Episode 463: How To Get A Country To Trust Its Banks : Planet Money It's something you can see on every day and on every block in most major cities. But in Myanmar, a country that was cut off from the rest of the world for decades, an ATM is a small miracle.
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Episode 463: How To Get A Country To Trust Its Banks

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Episode 463: How To Get A Country To Trust Its Banks

Episode 463: How To Get A Country To Trust Its Banks

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ROBERT SMITH, HOST:

Hey, it's Robert Smith here. On today's show, one of our favorite episodes we've ever done - it's from 2013 from the country of Myanmar.

(SOUNDBITE OF ARCHIVED BROADCAST)

UNIDENTIFIED MAN #1: (Singing in foreign language).

SMITH: Walking down the streets of Yangon in Myanmar is an experience unlike the kind you'll find in any other major city in Southeast Asia. Almost everything is sold on the streets. They have these rich, vibrant markets. But you can go blocks and blocks without seeing a single recognizable brand from the United States or from Europe.

LAM THUY VO, BYLINE: There are these, like, run-down colonial buildings in a city center. And parts of the sidewalk are just cracked open and you can see into the sewers.

SMITH: You have to be very careful.

VO: There are old cars. Some of the taxis have big holes in the floor and you can see the pavement move by as you drive in them.

SMITH: Particularly jarring as we walked around Yangon was the fact that you see almost no cell phones.

UNIDENTIFIED WOMAN #1: (Foreign language spoken).

SMITH: The way you make a call in public here is to go to these women on the street corners who tap into the phone lines - the actual phone lines - with alligator clips and they have an old handset sitting on a folding table. And they charge you by the minute for bootleg phone calls.

VO: And then we see something pretty amazing for Yangon. There's a machine sitting on a corner of 23rd Street and Strand Road.

SMITH: Yeah, it's something that you can find in most every major city on almost every block, something you probably see every day and never give it a second thought. But here in Yangon, it is a small miracle. On that corner, there is an ATM machine, a cash machine.

COMPUTER VOICE: (Foreign language spoken).

SMITH: ATMs are so new in Myanmar that there is a video that plays on the machine which basically shows you how an ATM works. It has all these young women on the screen, in these perfect uniforms, counting stacks and stacks of money, carrying it back and forth and back and forth within the bank. It's like they want to show you that inside this machine is actual cash.

GENERATED VOICE: (Foreign language spoken).

VO: Hello and welcome to PLANET MONEY. I'm Lam Thuy Vo the show's multimedia producer.

SMITH: And I'm Robert Smith. Today on the program, the story of one ATM on a run-down corner in Yangon, which is in many ways the story of Myanmar itself.

For decades, the country has been isolated from the rest of the world. It lived through a brutal dictatorship, lived through poverty and terrible natural disasters. But the government there is changing. It's trying to join this world economy that it once shunned. The struggle behind getting this ATM up and running really mirrors the struggle that Myanmar itself faces as it opens up to the West.

(SOUNDBITE OF SONG)

UNIDENTIFIED MAN #2: (Singing in foreign language).

SMITH: One of the few ATMs available in the city right now sits at the top of this little set of white stairs. It's set back from the street. It has a little rainbow above the screen. It actually looks a little bit like a Buddhist shrine, which you see everywhere here in Yangon. It's attached to the headquarters of CB Bank. Once you step inside the bank, you understand why it was so important to CB to get this ATM up and running.

VO: From the moment the bank opens, the place is packed. People are carrying bags filled with cash - like, giant rice bags, garbage bags full of paper money. They want it counted. And they want it deposited.

SMITH: I've never seen anything like it. This is a mostly cash-based economy in Myanmar. And almost no one takes credit cards. So people - businessmen end up with these giant bags of cash. And since the largest common note you'll find on the street is worth about $7, everyone is drowning in currency.

We were shown around by a young man, one of the managers here, Zam Yo U (ph). And he points out to me that not only are people dealing in cash, but they want to do this whole deposit transaction on paper with old-fashioned passbooks, you know, the kind you write your savings account number in.

ZAM YO U: I don't think they have internalized the process of virtual money yet, you know, like seeing, your balance online, not in an actual black-and-white kind of paper-and-ink kind of way.

