Digital banking: prospects and challenges

The government has recently embarked on the design and development of an all-encompassing digital banking system in the country. This is no doubt a welcome move as our financial institutions need to keep abreast of the developments taking place both at home and abroad. With that in view, the Bangladesh Bank has drawn up a roadmap for the banking industry to adopt in the near future. When implemented, the country can reap benefit of digital banking in many ways. According to a World Bank survey as many as 30 million people in Bangladesh do not have bank accounts. Digital banking can include these people financially as it does not require many formal procedures. There is also gender gap in financial inclusion in Bangladesh and another study shows that almost 65 per cent women in the country are unbanked. With the large number of people that are not served by the existing traditional banks, digital banks can use the market opportunities through innovative and convenient financial services. Since the digital bank does not need branch like traditional banks, the operational expense is supposed to be lower than that of traditional banks. It results in low-cost banking service. Digital banking can also help Bangladesh move to a cashless society in the future.

However, digital banking service is subject to some challenges too. For instance, cyber security negatively influences customers to adopt digital banking. Another obstruction to digital banking is data security and privacy concern. So, the government must address cyber security threats, and it can collaborate, if required, and encourage financial service providers to invest in building resilient data security platforms. In addition to that, the government should undertake a policy which will emphasise customers' data security and privacy concern.

Al Amin Hossain,

MBA student of University of Chittagong, Chattogram,

alaminfinance1998@gmail.com