Many listed companies have decided to invest in fully-fledged digital banking operations considering the huge opportunity of generating profits in the era of digital transformation.
Banks see it as a way of expanding their virtual services to remotest corners of the country with lower investments compared to what traditional banking operations require.
On the other hand, companies, other than banks, which would like to be part of such an initiative, want to exploit the scope to diversify their business portfolios. They expect that profits from digital banking would offset any loss of income from their regular business functions in an unfavorable stretch of time.
"Young and next generations will fully be dependent on digital banking systems," said Managing Director of Pubali Bank Mohammad Ali, insisting that the prospect of a digital bank being a success is undeniable.
As per a provision, a digital bank will have to float an IPO (initial public offering) within five years after getting licence. That will increase the value of the investment made.
Digital banks will be able to offer small loans, an area not covered by mobile financial services and traditional banking, said company secretary of Unique Hotel & Resorts Md. Sharif Hasan.
A majority of the loans given by digital banks will be below Tk 0.05 million but the highest amount could be as much as Tk 100 million, said Mr Ali.
Quick loan sanctions and disbursements will be possible through digital banks, he added.
However, digital banks will not be allowed to conduct foreign transactions and corporate banking.
Fifteen banks have so far disclosed their intention to invest in digital banks. The banks include City Bank, Pubali Bank, Dutch-Bangla Bank, Eastern Bank, NCC Bank and Prime Bank.
According to the Bangladesh Bank guidelines, a digital bank shall require a registered head office to serve as the main point of contact for stakeholders, including the central bank and other regulators.
The registered head office shall host the offices of management and support staff. It will also serve as the hub for receiving and resolving customer complaints both physically and digitally.
It, however, shall not provide any over-the-counter (OTC) service, and shall not have any branch, sub-branch, window, agent, or any ATM/CDM/CRM of its own.
Bankers say services without physical operation of branches will help boost the profits of digital banks.
"Digital banking is the demand of the time," said Syed Mahbubur Rahman, managing director of Mututal Trust Bank.
Other than banks, Unique Hotel & Resorts, ACI, Navana Pharmaceuticals, Queen South Textile Mills, Aramit, Pragati Insurance, and Genex Infosys have sought permission for investing in digital banking.
Company secretary of Navana Pharmaceuticals Jounul Abedin said the company's sponsors had expertise in banking operations.
"They have taken the investment decision [in digital banking] to overcome the impact of any decline in profits from regular operations."
Company secretary of Queen South Textile Mills Md Massum Rana said all sponsors of the organisation were foreign investors who decided to invest in a digital bank to boost the company's profits.
As per the guidelines of the central bank, the paid-up capital of a digital bank will be Tk 1.25 billion.
The BB has so far received 52 applications to form digital banks.
Many have come up with proposals to form a consortium to launch a digital bank. Ten listed banks have disclosed a plan to found a digital bank jointly by investing Tk 125 million each.
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