Banks Still Leading Fintech Revolution in Laos

Digital financial services are at a very nascent stage of development, but recent partnerships are seeking to change that by introducing new and innovative fintech solutions.

Most of these initiatives are being spearheaded by banking incumbents and financial institutions as they prepare for the adoption of digital financial services.

Agriculture Promotion Bank (AP Bank), a development bank that primarily provides financing to the forestry and agriculture sectors, inked a partnership with Hi Sun Fintech Global Limited (HSG) to modernize its core banking system.

The project, which is set to take 9.5 months, will see HSG upgrade the bank’s anti-money laundering systems, reporting systems, and several of the bank’s other business systems. The upgrade will lay the necessary groundwork for AP Bank to transition more seamlessly into a digital bank in future.

HSG had worked with other incumbents including Banque Pour Le Commerce Exterieur Lao Public (BCEL) and BIC Bank on similar projects, focusing on modernizing their core banking infrastructure to enable new business models, support advanced technologies and enhance customer experiences.

BCEL went live with HSG’s new banking system in April 2022. The new infrastructure aims to allow for fast product deployment as well as greater flexibility, adaptability, and scalability.

Bank of Lao PDR has been working on laying the foundation for digital payments, tying up with financial regulators from across the Asia-Pacific (APAC) region to upgrade its payment infrastructure, tap efficiency gains and access new capabilities.

Cambodian bank Acleda Bank was commissioned for the development of new systems connecting Cambodia’s digital currency infrastructure Bakong to Lao DPR’s national payment network Lapnet.

These developments follow the launch of the Lao Payment and Settlement System (LaPASS) in June 2020, and the introduction of Lao QR Code earlier that year. These two developments were amongst the biggest milestones in the Lao PDR digital payment landscape at the time. LaPASS is a real-time gross settlement system designed for institutional use, while the Lao QR Code aims to set industry standards in QR payments in the country.

Lao PDR’s fintech sector is falling behind those in neighboring countries including Vietnam and Cambodia, despite providing fertile ground for fintech adoption. Bank account ownership in Lao PDR is low at 26.8%. Additionally, cash remains the dominant means of payment with only 0.6% of those aged 15 and older having a credit card and 12.7%, a debit card.

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