Only 40% account owners capable of MFS transactions: Study

Only around 40% of account holders can transact money on their own through the mobile financial service (MFS) although transactions through the service have been on the rise in the country, reveals a research.

It indicates a major challenge for households to have access to MFS accounts, the research paper of Brac Institute of Governance and Development (BIGD) also says.

The study also says about 61% of the MFS account holders cannot read text messages while 28% check accounts only when necessary and 10% of the owners reported receiving unnecessary messages from mobile phone service providers. It adds to the challenges for household access to MFS accounts, the study mentions.

The BIGD study titled "Last Mile Experience of Mobile Financial Services during Covid-19" was presented at a webinar on Sunday. BIGD Research Fellow Dr Zulkarin Jahangir and Senior Research Associate Abdullah Hasan Safir presented the findings.

According to the research findings, about half the MFS account holders take the assistance of nearby MFS agents during transactions, while around 5% seek help from a specific family member and 4% from friends or neighbours.

The BIGD study also found around 70% of the government's cash assistance during April-June was distributed through the MFS platform while the rest of the amount through the conventional medium.

Only 34% of the MFS account owners, who opened a new account during this time, had received some form of government financial support within June 29.

The government allotted Tk1,256 crore for 50 lakh poor families across the country affected by the Covid-19 pandemic. Each family was supposed to receive a one-time Tk2,500.

The Brac University research paper explored the current practices of Government to People (G2P) cash transfer through MFS, focusing on interactions between people, MFS agents and the union digital centre (UDC) entrepreneurs to identify the bottlenecks in the ecosystem to further streamline the overall process and maximise opportunities.

The study found a significant gender gap in MFS users, with only 30% of households having female MFS account owners.

It also found evidence of a lack of clarity among people about the roles of MFS agents and UDC entrepreneurs in the cash transfer ecosystem, with users directing complaints to the wrong stakeholders while facing anomalies in registration or cash-out.

Talking about the challenges in MFS transactions, Anir Chowdhury, policy advisor, Access to Information (a2i) of the ICT Division, said, "As many G2P beneficiaries are illiterate and low-literate, one technological innovation that we could have explored is biometric authentication at cash-out points."

This would have given a greater control to the beneficiaries since they do not need to remember any specific information when cashing out, making the process simpler for them, he added.

Around one crore new MFS accounts were opened during April-July. Before the pandemic, in March, the total number of registered MFS accounts was 8.26 crore which grew to 9.26 crore in July.

Meanwhile, the ratio of active clients also rose to 46%, up from 32% in April.

At present, the average daily transaction through MFS has doubled to around Tk2,000 crore, from Tk1,000 crore in April.

Mizanur Rashid, chief commercial officer at bKash, BRAC Bank's MFS platform, said one of the reasons for grievance was that many users had registered with inaccurate information at the base level and their IDs were eventually filtered out.

However, they were never informed that they would not be able to receive the government's cash transfer from the Bangladesh Bank, he added.

Maria May, senior programme officer at Bill and Melinda Gates Foundation, expressed how the research was a testament to what an economic lifeline mobile money has been for many households in Bangladesh during the Covid-19 period.

Dr Imran Matin, executive director of BIGD, in his concluding statements said some digital innovations have the potential of increasing inequalities in existing power asymmetries, which can worsen the sufferings of the vulnerable populations.

"Therefore, we need to take a sceptic, social science perspective towards the pitfalls of rapid digitisation and innovate accordingly."