SMITH: It looks like, on this floor anyway, about half your employees are just dealing with the sheer physical management of pieces of paper.

U: Yes, they are.

VO: If you have half of your employees doing nothing but counting all day, it's only logical that you may want a little machine to do that for you, clear out the lobby a little.

SMITH: Yeah, and free up your bank from really annoying piles of cash. There is money stacked in the corners like old newspapers. Guys lift bags of it onto their shoulders.

U: You'll see, like, you know, some of them would stack really high and then throw it like this. Like, I've seen it in other banks too, so...

SMITH: Literally throwing money around.

U: Yeah.

SMITH: It only makes sense to look into automating some of this business. But in Myanmar, putting in an ATM - something that started in the rest of the world decades ago - putting in an ATM is a huge challenge.

VO: And the first thing that the bank had to deal with - isolation.

SMITH: Yeah. We think of the ATM as a teller. I mean, it's the automated teller machine. But really, at its core, an ATM is a phone. It calls up your bank, no matter where it is in the world, sees how much dough you have, how much you want and sends the answer back to the machine. Almost every bank in the world is connected through this network. I mean, it's multiple networks really. (Unintelligible) You can see the logos on the back of your ATM card. I have mine. You can have Cirrus and Plus and STAR. They cover Visa and MasterCard.

VO: But Myanmar was cut off from those networks for decades. There were international sanctions. And the West was trying to punish the repressive government. And so, European and U.S. businesses weren't allowed to come in.

SMITH: Yeah. The managing director of the bank, Pe Myint, says he knew exactly what he needed to do to set up an ATM. It was pretty simple. But it was illegal for anyone to even talk to him about how to make it happen. Pe would call up places like Visa and MasterCard and leave a message.

PE MYINT: But they do not reply any response on that day.

SMITH: They never called you back?

MYINT: They do not contact with us because we are under the sanction - they are very scared about the American government. That's why they do not contact with us.

VO: So for years, there was nothing for Myanmar banks to do but wait.

SMITH: You know, it's funny because American companies like Visa and MasterCard - they were just waiting, too. I called up Antonio Corro from MasterCard. He's in charge of the region. And I reached him in Manila. And he says that the years of sanctions created a second challenge for setting up an ATM there.

ANTONIO CORRO: Myanmar was, you know, was under isolation for more than four decades. So the infrastructure is, you know - is quite old.

SMITH: Now, Corro and his team at MasterCard were willing to tackle that infrastructure because the country has 50 to 60 million people. No one really knows the population for sure because they haven't really done a census. But it's still a lot of potential customers - potential ATM fees. And like many businesses, MasterCard saw that Myanmar was going to be a hot tourist destination one of these days. And foreign travelers mean even bigger fees.

VO: But when the West started lifting sanctions last year, Corro discovered that it was going to take a lot more work than the standard install of a cash machine.

SMITH: Yeah. Corro says that normally, when a bank wants an international ATM, MasterCard brings in this giant box filled with servers and routers and wires. It's the size of a small fridge. That's the piece of equipment that connects the ATM to all the banks in the world.

But Myanmar has these antique phone lines, you know, the ones that people were tapping into all day long with the alligator clips on the street corners. And those lines were so old that the box wouldn't work. So MasterCard had to improvise. Now there's a lot of computer technological terms here. But basically, they set up a direct connection between the ATM and a place halfway around the world.

CORRO: The most centrally located boxes were in St. Louis.

SMITH: Wait, wait - wait, wait, wait. So instead of bringing the box to Myanmar, the special box is in St. Louis?

CORRO: Yeah. St. Louis is a global technology headquarters for MasterCard.

SMITH: Basically, when a foreign traveler like me puts in his MasterCard and types in the PIN number, that information goes to Missouri.

VO: And you see this kind of improvisational work all over Yangon these days. There are Western companies trying to partner with local companies. There are some companies that are coming in to try and improve the infrastructure. But there's a bigger challenge.

