API integration is paving the way to financial inclusion for MFIs in Myanmar 

More than 2.5 billion people around the world – many of them in Asia – lack access to financial services, according to the United Nations and the ID2020 project. What’s more, only 20% of adults in Myanmar owned a bank account at a financial institution as reported by the World Bank’s study in 2014. 

Making financial services more accessible and more affordable

Access to financial services in Myanmar is often blocked by financial barriers. For the majority of the population in Myanmar, interest rates of ten percent or higher, transaction fees and the cost of traveling to a commercial bank’s branch is too expensive and too time-consuming.

The result is that individuals living in rural or remote communities in Myanmar rely on microfinance institutions (MFIs) for financial services. If financial services from an MFI are unavailable or inaccessible, individuals turn to informal and unreliable means of managing their cash, savings and loans.  

MFIs in Myanmar and most frontier markets have traditionally serviced new and existing clients through face-to-face interactions and meetings. To do so, field officers are required to travel from their MFI’s local branch deep into rural communities to meet with clients – most of whom are farmers or owners of small businesses.  Long, multi-day journeys drive costs up and hinder MFIs from scaling efficiently by reaching more clients.  

Delivering new financial services with API integration

However, the rise of smartphone ownership in Myanmar is creating an opportunity for MFIs to reduce their operating costs while reaching more clients using digital financial services and mobile money. Mobile money providers like Wave Money in Myanmar are allowing individuals to make payments, send money to lenders and withdraw cash – only using their smartphones. 

With smartphone ownership in Myanmar rising toward 90 percent of the population as the average selling price of smartphones falls, an unprecedented volume of transactions are expected to occur using mobile money. Through API integration and partnerships within the digital ecosystem, MFIs will be able to efficiently and affordably offer mobile money and digital financial services – boosting their service and their competitive edge.  

An opportunity for MFIs in Myanmar to offer new services

Oradian is delivering a cloud-based toolset including a core banking system, Instafin, to financial institutions in Southeast Asia. Instafin is specially designed to enable MFIs to rollout new financial services through API integration with fintech and mobile money providers.  

MFIs using Instafin can quickly offer new services, for example mobile money services offered by the likes of Wave Money, to their clients through API integration with Instafin. The core banking system can be configured to ‘talk to’ other technology via API integration so the two systems can work together. For MFIs using Oradian’s system, this means that they can offer new services provided by fintech providers and mobile money apps to their customers and connect these transactions to their client’s account with the MFI.

With digital financial services, MFIs can reach new clients – quickly and affordably, without extensive travel or time spent developing new financial services internally.  API integration is an efficient way for MFIs to improve their service, product offering and rates, enabling them to differentiate their business in markets with increasing competition and reduce costs for their clients.