Since Myanmar opened up its economy in 2010, after one of the most brutal dictatorships in Asia, capitalism has been on the rise. The country’s abundant natural resources, strategic location between Asia’s powers India and China, and its largely untapped market of 60 million people have caught the interest of foreign investors.
Singapore-based startup Leo Tech is one of those trying to navigate Myanmar’s spurting, but still opaque, business environment. Leo Tech launched its umbrella brand for financial tech, ConnectNPay, in 2014, along with the bid of several companies like German group Rocket Internet to jumpstart ecommerce in Myanmar.
Building a digital payment ecosystem
ConnectNPay’s first product was mobile wallet Mywallet Plus, a joint venture with Myanmar’s leading ICT group, MCC Group, which has billing operations. Mywallet Plus was born out of a need for a fast and secure bills payment system that caters even to the unbanked, says Leo Tech co-founder Andres Varela.
As expected, due to years of isolation to the world, most of Myanmar’s industries like telecoms, energy, agribusiness, tech, and financial are only starting to see movement. The country has an enormous unbanked population. Credit card penetration is low. Transactions are mostly on paper and done face-to-face. People need to queue outside payment branches for hours to pay for their utilities.
Varela says acceptance of mobile tech in the country, while explosive right now as consumers start to afford sim cards and phones, is nowhere near saturation. “We have the perfect opportunity to bring businesses out of the shadow of transactions recorded in giant paper ledgers to the kind of digital commerce that is taken for granted elsewhere.”
From a mobile wallet, ConnectNPay evolved to include other services such as digitization of records and systems after landing a 15-year contract with the Yangon City Development Council to handle their business and residential ownership data as well as billings.
To support the expansion of Mywallet Plus, Varela says they also created a financial ecosystem by allowing other players, including banks, vendors, and other ewallets to connect to them. ConnectNPay has signed up Myanmar’s CB Bank, which is giving the startup access to its mobile banking customers. Another bank, AYA, also inked a deal to integrate its services – online, phone, and over-the-counter – to the ConnectNPay network.
“Rather than produce a closed network we intend to collaborate allowing other merchants and payment gateways to connect. We’re already in talks to develop support for top-up cards, kiosks, epos, more banks and have our eyes on additional territories,” notes Varela. “The end aim is to allow people to pay utilities or top up their ewallets online or in person at any branch of banks connected to ConnectNPay – whether they’re customers of those banks, other banks, or no bank at all.”
Leo Tech started in 2010 as a four-person software R&D firm in Clarke Quay, Singapore. The team has grown to a team of 100, covering expertise from software design to infrastructure and hardware to support financial transactions. Its clients include multinationals like Visa, public sector projects in Singapore and Myanmar, as well as non-government organizations and startups.
Needless to say, the company, like all other entrepreneurs, forayed into Myanmar seeking to take advantage of the country’s growth spurt. Yet despite its great promise, Myanmar remains a tough place to do business.
Varela says they were very lucky to have found well-established local partners like MCC Group early on. Among MCC Group’s businesses is an IT company that was first to bring Apple and Oracle to Myanmar. Without such partners, Varela tells Tech in Asia, “Leo Tech would literally have no business going to Myanmar.”
One of the biggest challenges in the country is the lack of reliable telecoms infrastructure for cellular and data coverage, a key factor for development to pick up.
But Varela sees this as both a challenge and an opportunity. He says local and overseas telcos are rolling out infrastructure as quickly as they can, while access to sim cards, which were once tightly controlled and priced as luxury, has eased up. Citing recent figures from telco Ooredoo, Varela says: “There are over 18 million mobile users [in Myanmar] from around one million three years ago [and] over 80 percent of them are data subscribers.”
Given this, the concept of anything online, including banking and ecommerce, is very new. And everything is fast-tracked. In telecoms and ecommerce, Myanmar is cutting out years of evolution that we’ve seen happen around the world.
“Myanmar is having their first experience of the internet on their mobile phones. No evolution from dial-up modems, leapfrogging instead straight to the 21st century. This means in a market less likely to distinguish Facebook from the internet, digital brands need to arrive with a product ready for less experienced users, but who already demand the levels of user experience one expects from a multinational,” explains Varela.
“Until North Korea opens up I believe Myanmar is the most exciting ecosystem to watch new products and services evolve and thrive,” he adds.
Ecommerce is next
Being an all-in-one epayments solution, ConnectNPay largely sets its sights on the uptick of ecommerce in Myanmar.
Setting aside the temporary problem of telco connectivity, Varela says there are three components to a successful ecommerce sector in Myanmar. First is vendors. Right now, there aren’t many major ecommerce players. Second, the logistics for the delivery of physical goods isn’t as efficient as markets which today allow same-day or next-day delivery. However, Varela believes that both these components will be pushed and pulled as consumer and corporate demand increases.
The third component is frictionless financial transactions. This is where ConnectNPay comes in.
ConnectNPay aims to give access to the widest possible range of vendors and services by being an open network players can connect to. Varela says this is precisely the kind of fintech Myanmar needs to catch up with other emerging markets. Doing otherwise will result in “walled gardens creating weak, incompatible, constantly competing pools of vendors and customers,” he says. “We believe that it’s by empowering consumers and SMEs that we’re going to see the most traction, and are happy to be part of that.”