SMITH: As we walked around the city, we saw a bunch of new ATMs that have come online recently. There's one or two at the airport, at the one Western-style mall in Yangon, on a few street corners. It is a technological achievement. But there was something missing at all of these ATMs - customers. We almost never saw anyone using an ATM. So for all the technological hurdles that MasterCard and CB Bank overcame, there's a bigger problem the banks here are trying to solve - trust.

VO: For example, we met this guy who works at a newspaper, Zeya Thu.

SMITH: He's a business columnist.

VO: Right. He told us that even though the banks might be full of people who were trying to deposit cash, most people in Myanmar don't really have a bank account. The estimates are around 90 percent of the people wouldn't bring their money near a bank.

ZEYA THU: Many of us - we don't trust the banks because, you know, the banks - they don't work very well. If you want to withdraw the money from the bank and then you face difficulties. Sometimes you have to bribe the staff at the counter to get your own money back.

SMITH: You have to bribe them?

THU: Yeah, yeah, yeah - to get your money back. So people don't normally want to go to the, you know, bank and put money in there. So they put the money under their mattresses.

VO: Zeya himself - he keeps his life savings at home. He wouldn't tell us where.

SMITH: Yeah, we wanted to see his safe, but he wouldn't let us. And even our translator who came around with us - he carries all of his money with him pressed into the pages of a book.

UNIDENTIFIED MAN #2: For example...

SMITH: You've opened up a book here. And you have crisp $100 bills in here. They're perfect. They're beautiful. Look at this. It's is just - how many - you've got...

UNIDENTIFIED MAN #2: I always bring my money with me.

SMITH: Believe it or not, this is a common sentiment in Myanmar. We met people who say they even bring all their jewelry and cash in a car whenever they drive somewhere because they don't want to leave it at home in case someone breaks in. And a lot of people - a lot of people told us that they keep their savings in gold.

VO: Yeah. We went to all of these gold stores. And we met this one gold dealer Johnny Cho (ph) and he told us how people brought in these big wads of cash and would buy, I don't know, jewelry and other gold trinkets. And they would keep it as savings until they wanted to buy something large. And then they would sell it back to him.

JOHNNY CHO: They are selling gold to buy car, house, land, condo and buy gold to save - (unintelligible). We become a bank. We're like a bank. They are buying and selling. We become bank.

SMITH: And he is doing pretty well as a bank. Johnny says he gets about a thousand dollars worth of business a day. That's 1 million kyat, which is the local currency. And every night, he takes his million kyat home in his car. And even he doesn't have a bank account. He keeps it in his safe.

VO: Now, an entire country where people are lining up for gold instead of lining up in front of an ATM, where people are more likely to put their money in pages of books than in a bank - we can't overstate this. This is a disaster for an economy.

SMITH: Yeah, it's terrible because banks are not just a place to store money. They serve an essential function. They take money from people saving, and they lend it out to people who need it for something else - to buy a house, to start a business. All that gold that Johnny sells isn't doing anything for the economy. It's sitting in a safe. Money in the pages of a book, that doesn't end up going into someone else's pocket to buy something, to build anything.

VO: And so this love of cash may seem like a cultural quirk at first. But all of those problems we saw while walking around in Yangon, they could be solved with a functioning banking system.

SMITH: Yeah. So taxicab drivers, if the banks were working well, could get car loans to replace their cars, those holes in the floor. People could get mortgages to rehab those old colonial buildings that are falling apart. The broken sidewalks, the sewer you can see right into, cities around the world regularly borrow money to fix stuff like that. None of this is happening without a working banking system.

And, you know, it might be tempting to blame this on how poor Myanmar is. It is one of the poorest places in Asia. But this is only a small factor. I mean, China, Korea, Singapore, they were all poor once upon a time. They grew out of it. They built their banks. In Myanmar, the distrust of the banking system goes back to the same place that all of the problems here seem to come from, 50 years of really horrible government.

VO: I'm sure you've heard about the horrible human rights abuses committed by the government. They oppressed their minority populations for decades. They imprisoned political rivals. And they placed democracy leader Aung San Suu Kyi under house arrest for years.

