Banks will never be able to compete with financial technology (FinTech) service providers in terms of providing financial services, a specialist of the World Bank (WB) opined on Monday.
"As banks will never be able to compete with FinTechs, it is better to collaborate with them. Collaborations will be good for both banks and FinTechs," said A K M Abdullah, the WB Senior Financial Sector Specialist for South Asia Finance and Private Sector.
He opined that FinTech is a reality, and it is good for banks to accept the reality as early as possible.
He was speaking at a roundtable titled 'FinTech and RegTech: Possible Impact on Banking System in Bangladesh'.
The Bangladesh Institute of Bank Management (BIBM) organised the discussion on its campus.
Speaking as designated discussant, Mr Abdullah opined that there is no point of questioning why FinTech platforms like bKash or Nagad are not strongly regulated as banks are being regulated.
"Banks have to think how they can be evolved and get the highest benefit from FinTech instead of complaining about FinTech's less regulation."
The WB specialist further said banking sector in Bangladesh consists of much diversified groups.
There are some banks, which still carry out manual operations. On the other hand, there are banks, which have already adopted latest financial technologies.
"No regulator can regulate such diversified groups with one kind of law, and again the regulator can't introduce separate laws for one market."
So banks and FinTechs should stop worrying about regulation, and extend competition and collaboration simultaneously for better market environment, he added.
Deputy Governor of the Bangladesh Bank (BB) S M Moniruzzaman said the BB is closely monitoring activities of the growing FinTech firms, and giving appropriate directions to them.
"In recent time, when bitcoin issue was booming, BB took necessary actions to stop (using) it and to raise awareness among different stakeholders," he noted.
IPDC Finance Limited Managing Director and CEO Mominul Islam said collaboration is the biggest innovation in the 21st century.
Banks and FinTechs will also need collaboration, as there are risks of data breaches and cyber threats.
He also said the biggest benefit in (collaboration of) banking and FinTech industries will come in the form of financial inclusion.
"We are not going to succeed unless we can collaborate."
Mr Islam observed that many FinTech services are yet to be launched, including lending and deposit-related services.
Sharing experience of IPDC's new blockchain-based financial service, he said blockchain will change the face of present financial technology services, and everyone needs to get prepared for the change.
The country's financial sector has scarcity of resources and the sector is understaffed, he added.
Supernumerary Professor of the BIBM Helal Ahmed Chowdhury said people need various financial services.
He said if FinTech provides the financial services that people need, they will go to them. If banks miss the opportunity, they will regret.
"So grab your share in FinTech business as much as you can," he urged the banks.
Meanwhile, a team of bankers and academicians, led by Md. Shihab Uddin Khan, Associate Professor of the BIBM, conducted a study on FinTech and regulatory technology (RegTech).
According to the study findings, almost half of the respondents opined that FinTech is going to pose significant threats to operations of banks.
They also indicated that large technology firms can appear as a threat to traditional financial institutions.
The study covered four state-owned commercial banks and 28 private commercial banks.
The study found that 65 per cent of the banks have a FinTech strategy to face the financial technology wave.
However, 30 per cent banks are still not interested to invest in FinTech firms.
They study found that two-fifth of the banks use RegTech solution to some extent.
Dr Muzaffer Ahmad Chair Professor at the BIBM Barkat-e-Khuda moderated the roundtable.
He said senior management of the banks needs to have mentality to accept new technologies.
"But, more responsibilities lie with technical persons, who must have capabilities to make their senior managements understand the need for new technology," he added.
Dr Prashanta Kumar Banerjee, Professor and Director of the BIBM, delivered the welcome address, while Dr Md Akhtaruzzaman, Director General of the BIBM, chaired the programme.
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