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Yoma Bank embarking on digital-led growth strategy

The bank is using technology from Finastra to win retail and SME customers in Myanmar.



Yoma Bank, a privately owned bank in Myanmar, is investing heavily in technology to tackle the country’s rapidly growing retail and corporate segments.

Vijay Maheshwari, CFO in Yangon, says the bank is adopting several software modules from vendor Finastra to make it competitive and help it grow its deposit base.

Since October 2016, it has been migrating to core banking systems, launching mobile banking services for the mass market and automating trade finance. Most recently, it has gone live with a Finastra service for treasury management. (Finastra is the new brand name for the merger of vendors the U.K.’s Misys and Canada’s D+H.)

The bank’s biggest opportunity will be with mass retail customers. “We’re working on making banking accessible through the mobile phone,” Maheshwari told DigFin. Myanmar has a huge population of unbanked people newly empowered with smartphones, and Yoma wants to quickly grow market share by investing in technology. Indeed, such investment has been key to turning Yoma Bank from an obscurity into a major domestic player.

The bank was founded in 1993 but from the early 2000s lost its business licenses and languished; those licenses were restored in 2014, the same year it accepted investment from the International Finance Corporation, the private-sector arm of the World Bank.

“We were 23rd out of 23 banks” in terms of deposit size, Maheshwari said. “We had fallen behind other banks because for 10 years we lacked a business. Now we’ve rebooted.”

Today Yoma is among the top-five biggest domestic banks, with 1.5 trillion kyat in deposits ($1.1 billion), or 6% to 7% of the total market. The biggest domestic bank, KBZ Bank, stands in a class by itself, with nearly 40% of deposits.

Transaction retail banking
Maheshwari claims Yoma’s digital offering will give it entre to a new legion of customers, but this will not initially compete head-on with KBZ or other banks, whose brick-and-mortar branches compete by providing interest-bearing deposit accounts.

Yoma instead has developed a retail app, using Finastra’s Fusion Banking service, to onboard customers and provide current accounts that don’t bear interest, but make it easy to transact and move money.

The bank wants to add lending to this app, and gradually develop a credit scoring system for individuals, Maheshwari says. “There’s a lot of use cases for the retail market,” he said. “With digitized accounts, it’s more about offering customers convenience and credit” than giving them interest-bearing accounts. (Deposit interest rates operate within a 2% band of the central bank’s reference rate, which today is 10%.)

The goal for the bank is to use easy apps to quickly grow deposits and encourage low-cost transactions, thereby reducing its overall cost of funding while rapidly expanding its customer base. Yoma also has 75 branches across the country, but these focus more on small- and medium-sized enterprises, providing trade and treasury solutions, as well as to traditionally banked retail customers.

Multiple platforms
The bank’s modernization strategy began in 2014, with IFC’s involvement.

In 2015, in an early signal of its new strategy, the bank co-founded Wave Money, a mobile financial services company, with Telenor, the largest foreign telecoms operator in the country. Wave Money remains a separately run business, and although Yoma would like to see how it could leverage Wave Money directly, Maheshwari says no such plans have emerged.

The following year, with IFC’s help, Yoma Bank hosted a public bid to centralize its branches onto a modern, core banking system. Misys, one of the two companies that would go on to create Finastra, won the bid. The first branches migrated to the system in October 2017.

Most recently, the bank went live on Opics, a Misys treasury system that has since been rebranded Fusion.

Maheshwari says this makes Yoma the only Burmese bank with an international treasury system, one that will allow the bank to begin offering foreign-exchange forwards and swaps.

He says the bank will eventually use it for interest-rate derivatives, too, but the market is too underdeveloped for now to justify launching such products.

Beyond merely providing products, however, Maheshwari says using a global vendor’s services helps the bank improve its governance, such as by separating the front office from the middle and back operations, and by instituting basic things like dealer limits or authorization protocols. “This positions us to scale the business into areas that would be high risk if they weren’t done properly,” he said.

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