DPS Thru bKash: Democratising savings, augmenting prosperity

Infograph: TBS

"For any country's economy, savings is one of the fundamental foundations. The more savings there are, the more banks can channel them into investments. Investment should not only come from abroad; local investments should also come from our own savings," said Selim R F Hussain, Managing Director and CEO of BRAC Bank PLC.

In Bangladesh, many traditional savings mechanisms remain inaccessible, particularly for rural populations and low-income earners. To address this, bKash, the country's largest mobile financial services (MFS) provider, introduced Deposit Pension Schemes (DPS), revolutionising savings accessibility. Since its launch three years ago, over 3.3 million DPS accounts have been opened via the bKash app, spanning four commercial banks and one financial institution.

Notably, 96% of customers whose DPS matured expressed interest in opening another account through the app, a testament to its convenience and effectiveness.

DPS through bKash: Redefining savings

DPS through bKash is a collaborative initiative with IDLC Finance, BRAC Bank, Dhaka Bank, Mutual Trust Bank, and City Bank. With savings starting as low as Tk250 weekly, the scheme caters to a broad demographic, including low-income and rural populations.

The integration of Shariah-compliant DPS options further broadens its appeal, accommodating users seeking faith-based financial solutions. Customers can select plans ranging from Tk250 to Tk10,000, and opening a DPS account involves a few simple steps through the bKash app's "Savings" feature. Upon maturity, funds can be withdrawn without fees, ensuring ease of use.

Impact on personal finance

The flexibility and accessibility of DPS through bKash have transformed personal finance for millions of Bangladeshis. It allows users to save for emergencies, education, healthcare, weddings, and other life milestones. Stories from users illustrate its life-changing impact:

Contributing to family aspirations:: Md Yasin from Brahmanbaria used his DPS savings to send his younger brother abroad, fulfilling a long-cherished family dream.

Ahmed Hossain Anas, the sole breadwinner of a middle-class family, saved to help his parents buy land for their dream home.

Boosting small businesses: Entrepreneurs like Kader Hawlader in Gopalganj reinvested matured DPS funds into their ventures, such as expanding inventory for his computer business and significantly increasing monthly revenues.

Promoting women's financial inclusion

Around 30% of DPS accounts opened through bKash belong to women, reflecting the scheme's role in advancing financial inclusion.

For example, Syeda Ayesha Akhtar, a homemaker in Dhaka, saved small amounts weekly through DPS to fund her children's education.

Moreover, nearly 1 million garment workers, most of whom are women,  receive their salaries through bKash accounts. Women receiving salaries in their bKash accounts are utilising various financial services and opening DPS accounts. Driving economic growth

Savings mobilised through DPS are pooled and utilised by partner banks to finance sectors such as agriculture, manufacturing, and infrastructure. This cycle generates economic activity, creates jobs, and boosts GDP growth. By reducing reliance on foreign investment, the scheme strengthens Bangladesh's financial independence.

Encouraging a savings culture

Developing a culture of saving is critical for economic stability. DPS through bKash makes savings accessible and convenient, encouraging users to prioritise financial planning. Approximately 48% of account holders are under 35 years old, showcasing how young people are embracing savings as a habit.

Advancing financial inclusion

Traditionally, large segments of Bangladesh's population, particularly in rural areas, were excluded from formal banking systems. DPS through bKash has changed this narrative by bringing banking services to the doorstep of millions.

Whether it's a farmer in Bogura or a garment worker in Gazipur, individuals can now access savings services through their mobile phones, breaking long-standing barriers of accessibility and affordability.

Collaboration and innovation

The success of DPS through bKash is underpinned by strong policy support from Bangladesh Bank and partnerships with financial institutions.

Syed Mahbubur Rahman, CEO of Mutual Trust Bank, remarked, "The future is bleak without collaboration and co-creation. MFS has made reaching marginalised communities more efficient. Such partnerships are assisting us in achieving goals more effectively."

Contributing to the digital economy

City Bank's Shariah-compliant DPS offerings demonstrate how traditional banking principles can seamlessly integrate with digital platforms, fostering trust and financial literacy.

Masrur Arefin, CEO of City Bank PLC, emphasised the transformative impact of partnerships with bKash. "We've disbursed Tk13 billion in nano loans with an NPL rate below 1.0%. The central bank's support is encouraging us to explore further innovations," he said.

Partnership growth

The bank-MFS partnership has opened up new horizons. Because of MFS, reaching the last mile is no longer a difficult task.

Kamal Quadir, Founder and CEO of bKash, said, "Prosperity begins with savings. The day the first dime is saved, future planning begins from there. In this regard, the policy support of Bangladesh Bank was also crucial. Furthermore, bKash won't be able to reach this far without the infrastructure of its partner banks. Besides, the banks are playing integral role in transacting crores of taka in bKash's platform every day."