The future of mobile financial services in Bangladesh

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Mobile financial services already are growing at an easy clip in Bangladesh. If interoperability among operators and compliance is certainly ensured, the service's cost is definitely brought down, and a level-playing discipline is guaranteed, the industry will reach a fresh height.

The industry has emerged as a one-stop solution for a myriad of transactions, from sending and acquiring money to producing payments for utility, transportation, education, medical, and retail bills. This innovation possesses accelerated financial inclusion.

The World Bank estimates that, in 2017, 50 percent of adults had a merchant account within their name with a full-service lender. This shows a 56 percent increase from 2011, according to a research study of the Alliance for Financial Inclusion (AFI), the world's top rated organisation on economic inclusion policy and regulation, located in Kuala Lumpur. This increase is mostly because of the introduction and growth of MFS since 2014. The government's initiatives to register SIM cards in 2015 also have contributed to the sustained progress in mobile money gain access to and user registration.

"The interoperability should be introduced on an urgent basis to take on the industry to an elevated level," says Abul Kashem Md Shirin, managing director and CEO of Dutch-Bangla Lender Ltd, which owns Rocket, the country's primary MFS operator.

"The sky may be the limit," says Tanvir A Mishuk, managing director of Nagad, the MFS operator of the postal division, while talking about the industry's potential. 

Sydul Haque Khandaker, managing director of UCB Fintech Ltd, said that you will find a tremendous growth prospect of mobile financial services in Bangladesh amid the developing adoption of digital economic services, which range from personal fund transfer to merchant payment, utilities to disbursement of varied government allowances and stipends.

"Due to the momentum gained within the last decade, practitioners are actually seeking at the immense potential found in MFS," shares Sheikh Md Monirul Islam, chief external and corporate affairs officer of bKash.

Abul Kashem Md Shirin also mentioned that the cost per Tk 1,000 cash-out must be brought right down to a single-digit from Tk 20 now. The central bank just lately published a circular which allows tiny businesses that don't have trade licenses and privately-possessed businesses to open up merchant accounts with MFS operators. As a result, small businesses such as grocers in the united states can open the profile and allow digital payments.

"Once small merchants begin accepting digital payments found in a major way, and people use mobile wallets to get things and get payments a lot more, the deal volume will bounce massively," says Tanvir A Mishuk. Currently, on average, Tk 50,000 crore has been transacted through this mobile funds channel on a monthly basis, and Mishuk described this is just the tip of the iceberg.

Sydul Haque Khandaker praised the Bangladesh Lender for introducing personal retail accounts for micro-entrepreneurs: "There is going to be a big prospect on this segment."

Additionally, the MFS platform can even be used as a good channel for other businesses such as for example banks, microfinance institutions, NGOs, and insurances to offer financial products such as bank loan disbursement and collections, deposit instalment payment, and insurance high quality, according to Khandaker. "It will reduce the expense of the services and increase proficiency," he says.

He also added that personal fund transfers and cash-out from the wallet even now dominate the marketplace. But significant prospects lie in SME organization, utility repayment, e-commerce and F-commerce order, payment for digital content material, and various government disbursements. 

Mishuk gave full credit to the federal government for the development of the MFS sector: "The government is quite pro-active and available to suggestions from the individual sector; that is helping the market grow."

Islam of bKash said that MFS is a good the main Fintech revolution, and technology is the key driving force at the rear of this sector's growth. "It's the foremost duty of the MFS services to hold their customers' funds risk-free by investing in IT infrastructure and cybersecurity. On top of that, integration of innovative technology such as for example artificial intelligence, blockchain technology, digital reality and machine learning, and internet of things remains to be of the essence to greatly help the MFS sector reach fresh frontiers," he shares.

He as well mentioned that the regulators' support and supervision were fundamental to the inception and growth of the MFS industry. The regulatory environment of Bangladesh is normally conducive to continued nurturing of MFS industry for its sustainable growth. "The remarkable progress of the MFS industry will get severely hampered if the compliance self-discipline isn't identically supervised and managed across the entire MFS market," he adds.

A global study by the International Monetary Fund with an increase of than 70 stakeholders - Fintech businesses, central banks, regulatory bodies, and banks - disclosed that regulators have to match fast-paced technological alters in Fintech to ensure consumer and data security, cybersecurity, and interoperability across users and national borders.

Regarding to Khandaker, digital literacy and buyer awareness certainly are a must to keep MFS clients safe and enhance their confidence. There are challenges such as lower penetration of smart equipment - smartphone penetration is significantly less than 30 percent. Mishuk stated that the cost of smartphones should be brought down, and the price tag on internet usage should be reduced. The problem of the digital divide would have to be tackled. He also mentioned that interoperability would allow operators to target more on customer support and product innovations rather than competing for buyer acquisition. According to Mishuk, this will "stop burning cash."
Source: https://www.thedailystar.net

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