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Media »Opening remark at Fintech Challenge Myanmar

May 22, 2019

 

Tom Coward, Team Leader, UK aid Myanmar Inclusive Growth and Livelihoods team

Yangon

 

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Good morning,

 

My name is Tom Coward and I’m lead the UK Department of International Development’s work here in Myanmar on inclusive growth. DFID delivers UKaid and leads the UK government’s work to promote sustainable development and fight poverty around the world, including here in Myanmar.

 

I’m really happy to see everyone here this morning. I have worked on financial sector development for a long time because I know that it can really make a difference.

 

The financial sector is vital to development

 

For the economy as a whole:

  • It pools savings and channels the money into productive investments
  • It drives innovation and technological progress
  • The sector is a fast and efficient way of producing information on opportunities
  • It encourages and then supports inflows of foreign capital

 

Ultimately a working financial sector is important to drive growth and jobs!

 

But it is also a tool to reduces poverty and vulnerability. A healthy financial sector gives people

  • Tools to manage risks and reduce vulnerability to shocks
  • Helps them manage unpredictable cashflows
  • And Helps increase investment and productivity that result in higher income generation.

 

I was always struck by the findings from the first financial diary studies undertaken that the poorest use more financial tools than the rich. They may not be formal or pretty, but they rely on a huge range of financial arrangements to get by. Making these better is really important.

 

Financial sector in Myanmar

 

At present the financial sector in Myanmar is under-developed and is not serving the population as it could – but it is getting better really quickly – in part thanks to a lot of people in this room)

  • Savings in formal financial institutions are only 12% of adults but this has doubled since 2014
  • Insurance penetration in only 6% of adults, but this has trebled since 2014 and the recent liberalization of the market is a really positive step
  • 21% of adults now send or receive remittances
  • The number of private bank branches is up from 577 to 1715
  • The number of ATMs up from 253 to 3,123

 

However there is still so much less to do and so much further the sector needs to go

 

Fintech

 

And financial technology provides new and exciting options

 

It is interesting to pose the question of where innovation in financial services come from.  Twenty or thirty years ago, the answer would have been, large international or regional banks.  Nowadays, there is so much happening in fintech around the world and the region that the old answer to the question “where does financial innovation come from” has a different answer.  The answer now is more likely to be:  innovation comes from specialized fintech companies that use the latest technology to do things more efficiently.  Even the large international banks—the Citibanks and the JP Morgans of the world—are looking to fintechs to help them develop solutions to the challenge of providing financial services more painlessly and efficiently.

 

Fintechs have the power to transform the financial sector quickly. It can overcome huge boundaries that used to exist and rapid and cheaply connect people with financial options

 

Change can be quick – access to formal financial tools in Kenya rose from 14% in 2006 to 83% this year. That is only 12 years

 

In Myanmar mobile phone ownership has gone from 23% of adults in 2013 to 78% in 2018. Mobile money has started to take off as well, with 1.4 million adults using it in early 2018, rising rapidly with double-digit month-on-month growth

 

But this is only the start of the fintech revolution

 

Fintech and the UK

 

And I am really proud that the UK government can support this initiative.  Not only due to DFID’s commitment to develop the economy as a powerful driver of poverty reduction – but also with the UK’s position as a recognized leader in financial technology.

 

This leadership is built upon more than a century of global prominence in banking, insurance and financial services. These historic skills are merged with: the UK’s deep pools of entrepreneurial and tech talent; progressive regulators and policy makers; capital and professional expertise, and; its vibrant startups are driving the digital economy.

 

The UK’s Financial Conduct Authority for example is a pioneer of the “sandbox” approach to piloting innovative financial products and business models.

 

We are working across the UK government to maximise the links across this sector – and for businesses in the room keen to talk about the UK fintech industry my colleagues from the Department for International Trade are here today.

 

So DFID, is delighted to be able to promote the spirit of financial innovation through the Fintech Challenge Myanmar programme. We are pleased to support this through our partners at the DaNa Facility, UNCDF partners, and the Asian Development Bank – and alongside our friends from Australia.

 

This is an important part of our wider support to financial sector development in Myanmar – in a strong and productive partnership with the central bank of Myanmar and the Ministry of Planning and finance. including our ongoing support for payment systems modernization, work on insurance sector support and our help to reform the state owned banks.

 

We are very proud to support the Fintech Challenge Myanmar. We hope this challenge fund will support new fintech business models and products that help to facilitate financial inclusion. We hope that it will enable us to work together to improveme the quality and range of financial services available to those people who the formal financial sector has not yet managed to reach.

 

To be successful in this we must all work together – so I am delighted that you could all be here today. I hope this is an exciting and productive partnership – so thank you all!