Digital Collaboration: The future of financial intermediaries

Financial inclusion in Bangladesh has been progressing quickly and in tandem with the increasingly widespread use of digital technology. Over the past 10 years, Mobile Financial Services (MFS) changed the landscape of economic advantages. It altered the way people transfer money from one place to another and gradually introduced improvements to digital payments.

Online banking has undergone a significant boost throughout the nation. Recent expansions suggest that financial help providers are likely to go further. To reach individuals who effectively do not have access to conventional banking services, several NBFIs and banks have introduced digital services, including online deposit, online DPS, and credit services, both on their own and in partnership with the top MFS operators.

After the IDLC DPS programme with bKash received such a positive response, Dhaka Bank Limited and Mutual Trust Bank Limited have already launched a similar feature to encourage Nano deposits from the millions of MFS service customers. Additionally, it strengthens the national population's root-level savings habits.

After a successful one-year trial programme, The City Bank Limited has started offering bKash users an immediate, collateral-free "digital nano loan." Eligible bKash customers can now instantly request loans between Tk500 and Tk20,000 through the bKash app, receive them, and repay them over the course of three equal monthly instalments using their bKash accounts. 

By utilising their Internet banking capabilities, Dhaka Bank Limited and Prime Bank Limited are also focused on the Nano Loan Facility. The digital nano loan disbursements refinance program from Bangladesh Bank aims to increase financial inclusion for the impoverished and is valued at Tk100 crore. 

Without a doubt, it downplays the importance of local lenders and NGOs while supplying lower-income people with their seasonal financial needs. I sincerely hope that more institutions will step forward and take advantage of these guidelines for digital financial inclusion.

Assuming Bangladesh's digital financial ecosystem is still in its infancy and that the sector is growing swiftly, these stories are not particularly impressive. Payments of salary, bonuses, different social security benefits, and government subsidies have all been subject to P2P transfer and payment as well as MFS use concerns.

MFS provides the unpopular insurance industry with fresh opportunities. With only one tap on an MFS app, consumers may quickly and simply take advantage of an insurance policy and premium payment features. From an MFS account to a bank account, and vice versa, the money can be transferred with ease. By working with reputable international foreign remittance providers, freelancers can also receive income via MFS.

MFS worked with several organisations from various fields to provide services like bill payments to the general public. Recent months have seen an extraordinary increase in people paying their bills online through MFS services rather than standing in huge lines.

Bangladesh has a sizable population, with the majority of people living in rural areas. Almost 70% of the population is unbanked, but they are not hesitant to use financial services. Figures reveal that about 60% of the population is using MFS.

Right now, traditional financial institutions can collaborate digitally with MFS or other financial technology, which is the easiest and most affordable option. Therefore, businesses must increase digital collaboration to manage more employees. Additionally, this financial inclusion will guarantee both individual financial security and the nation's macroeconomic effectiveness.

Sketch: TBS

Sk. Shamim Iqbal is a faculty member at SIBL Training Institute and has an MBA from the University of Dhaka.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.