SMITH: Yeah. The government of Myanmar was so terrible on human rights that we never really heard about how bad they were at economics. Sean Turnell is a professor at Macquarie University in Australia. He studies Myanmar's economy. He said every time there was a coup or a revolution, things in Myanmar just got worse. It went from a British colony to a particularly bad form of socialism to a military dictatorship, the three most economically damaging forms of government that you can imagine.

SEAN TURNELL: It was the triple crown, I'm afraid. Burma is often a poster child, I think, for economic mismanagement. Under alternative ideologies, it's almost - it, you know, looked up the playbook to see which ideology would be worse for the economy and then decide, well, given there's a list of them, let's try them all.

SMITH: Just one crazy example - a former dictator in the 1980s decided that too many people were keeping their money at home, so he declared that the largest denominations of bills in the country were all of a sudden null and void, worthless. People lost fortunes.

Zeya Thu, the business columnist we talked to, he remembers how his parents had all this money saved up in cash in order to buy a plot of land for their retirement. Then they heard the news on the radio. The bills that they'd saved were illegal.

THU: The largest amount of money in our life and then it was just gone, just with the wind.

SMITH: The dictator replaced the money with a currency based on the number nine, which was his lucky number.

VO: There were plenty of other mistakes, ranging from incompetent to corrupt. When taxi drivers would take us around the city, they would always point out the largest mansions, you know, the ones with the big lawns and the imposing fences, and say, oh, that guy is a military general.

SMITH: All of this history is weighing heavily on that poor little ATM machine on the corner of 23rd and Strand Road. Before the people of Yangon are going to line up and put their money in this machine and take their money out of the machine, they have to trust the bank it's attached to.

And in order to trust the bank, they have to trust the banking system of the country. And in order to trust the system, they have to trust the government, even the military. And all of that is hard to do after what's happened in Myanmar.

VO: The government is trying to regain some of that trust. They held elections. They've released a bunch of political prisoners. And they even allowed Aung San Suu Kyi to serve in parliament.

SMITH: You know, the banks are stepping up, too. They're trying to prove that there are no members of the former dictatorship on their board. They're trying to make more loans. They're trying to make better loans, prove that they aren't all going to some branch manager upcountry.

And even the ATM itself is a way to build trust. When it sits out in front of your bank, an ATM is a kind of ambassador to the street. The idea is that if you can walk by and see your friends and your neighbors using it and pulling out money - hopefully successfully - then you might do it, too. If you can see foreigners trusting the ATM, the big Visa and MasterCard logos on the side, maybe you'll think there's a little bit of American know-how inside that thing.

VO: And as we were standing there at this ATM machine waiting for someone to use it, and this woman walks up. She has a long ponytail. She was dressed all in yellow, and she works for an elementary school. The bank - CB Bank - had struck a deal with her school, and the school was now paying her electronically. And the bank gave her an ATM card, hoping that she would really use it.

UNIDENTIFIED WOMAN #2: Yeah. I'm withdrawing my salary from the ATM machine.

SMITH: Now you collect electronically...

UNIDENTIFIED WOMAN #2: Yes.

SMITH: It's deposited in your account, and then you pull the money out here.

UNIDENTIFIED WOMAN #2: Yeah.

SMITH: This is only the third time in her life she had used a cash machine. It's a new program. And she and her co-workers say they still have to be convinced that it's a good thing.

UNIDENTIFIED WOMAN #2: Some machine doesn't work, but we hope that it will be better in the future, yeah (laughter).

VO: She hits a few buttons, and...

(SOUNDBITE OF ATM MACHINE DISPENSING CASH)

UNIDENTIFIED WOMAN #2: Today it works, so I'm lucky (laughter).

SMITH: The most exciting future for Myanmar is that this transaction someday will seem incredibly boring and routine. There will be no luck involved.

(SOUNDBITE OF MUSIC)

SMITH: Robert Smith here, back in the present. We did that story in 2013 as of the end of last year. The Myanmar Payment Union said that over 1,600 ATMs are now operational across the country, so boring, indeed.

This episode was produced by Jess Jiang. Today's update was produced by Elizabeth Cooles (ph). We always love to know what you think of the show. You can send us an email, planetmoney@npr.org or follow us on Facebook or Twitter. We're @planetmoney. I'm Robert Smith. Thanks for listening.

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