Digital financial services must expand to address pandemic fallout
Bangladesh's financial sector will have to adopt new technologies and services in the post-Covid-19 period for the lenders to move their operations online and address the recent challenges faced by the industry, speakers said at a webinar yesterday.
The coronavirus could be a boon for digital financial services (DFS) and although Bangladesh has already seen early success in this regard, facilitative regulations, a risk management framework, digital infrastructure, effective data analytics, and capacity building are required to move forward, they said.
"The use of artificial intelligence is an alternative solution for increasing digital transactions amid the ongoing pandemic," said Aftab Ul Islam, a board member of the Bangladesh Bank.
Islam made the comments during the webinar styled "Digital innovations in financial services: the key to success in the post-Covid-19 world", jointly organised by the Resurgent Bangladesh and Deloitte yesterday.
About 96 per cent of the clients were accustomed to making transactions through traditional methods before the Covid-19 outbreak.
However, the younger generations are keen on using up-to-date technologies and services at banks, Islam said, adding that Bangladesh's policy-makers are seemingly stuck in the analogue era.
Md Ashadul Islam, senior secretary of the Financial Institutions Division, however, said that the government fully supports the expansion of DFS in the country and is ready to expedite any necessary changes to regulations.
Ali Reza Iftekhar, chairman of the Association of Bankers Bangladesh, said lenders are trying to control the number of non-performing loans.
If a bank's balance sheet is well-managed, then everything else falls into place, according to Iftekhar, also the managing director of Eastern Bank.
He went on to say that adopting new technologies will help avoid digital financial crimes.
"We have to understand Bangladesh's culture. The older generation is accustomed to physically visiting bank branches," Iftekhar added.
He called on local financial institutions to accept return submissions in digital format and said the use of online platforms will help reduce costs and enhance the banking sector's capacity to reach out to its customers.
Sanjoy Datta, the financial industry leader of Deloitte South Asia, said that digital financing is crucial for any economy to attain a sustainable high rate of growth.
The ongoing pandemic has significantly altered the consumer mindset, he added during his keynote speech.
Using digital financial transactions could be incentivised for customers as the service will help build a cashless society in Bangladesh, said Syed Mohammad Kamal, country manager of Mastercard International.
Lenders in Bangladesh are already preparing to provide their clients with contactless cards, he added.
Sonia Bashir Kabir, vice-chairperson and co-founder of DMoney, said that there is great potential for the expansion of DFS in the post-COVID-19 period.
The low-income groups could particularly benefit from the use of mobile applications to complete online transactions. The younger generation and the cottage and micro industries will enjoy better services through the use of enhanced technology in the financial sector, Kabir said.
BKash Chairman Shameran Abed said that mobile financial services help those with low incomes handle day-to-day transactions online. However, this does not include formal banking.
"We need financial inclusion for digital transactions," he said.
BKash manages the transactions for around 750,000 micro-finance clients of Brac Bank and this number is expected to double in about one year, Abed added.
Bangladesh's capital market is transforming in line with global standards in regards to digital transactions, said Asif Ibrahim, chairman of the Chattogram Stock Exchange.
Although mobile applications encourage the use of digital transactions in the capital market, completing transactions through such services is challenging for brokerage houses, the entrepreneur said.
Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said that the Covid-19 pandemic sped up the country's shift towards DFS, which was already making strides in regards to improving financial inclusion.
Embracing digital finance at a faster pace will help address recent challenges faced by the banking sector and improve financial inclusion, he added.
Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry, conducted the programme.
Syed Nasim Manzur, managing director of Apex Group; Syed Mahbubur Rahman, CEO of Mutual Trust Bank; Mehmood Husain, CEO of NRB Bank; Tarique Afzal, managing director of AB Bank; John Smith-Sreen, USAID Director for the Economic Growth Office; Abul Kasem Khan, chairman of the BUILD; Shams Mahmud, president of the Dhaka Chamber of Commerce and Industry, and Arijit Chowdhury, additional secretary of the finance ministry, also spoke.