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Financial solutions in Bangladesh: Are we future-proof?

Monsurul Aziz | Wednesday, 8 December 2021


Let's imagine two scenarios. In one of the scenarios we can imagine of a group of young people of any town of Bangladesh who are enjoying a lively chit chat in a tea-stall while in another case, we can think of a group of young people- sipping on Venti Coffee at Starbucks, 99 Wall Street. What do you think the difference could be of both of these discussions? The physical distance between these two places is roughly 12,672.38 km. However, the quality or pattern of these conversations, perhaps the metaphorical distance, will be a few thousand lightyears. In all honesty, we have to admit that we are far behind - in terms of our thought processes, skills, and maybe our systems too. But the question is why?
One of the most discussed topics in recent time is what could be the possible skill set one should have to adjust with the coming future. It is essential that we look for answers of these questions as we need to be prepared beforehand to compete with the upcoming world. Another such issue that needs to be concerned about is the future of financial solutions-specifically in Bangladesh. Despite the fact that we already have 61 scheduled banks in Bangladesh, our banking still needs to go for better formation to keep pace with global economy and with the growing technology and service. As we know we have few generations of banks, the 4th Generation (After 2010 - Present) being the last, however, the previous generation of banks failed to upgrade and be at par with the next generations. On the other hand, if we focus on our Mobile Financial Services (MFS), we can observe great progress in our MFS sector. Though a lot of banks have also tried their luck in MFS, unfortunately, they have failed to achieve substantial success. As the world technology is moving forward fast with the change in consumer needs, it is necessary to look into few factors. Will traditional banks survive in the distant future? How can MFS operate successfully in the changing world? And most importantly, what does the future of financial services look like?
Though there are 15 MFS providers right now, Bkash, Nagad and Rocket are dominating the market. Compared to all other service providers, Bkash and Nagad are doing exceptionally well. What actually made the difference? I believe the reason behind the failure of bank-backed MFS is- those services were an extension of the bank and somehow they operated like banks as well. Whereas independent service providers like Bkash and Nagad operate solely as Mobile Financial service providers.
The financial solution system in Bangladesh is lagging far behind compared to the global market. What could be the possible solutions for this issue? You see, the success of new forms of financial services is largely dependent on the ways in which they are understood as useful and credible as viable forms of exchange, and how they support the ways that their users interact around them. Whenever the consumers go for any financial service, they look for a flexible, less time-consuming and smooth process which can mostly be availed by mobile financial services. Hence, we can see this sector emerging every other day. Especially amidst pandemic, mobile financial services helped the wheel of economy of Bangladesh keep moving. The utilisation of mobile financial services has been maximum during this period and it has been considered the safest method of transaction. Moreover, if we look at the customer segment of MFS, there are different types of people who need financial services. Bkash and Nagad took consideration of this diversity; they catered to both Digital Native and almost Digitally Illiterate segments. As all the targeted customers of Bangladesh are still not capable of adapting to the digital form of financial transaction, hence they have kept both the options open for the customers: Mobile Phone applications for smart phone users and USSD system for button phone users. So, if we look for the best fit for Bangladesh, it cannot be solely Digital or solely Analog. I believe we need a novel model - perhaps a hybrid of Digital and Analog, which seems to be giving the best results so far. Banks, MFS providers and any other financial solution have to make sure that they not only prevent themselves from becoming obsolete in the changing world, but also that they continue to be of value into the distant future.
There can be an argument about whether digitalisation of financial solutions is required or not. In this era of globalization, this is a silly question. With advancement of technology all over the world, the demand for digitalisation of financial sector is felt more than ever now. The whole world is connected today and we are a part of this global village. If we cannot keep up with the rest of the world, we will fall behind, or worse, we will be overtaken by global giants. So it is absolutely essential that we upgrade our system, even if gradually and in baby steps. We have to move to the advanced level and we have to move fast. They say if you are on time, you are already late. We cannot afford to waste any more time. Let us unlearn our old ways, relearn the new and embrace the future.

The writer is currently working as the Head of Corporate Communications at Nagad.
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