Future of digital banking in Bangladesh

Bangladesh, long known for its vibrant markets and thriving informal economy, is now standing at a crossroads in financial innovation. While physical bank branches have traditionally symbolised financial reach, the future of banking in Bangladesh is increasingly leaning towards the "branchless" or digital model. This quiet revolution, driven by technological advancement, is transforming the landscape of financial inclusion and gradually steering the country toward a cashless future.

Mobile financial service (MFS) platforms such as bKash, Nagad, and Rocket have already built a strong foundation for this transformation. For millions of Bangladeshis who once had no access to formal banking, these platforms have become the new digital branches - accessible from both remote villages and crowded cities. They allow users to transfer money, pay bills, and conduct small-scale business transactions, reducing dependence on cash and bringing the unbanked into the formal economy.

The promise of branchless banking goes beyond convenience. It empowers a farmer to receive crop payments directly to a mobile wallet or a garment worker to send remittances home without visiting a bank. The next major leap lies in developing sophisticated digital credit scoring systems. Since many citizens lack traditional credit histories, leveraging data from MFS transactions - such as payment records and spending patterns - can help build inclusive credit profiles. With proper privacy safeguards, this innovation can make access to loans and financial services more equitable.

Such a system would enable small entrepreneurs and individuals to obtain micro-loans and working capital, reducing reliance on informal lenders and stimulating economic growth. Digital transactions also enhance transparency, curb corruption, and enable quick disbursement of aid during natural disasters - a vital advantage for a disaster-prone country like Bangladesh.

However, challenges remain. Ensuring cyber security, improving digital literacy, and updating regulatory frameworks are essential for sustaining trust in the digital banking ecosystem. Investment in rural connectivity must also continue to ensure equitable access.

The future "branches" of Bangladesh's banks will not be built of brick and mortar but of secure code and data. If managed wisely, branchless banking can democratise finance, accelerate growth, and make opportunity accessible to all, regardless of geography.

K M Zakir Hassan

Dhaka

kmzakirhassan@gmail.com