Nagad to emerge as complete financial solution through digital bank

Bangladeshis inching towards the era of a digital bank with Nagad, a leading mobile financial service provider, leading from the front in terms of ascending with this next wave in banking.
The MFS carrier is well-equipped with all necessary products and services with a view to offering its customers all kinds of financial services on a single platform once it establishes a digital bank.
A total of 52 companies, including Nagad, have applied to secure a digital bank licence following the central bank's call for applications through its website. On 21 June, the application process began through the Bangladesh Bank's dedicated licence application portal and the deadline ended on 17 August.
Earlier, with the intent to widen and accelerate financial inclusion, the Bangladesh Bank formulated necessary guidelines and gave its go-ahead to the launch of digital banks, which will also create jobs for young IT workers.
According to Bangladesh Bank's guidelines, a paid-up capital of Tk 1.25 billion is required to set up a digital bank. The licencing will be under the Bank Company Act 1991, while the payment service will be carried out in line with the Bangladesh Payment and Settlement System Regulations-2014.
It is Nagad that first introduced the country and its people with the idea of Digital Bank, also known as neobank or virtual bank. Such a bank will provide all banking services completely through websites and mobile phone apps.
Financial industry experts say many people are already enjoying many banking services offered by MFS on their mobile phones amid fast-growing smartphone and internet users.
What they now seek is a complete financial solution on a single platform. But MFS providers have limitations, they cannot perform like a bank does, they also say.
Against this backdrop, it is high time for an MFS operator like Nagad to function as a digital bank. In this way, customers will get all their desired financial services on a single platform, the experts believe.
It is good news that the government is going to allow the operation of digital banks in Bangladesh, they also say, adding that this will change the entire banking experience for people by making available services at their fingertips.
A traditional bank operates through physical branches and locations, but a digital bank with little or no physical presence runs solely through their digital platforms, enabling customers to perform various financial transactions using digital devices such as smartphones, tablets, or computers.
In digital banking, customers can perform many of the same services that they would in a physical branch, such as opening accounts, checking account balances, transferring money between accounts, paying bills, applying for loans, and more.
Experts believe that digital banking in Bangladesh will make the lives of customers easier by allowing them access to banking services from anywhere at any time. Digital banks also have lower operating expenses than traditional ones as they do not have physical infrastructure, but rather rely more heavily on technology to provide customers with diversified services.
An important feature that makes digital banking popular worldwide is speed. Digital banks process transactions faster than traditional banks do because of the speed and efficiency of their digital platforms. Another thing is that digital banks put utmost importance on security and the use of advanced technologies with a view to protecting consumer data and preventing fraud.
Talking to FE, Muhammad Zahidul Islam, head of Public Relations at Nagad, said, "Nagad is ready to establish a digital bank. If we get a licence for a digital bank today, we will begin to provide people with services from the next day."
After launching the digital bank, Nagad will introduce single-digit and collateral-free loans for small informal businesses who now are to take loans from moneylenders even at 40% interest rate per day, he noted.
"Thus, we will motivate them to come under financial inclusion, thus putting their money into the formal channel," he also said.
To assess one's creditworthiness, Nagad has created an AI-based credit rating system that will analyse all transactions-related data available on public domains using one's NID and mobile number, Zahidul Islam pointed out.
The system will determine if giving a loan to a particular individual is safe or not," he also said.
"We believe that with a strong foundation and a vision for the future, Nagad is well-positioned to shape the future of digital banking in Bangladesh and contribute to the country's overall development," he added.