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Progression of FinTech in Bangladesh

Progression of FinTech in Bangladesh 

f you don’t know the definition of Financial Technology or Fintech, then it would be better to introduce you at first to Financial Technology, right? Financial Technology or in short, FinTech means using modern software and technologies in order to provide financial services through a business. The progression of FinTech in Bangladesh has become accelerate day by day.

Do you ever think about how any kind of worry, you get products delivered in your house within a short period nowadays? It is all because of FinTech. Using FinTech through your smart devices, now you can easily grab the opportunity of getting products at your hands without any trouble.

Actually, it’s all about Global FinTech progression and Bangladesh has also successfully become a part of this evolution. According to most people, FinTech is able to fulfill almost all digital age demands and also it’s definitely walking on that path. That’s how a new miracle FinTech is making happen.

The growth of the FinTech Industry in Bangladesh in recent years is just tremendous. People in Bangladesh are now getting out of the thought of exchanging cash and being highly dependent on mobile financial services. Simply, they are adopting the wide-ranging opportunities of fintech in Bangladesh

Thanks to FinTech, many people have been leading lives easily in this pandemic COVID-19. They can stay safe in their respective homes and still have uninterrupted service of getting food, groceries, and other products delivered so easily! Actually, the reason behind these is to automate and improve the FinTech industry in Bangladesh

FinTech Innovation in Bangladesh infographic

Most people mix up the Digital Financial Services (DFS) with Financial Technology, but they don’t know that Digital Financial Services is just a part of Financial Technology. It is a platform which is consisted of some financial services like savings, credits, payments, insurance, and remittances. FinTech is a large portion of Technology where the financial sector’s innovations are discussed. 

What is frustrating is that not many people are trying and interested to explore benefits and challenges coming in the way of fintech services in Bangladesh. As it’s very important to cope up with the global economy, there should be more consideration for improving opportunities of fintech in Bangladesh.

Turning The Wheel Of The Global FinTech Situation

No matter where you belong to, if FinTech is involved in the economy of your country, you’ll definitely observe the impression of FinTech on the financial inclusion of your country. In many countries, their economical condition is highly dependent on their fintech industry. 

It is expected that within 2022, the FinTech Industry will grow up to USD 310 billion globally and the expected annual growth is 25%. While until 2018, the growth was up to almost USD 128 billion. But the growing amount of 2019 clearly shows that the global fintech sector is yet to get maturity. 

Global FinTech Adoption Index 2019 by Ernst and Young stated that India and China are the leading countries in Global FinTech Sector by 87% adoption. Because of having 82% adoption,  South Africa and Russia are close to India and China.

Due to open banking, adoptions in many European countries like Ireland, the UK, and the Netherlands have also developed. Since 2015, in the case of globalization of the FinTech Industry, the highlighted countries are Singapore, Hong Kong, Canada, Australia, the US, and the UK. 

If you look carefully at the chart below, then you’ll get to see the comparison between these six popular FinTech Markets from 2015 to 2019 –  

Graph of comperision of fintech adoption in six market

FinTech Ecosystem of Bangladesh

Within 2020, approximately 5 billion Bangladeshi people and 20 billion devices are expected to adopt Digital Finance Service (DFS). If this actually happens, then Bangladesh will get to see some positive changes in the financial sector which will be both impactful and competitive. 

Like other developing countries, lately, Bangladesh has also accepted Financial Technology for betterment. FinTech has been creating opportunities since it has emerged in Bangladesh. It has wonderfully progressed financial services which have left a positive effect on economic activities. Customers are greatly consuming the benefits of fintech in Bangladesh

Though merely 47% of the population of Bangladesh is now involved with FinTech, hopefully, the rest 53% will be under the umbrella of FinTech very soon. But for that, Micro Finance Institutions (MFI) have to take major steps. MFI is the best way to include more people in FinTech.

Because of having high-quality mobile phones and easy access to the Internet, Bangladeshi people are getting engaged in Financial Technology at a large amount. From building accounts to paying off different bills or payments they are becoming highly dependent on this form of technology. 

process chart of fintech                                                                               Fig: Process of Fintech

Now, let’s learn at first about the popular fintech companies in Bangladesh which have been promoting Bangladesh Finance Technology. 

