was the launch of the Central Bank of Myanmar Financial Network System 2 (CBM-NET2), an upgraded version of the original CBM-NET, supported by the Japan International Cooperation Agency (JICA). This system improved financial connectivity and services across the country.
Wave Money remains the dominant player in Myanmar’s fintech landscape, holding 80 per cent of the mobile financial services market. With over 200,000 merchants accepting QR code payments, it has become indispensable, particularly in rural areas, where two-thirds of the population lives. Wave Money’s 58,000 agents, most of whom are women, play a crucial role in extending services to these underserved regions.
Other notable fintech players in Myanmar include KBZPay, CB Pay, AYA Pay, and OnePay, which also contribute to the country’s growing digital financial services ecosystem.
The Covid-19 pandemic had a significant impact on Myanmar’s economy. However, an Oxford Business Group report projected a 197 per cent increase in digital service users this year, alongside a 7.1 per cent rise in digital transactions, indicating fintech’s resilience during the crisis.
Despite advancements in fintech, the political instability since 2021 has created new challenges, compounded by the pandemic. Yet, there is hope that Myanmar can continue to develop and further digitalise its economy in the coming years.
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