Aspire to Innovate fifth webinar: G2P payment digitalization key takeaways and understanding beneficiary's experience

a2i Programme is organizing a webinar series on different thematic areas related to digital financial inclusion ensuring participation from relevant stakeholders. The initiative is called "Bangladesh Financial Inclusion Forum 1.0" with the theme "Accelerating Digital Financial Services to create an inclusive financial ecosystem".  The co-partners of the webinar series are Milvik Bangladesh Limited, Light Castle Partners, Innovations for Poverty Action (IPA), Social Innovation Lab (BRAC), Microsave Consulting, Access Health International, Nagad, and Digital Financial Forum Bangladesh. The media partner of the event is the Business Standard. The webinar series has started on 23 June 2021, states a press release. 

Aspire to Innovate (a2i) has been working closely with Bangladesh Bank, other government and non-government organizations, fintech startups, and development partners to bring the grassroots population of the country into the formal financial system. To make the digital financial ecosystem in the country more dynamic, it is important to ensure the involvement and increase the capacity of the officials from various banks, MFS, financial institutions, development partners, research institutes, donor agencies, Bangladesh Bank, various government ministries and departments and other service providers on relevant issues.

The Government of Bangladesh has been implementing a number of Social Safety Net Programs to assist the underprivileged and vulnerable population of the country for a long time. Social protection programs help the government to alleviate poverty and reduce inequality. As a result, budgetary allocations of Social Safety Net Programs have grown in absolute terms as well as a share of GDP, from 1.3 % of GDP in 1998 to 2.92 % in FY 2019-2020. Over a five-year period, there has been a substantial expansion in the coverage of safety nets and cash transfer programs as well. At the moment, there are 120+ social safety net programs, implemented by 23 ministries and divisions, with an annual budget of BDT 568 Billion (FY 2020-2021), accounting for 16.83% of the Government Budget, at a level of 3.01% of GDP.   

The majority of these programs are still heavily reliant on cash. A study conducted by a2i in collaboration with Pi Strategy revealed that there are significant opportunities for cost-saving both from government and consumer sides through digitization of social safety net programs. The study showed that the digitization of G2P payments regarding SSN allowances could save up to $15 million annually for the government. A Time-Cost-Visit analysis suggests it could save up to 91 million hours, $20 million in costs, and 60.4 million visits for the allowance recipients annually.

In light of the prevailing challenges of direct cash transfers, the a2i Programme with the support from Bill & Melinda Gates Foundation, facilitated the piloting of electronic social safety net payments as part of the government's overarching plan to digitize all G2P payments to achieve affordable, more efficient, and appropriate inclusive financial services for all. Hon'ble Prime Minister Sheikh Hasina inaugurated the electronic payment system G2P (Government to Person) for disbursement of the allowances of Social Safety Net (SSN) programs for marginalized people including elderly, physically challenged persons, and widows on 17th July 2018 through a video conferencing from her Gonobhaban residence. After the successful piloting of the payments, Bangladesh Government and the Social welfare ministry decided to bring in the majority of the social safety net programs under digitization by directly depositing the transfers from the government treasury account into individual bank accounts (Agent banking Account). In addition to that, Mobila Financial Services have been introduced as a choice option for the beneficiaries as well. As a result, within the last two to three years, a large number of beneficiaries under different social safety net programs were quickly brought under the G2P payment digitization process. 

Although digitizing these payment programs have led to a substantial increase in access to formal financial institutions, but a number of challenges still prevailing in the last-mile delivery of these services, especially for women. In an effort to improve the recipients' experience and increase their usage of formal financial services, a2i in collaboration with IPA Bangladesh took an initiative during March 2020 to analyze recipients' journeys and develop instruments to closely monitor and improve the delivery of cash transfer programs. Over the years this initiative conducted two rounds of phone-based monitoring surveys identifying major challenges beneficiaries experienced with the newly digitized government-to-person (G2P) payment system to help the government improves the overall experience. 

Some key takeaways from this initiative found out that although overall satisfaction rates are high, 58% of beneficiaries reported facing difficulties while withdrawing the payment. Low awareness of SMS notification, high illiteracy, and heavy dependence on local networks for communication for receiving payment are still persisting. There is a large gender gap among beneficiaries who received MFS payments. This initiative also found out that there are financial inclusion and program awareness gap among beneficiaries who received transfers through a bank agent vs. mobile money.