FinTech Startups in Bangladesh

In Bangladesh, to bring mass people close to financial services and basic banking, digital finance and FinTech have come along. This has helped to develop the fintech industry of Bangladesh. As of July 2019, there were 69 FinTech startups in Bangladesh. Most people think that these fintech startups are giving a tough competition to the banks. 

Top FinTech Startups in Bangladesh

Bangladeshi mobile financial service company bKash, which is dominated by BRAC Bank, is one of the initiating FinTech startups in Bangladesh. It stepped in this field in 2010 by possessing a market share of 80%. 

bKash’s funding was USD 11M by 2019. The popular terms – “Send Money”, “Cash in” and “Cash out” are the proofs of bKash’s popularity. The leading financial service provider of Bangladesh is now bKash as the highest number of people use bKash.

Another Bangladeshi startup named SureCash, founded in 2010 is also a contributor to the FinTech Industry of Bangladesh. In 2015, it got funding of US$7 million from Osiris Group and it’s other investors. Just like bKash, it also provides mobile banking facilities to approximately 7 lakhs people in Bangladesh.

iFarmer, founded in 2017, is known as a Bangladeshi crowdfunding platform. Bangladeshi people can engage themselves in investing in farming through the iFarmer. Landowners and farmers get connected with crop buyers and sponsors through this platform and earn benefits. Its funding was USD 74K by 2019.

Ajkerdeal, Rocket, NAGAD, Daraz, ShopUp, Uber, Pathao, etc. are other popular fintech services in Bangladesh.

FinTech in Bangladesh Banks

Many people consider banks as the “Center of the advancement of FinTech in Bangladesh”. Global Financial Service Industry has seen a great, positive change as the FinTech Firms in Bangladesh started rising. But still, nothing is more discussed in this sector than the banks adopting financial technology

Coming to the customer-oriented problems, some of them can be only solved by taking the help of financial technology as traditional banking services can’t solve them. That’s why in 2011, Bangladesh Bank issued a draft guideline where 28 banks got permission for providing mobile financial services in Bangladesh. This step certainly boosted the financial inclusion of Bangladesh.  

Dutch Bangla Bank Limited or DBBL, a popular mobile wallet company in Bangladesh has played a vital role in this field. It can be considered as one of the banks which brought fintech in Bangladesh banks. Because of DBBL, people started managing their finances through their mobile phones. Because of its tremendous services, DBBL has already received many prestigious awards.

As the majority of Bangladesh’s population is unbanked, United Commercial Bank Limited (UCBL) took an initiative to provide them with banking facilities. This initiative of UCBL is called UCash. People do online transactions through UCash.

City Bank is the leading bank in Bangladesh, which provides internet banking service. It launched “City Touch”, a digital banking app to make banking easier for Bangladeshi people. Per month almost BDT 550 crore worth transactions are done through their internet-banking channel. 

Eastern Bank Limited (EBL), Mutual Trust Bank (MTB), BRAC Bank, Standard Chartered Bank also offer online banking services to mass people of Bangladesh and have been improving Bangladesh Finance Technology. Respectively the banks use EBL Skybanking, MTB Smart Banking, BRAC Bank Mobile, SC Mobile Bangladesh to provide online banking services to their consumers. 

Bangladesh’s first-ever private sector bank, AB Bank also provides consumers with online banking services. According to their convenience, the consumers can log into their accounts anytime and complete banking procedures. 

Islami Bank Bangladesh Limited (IBBL), another popular bank of Bangladesh has declared that by the end of 2020, it will be launching real-time online investment banking means it will be concerned with FinTech too! Dhaka Bank Limited (DBL) has also planned to adjoin diversified FinTech Services with their banking services.

Banks in Bangladesh can which are still not concerned with Financial Technology can easily adopt it by taking some major steps like –

  • App-based Centralized Platform 
  • Algorithm-based Credit Evaluation 
  • Machine-driven Customer Service 
  • Micro Marketing using BIG Data
  • Fintech Startups Collaboration 

As soon as the banks start embracing fintech by taking the following actions, the promise of fintech for Bangladesh will be half fulfilled for sure.

