Home FinTech Khuon Sophorth – solutions for Microfinance and Banks

Khuon Sophorth – solutions for Microfinance and Banks

Khuon Sophorth is the co-founder of Morakot Technology – a financial software company that is trying to  make inroads to help Cambodian microfinance institutions and banks leave their outdated spreadsheets and paper forms.  He also wants to make this technology available to other parts of Southeast Asia.

Khuon gave this exclusive interview to Human Asia.

Firstly, could you please tell us a little bit about the state of the Cambodian banking and financial system? How does it compare to other markets in the region?

Sophorth:  Cambodia is a bank-based economy. Commercial banks are the primary source of funding. The Cambodian banking system is a two-tier system comprising the Central Bank (National Bank of Cambodia), and private sectors such as commercial banks, specialized banks, microfinance institutions, and a number of NGOs involved in rural credit activities.

 The key players in Cambodia’s banking sector are NBC, 37 commercial banks, 13 specialized banks including one state bank, two Representative office of foreign commercial banks, 61 microfinance institutions where seven are eligible to collect customer deposits, and over 300 NGOs involved in rural credit activities.

Myanmar banking and microfinance markets are similar to Cambodia, where these institutions both play an important role in the banking industry but slowly they have developed independently due to the interest cap of 13% for loans with of up to one-year term.

If we look at Thailand, they don’t have microfinance institutions but they have co-operative banks. In Vietnam, the banking sector also has two tiers. The first tier is the State Bank of Vietnam, which is the regulatory and supervision body. The second tier is the private commercial banks, financial companies, and credit co-operatives. Vietnam currently has five state-owned banks, 33 stock commercial banks, five joint venture commercial banks and five wholly owned foreign owned bank.

Khuon Sophorth – cofounder of Morakot Technology, Cambodia

Tell us more about Morakot VB software. What problem or pain point in the Cambodian financial system are you trying to solve?

Sophorth: Morakot VB is a core-banking system for Microfinance Institutions (MFI), Credit Operators, as well as Banks. The system can be implemented on-premise or on a cloud-based server for low-budget clients. The system comes with fully integrated and automated accounting, and supports multi-branch and multi-currency.

Currently, most MFI’s and Credit Operators are operating on Microsoft Excel or even paper based. This exposes them to human error and fraud, and inhibits them from expanding quickly. To make matters worse, existing core-banking software in the market is too expensive for them and mostly are designed for Banks and not MFI’s.

So how do you differentiate Morakot’s software from those other established ones in the market?

Sophorth: We have a few things that set us apart from other software. First, our software only takes three weeks to implement. Secondly we are cloud-based. Thirdly, we are designed for microfinance business processes in mind. And finally, our product comes with monthly subscription fee option.

What challenges do you currently face in trying to market this product? Is it regulatory compliant, for example?

Sophorth:  We are new to the market and gaining trust from potential clients is quite a challenge. Also, we currently find it challenging to rope in Banks as customers. It’s difficult to convince Banks to use our software. The system itself is regulatory compliant, and also comes with regulatory reports.

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What’s your plan regarding market expansion for this product going forward? 

Sophorth:  We are going to expand into the Myanmar market this year. There are more than 300 microfinance institutions in Myanmar. Aside from Myanmar we are also interested in expanding into Indonesia, India, Sri-lanka, Bangladesh, Lao, and also other countries in Africa.

Are you currently looking for outside investors?

Sophorth: We are looking for funding of US$500,000 to support expansion in Myanmar, Indonesia, and also for product development. We are also looking for strategic partners who can help to connect us with more potential clients in Myanmar.

Sophorth, tell us more about yourself 

Sophorth:  I was born in 1980 in a refugee camp in Thailand during the civil war in Cambodia. In 1992, my family returned to Cambodia after spending 12
years living in the camp. The camp is a UNHCR-supported camp. It was my second year of high school at the time we returned to Cambodia, and I continued my schooling in Banteay Meanchey, a province located in the west of Cambodia.

After completing my high school in 1997, I continued to pursue my Bachelors degree majoring in Computer Science and Engineering in Phnom Penh city. I got my first job as a software developer at a local software company while still undergoing the second year of my Bachelors program, and then promoted as an IT Project Manager at the same company.

I graduated in 2002 and got a new job at an NGO called VBNK as a Program Support Unit Manager. In 2005, I moved to VisionFund – one of the top MFI’s in Cambodia – as an IT Manager. I then left VisionFund and co-founded Morakot Technology with two other co-founders. The three of us were co-workers at VisionFund.

What made you jump into entrepreneurship? 

Sophorth: My motivation in becoming an entrepreneur is to follow my passion, do things I love, maximize my potential, and simply to be my own boss.

How do you define success personally?

Sophorth: Personally, I think success is about making other people succeed. Helping them solve their problems and get things done in a better way.

Advice for aspiring entrepreneurs?

Sophorth: Being an entrepreneur is tough, but it’s fun. It accelerates your learning curve like never before. You will understand about who you truly are.

To be a successful entrepreneur you must start with what you really love to do. This is called passion. Passion will keep you moving forward regardless of obstacles. You have to get the right partners or co-founders. This helps a lot in your entrepreneurial journey especially when you are in trouble. You need someone to talk to, and the best person to talk to is the one who sits in the same boat as you.

Focus on one thing at a time. Put all your energy on that one-thing and make it move forward. This is more likely to give you success than doing too many things at the same time. Watch your cash flow. Most startups fail because of poor cash flow management. Control your burning rate and maximize your earning.

Finally, get the right mentors. This is an important factor for a startup. Get somebody who could guide you, and to help you steer your ship.

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Visit Morakot Technology at https://www.morakot.it/

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