A revolution in the financial services industry of Bangladesh is in the offing with every passing day, with several banks, MFS, and telecom companies gearing up to invest in digital banks through both individual investments and a consortium. The extension of the digital banking application deadline has prompted almost 20% of the traditional banks in Bangladesh to apply for a digital banking licence in a bid to increase their market penetration and bring the unbanked population under the banking umbrella. With an unbanked population of 47% in Bangladesh, digital banks hold the key to enhancing financial inclusion and extending digital banking services to the underserved and unserved population.
The rapid adoption of MFS and internet banking services has laid the groundwork for digital banks to potentially thrive, as evident by the MFS transactions, which registered a year-on-year growth of 19.5% for April 2023 relative to April 2022. The ease of availing MFS services facilitated the financial inclusion of the unbanked demographic, which mostly consisted of low-income households. The unserved and underserved populations were the biggest beneficiaries of such services, owing to convenience, cost and time savings.
Undeniably, the exponential adoption of MFS among low-income households in the last decade serves as evidence for the potential success of digital banking services. These services can effectively replace conventional banking services, which could lead to more competitive rates and reduced operating costs. This, in turn, can help create a conducive business environment for both banked and unbanked communities where digital banks can accelerate financial inclusion and economic growth of Bangladesh with the vision of bringing the majority of the population under a cashless economy.
Md. Shah Jalal
Editor
IDLC Monthly Business Review
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