Recent Activities of FinTech Through Banks in Bangladesh

  • The Government of Bangladesh has taken steps for the progression of FinTech in Bangladesh. So, right now apart from working on building a Digital Financial Services (DFS) friendly ecosystem, FinTech firms of Bangladesh are also focusing on the initiatives taken by Government.
  • Access to Information (a2i) and Bangladesh Bank has developed an initiative named Digital Financial Services (DFS) Lab, for expanding digital financial inclusion in Bangladesh. This lab is consistently working to increase financial elementary knowledge and assist rural e-commerce.
  • ICT Division and the Bangladesh Bank have also signed an MoU which will implement the initiative “Interoperable Digital Transaction Platform” (IDTP). The aim of this platform will be launching digital payment services in all sections. Also, FinTech Organizations of Bangladesh will be benefitted by adopting the “Application Programming Interface” (API), offered by this platform.
  • Digital Bangladesh’s mission of the Government is adopted by the central bank of Bangladesh. Other renowned banks are also focused to fulfill this dream of the Government. The Government’s “Digital Bangladesh Vision” includes –
  1. People Involvement
  2. Human Resource Development 
  3. Civil Services
  4. Use of Technology in Businesses 

Besides working on “Digital Bangladesh”, the Bangladeshi banks are working on making payments and remittance collecting process easier as now many Bangladeshis stay abroad.

Because of pandemic COVID-19, garments workers are getting salaries through permitted payment service providers. In total, the banks are trying at present hardly to understand the theme of “Global FinTech Progression and Bangladesh” and gradually making progress.

If transactions between March 2020 to June 2020 are noticed tactfully, it will be clearly seen that banks have witnessed more usage and gained much growth in this period [According to data provided by Bangladesh Bank].

Activation of Wallet Interoperability

In case of your having no idea about Wallet Interoperability, it is an idea of easy money transfer through a wallet. You can send money to a digital payment receiver merchant. Global people believe that Wallet Interoperability is something that can improve financial penetration and boost the e-commerce industry. 

Due to the pandemic COVID-19, people have realized how important it is to have options that serve you the opportunity to exchange money staying anywhere. For this, Wallet Interoperability is now a hot topic. DFS wallet is considered as a very important factor to affect the growth of the financial industry of any country. 

Wallet interoperability is one of the major factors which caused the Digital Financial Revolution of our neighboring country India. So, it is high time we realized the importance of wallet interoperability and start using it on a regular basis.

Bangladesh FinTech Summit 2019

In order to explore the benefits of fintech for mass people and to let Bangladesh achieve her potentiality, Bangladesh Brand Forum organized the very first “Bangladesh FinTech Summit 2019” on 23rd November 2019. 300+ financial professionals from all over the country attended this great event.

Chief Co-ordinator of Prime Minister’s office’s Sustainable Development Goals (SDGs) affairs, Md. Abul Kalam Azad attended the event as a panel member along with many other distinguished persons. This grand event was powered by Guardian Life, along with City Bank Limited and Access to Information (a2i).

Bangladesh’s First FinTech Summit‘s theme was “Shaping Future of Finance for People”. The theme was set with a goal to provide an all-accessible platform to the fintech companies and entrepreneurs. The summit stood for aspiring fintech companies in Bangladesh

The Bangladesh FinTech Summit 2019 was partitioned in different segments where local and international industry leaders took part –

  • 4 Keynote Sessions
  • 2 Insight Sessions 
  • 5 Panel Discussions
  • Case Study Presentation 
  • Breakout Sessions

At the end of the summit, everybody present there expected that playing a vital role, FinTech will be reshaping the financial industry and make it grow. 

Like other countries, Bangladesh is also facing troubles in digital transactions during this COVID-19 pandemic. But even in this crucial time, the financial inclusion of Bangladesh is trying hard to get faster because of FinTech. Bangladesh Bank has stated that in recent days, a 7% increase is noticed in the daily mobile financial services (MFS).

However, noticing all the major facts, the conclusion stands that FinTech is trying momently for creating a positive environment to provide smart but easy solutions to all kinds of financial problems in Bangladesh. Apart from competing toughly with traditional financial services, FinTech’s main aim is to improve each and every financial service.

Nobody can deny the fact that FinTech is the Future. So, just like the neighboring countries, the betterment of Bangladesh is lied in adopting FinTech in necessary sectors, driving a digital financial revolution, and reshaping this part of technology as soon as possible. The progression of FinTech in Bangladesh is beneficial for us.

Read More: Telemedicine in Bangladesh: Bringing Equity Among Citizen 

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