ACLEDA Bank President and Group Managing Director Dr In Channy transformed a NGO-based institution into a financial powerhouse by combining traditional infrastructure with the use of fibre optics and even satellites to deliver modern banking services. Later, he took the bank public – to become a pride of the nation. He tells The Post how he did it his way.
How is it being 30 years of age?
It is amazing! We achieved so many things when there were no adequate laws and regulations in the banking and financial sector in the 1990s, and limited financial inclusion.
When ACLEDA Bank started as an NGO for small and micro – development and small enterprises, becoming a specialised bank in 2000, we started to provide micro and small commercial loans.
Yes, I am happy – happy because we have grown together with all stakeholders and not alone – our success came with the support from the government, shareholders, board of directors, management and staff; and valued customers.
As a bank we want to provide the best to all stakeholders, the private and public sector, micro businesses, so they are able to manage their finances properly. We want to provide an effective tool to empower them.
How would you summarise Acleda’s 30-year growth story?
When we started the CMB/92/010 project in 1992, we looked at four major sustainability components – organisational sustainability; programme sustainability in providing loans to micro, small and medium enterprises (MSMEs); technical sustainability – creating credit manuals, operation manuals and customer education manuals ourselves and our customers; and financial sustainability.
We achieved these targets in late1997, and we then started to work towards transforming into a specialised bank.
From 2000 to 2003, we saw the demand for financial services triple, such as demand for loans and fund transfers. So the bank decided to triple its paid-up capital from $4 million in 2000 to $13 million in 2003.
We were clear-eyed and saw the broader picture. Why were so many banks concentrated only in Phnom Penh – at least 90 per cent of them?
We then pushed our expansion into the rural provinces to provide loans to micro and small businesses.
How did you take your services to the Kingdom’s remote corners?
In 2000 we realised that Cambodia had telecommunications infrastructure advantages like fibre optics, but banks were not using them.
Most banks functioned offline – we relied on fax machines that were troublesome, sometimes signatures were not clear, and when there were power cuts, there were security and verification issues. We wasted a lot of time.
So we decided to lease the new fibre optic cables from the government. We introduced online banking and invested in Swiss Temenos T24 software and the bank’s business grew exponentially.
Our savings grew fast – from 200 per cent to 300 per cent – and so did our loans.
But when we reached some provinces, like Pailin, there were no fibre optics, so we had to lease small satellites from the Department of Telecommunications.
Our aim was to provide online connections throughout the country. This was significant expansion, not only in terms of branches and offices, but in network and telecommunications as well.
And then you took the leap into the digital sphere?
Our vision is to provide superior financial services to customers of all segments of the community.
In 2007 we invested in infrastructure – branches and offices or traditional infrastructure, and then electronic infrastructure – ATMs, point of sale (POS) and the internet.
We established 4,462 POS terminals and 909 ATMs across the country.
But ATMs cannot be located in all villages. So the third – digital infrastructure – really came into the picture.
Has the bank achieved its core visions as set out in the early days?
Yes, absolutely. We have brought financial services from Phnom Penh to the provinces as our mission is to serve all segments. We brought banking education nationwide. People did not have access to formal banking before but that has changed.
Now they have access to traditional banking, as well as electronic and digital banking.
People in the countryside can access their bank accounts, save or transfer money like other people in more affluent areas.
How has ACLEDA helped to expedite financial inclusion?
ACLEDA Bank is the pioneer in Cambodia in promoting financial inclusion, because when we started we wanted to open financial access up to those who did not have access to banks. Some people borrow from money lenders. We even lend money to the destitute.
I asked a vagrant what he would do if he had $20, and he said he would sell fried bananas. So I experimented by loaning him $20 and he started a stall.
And I lent $30 to a lady who used to live in a hut in Kien Svay and she too started to sell chek chean – crispy banana fritters.
Our focus is on vulnerable groups who do not have access to the formal financial sector – we don’t ask for documents.
That is the reason we open branches even in rural areas, so that we can be close to the borrowers and understand their business needs.
ACLEDA Bank overcame the 1997 Asian Financial Crisis, the 2008 Global Financial Crisis and now the pandemic? How was that possible?
Well, during the Asian crisis, we worked as an institution for MSME development and Cambodia was a dollarised economy, so we were not impacted.
During the global financial crisis, ACLEDA Bank had a good record and our loan size was small because we were working with MSMEs.
Our small loans were for short term –18 months only. So there was no significant impact on the bank, and we managed to register strong growth. We diversified our risk. Our housing loan portfolio was less than five per cent then.
We don’t give loans against collateral but based on cash flow. We don’t ask our customers for their land as collateral but look at their business plans – that is our secret.
The pandemic could not stop ACLEDA Bank because our digital expansion benefited us. Customers were scared to come to the bank or touch money but we managed to convince them to use our mobile app.
That helped in digital loan applications and mobilise savings.
You are reading Crossing Continents: A History of Standard Chartered Bank?
Yes, I am reading Crossing Continents. We want to go beyond regional borders.
I first went to Vietnam but they asked me to come back because our paid-up capital then was small. I then went to Laos in 2008 to expand our regional presence.
We later established branches in Myanmar, and it was easier there because the economic conditions there at the time were similar to ours – the country was still developing and there was a demand for micro-loans.
Is there a plan in place for when you retire?
The succession plan has been planned in advance. For all senior positions there is a succession plan.
We have been training and coaching suitable people, and we will pick the most outstanding person when I retire.
Could a woman be at the helm of ACLEDA Bank?
Why not? A woman could of course replace me! We have many female staff – of the 12,081 workforce, 40.74 per cent are female, and in the headquarters 33.33 per cent of our staff strength are women too.
What prompted you to take the bank public?
As we pride ourselves on being “the Bank You Can Trust, the Bank for the People”, we wanted our customers to enjoy our success too.
So in May 2020 we listed ACLEDA Bank on the Cambodia Securities Exchange. And our customers became shareholders.
We are doing well and paid good dividends, and that makes our shareholders happy.
Basic earnings per share rose to 0.33 cents in 2020 from 0.29 in 2019 – can you match this in 2022?
We can improve significantly in 2022. We have all the support to achieve better figures and grow with our successful customers.
I believe we can do better because of our digital infrastructure and also because the way the government efficiently managed the Covid-19 pandemic, with businesses benefiting from this.
And ACLEDA Bank mostly targets agriculture businesses to give loans to, from crops and rice farming, to chicken and pig breeding, and animal husbandry – we are very diversified.
Having one-fifth of our loan portfolio in agriculture and agriculture-related businesses, our loan portfolio is so safe.