If we knew about Bangladesh 10 years ago, it was all about a country thrived to develop and the young generation was struggling about to change the way they live. Now the situation is almost changed. According to World Bank, Bangladesh is among the five fastest growing economies of the world. The current ruling govt. Bangladesh Awami League lead by prime minister Sheikh Hasina came in power in 2009 with a modern vision of “Digital Bangladesh” to build a modern country powered by digitization everywhere and the government made technology accessible by majority of it’s 17 crore population. The country has now 4G in major metropoliton areas, cities. After analyzing current economy and tech industry we can see a future of Bangladesh that is moving towards “cashless” economy.
There are numerous number of digital payment system has been developed in Bangladesh and the market is growing tremendously. Major Banks are investing in it’s fin-Tech sector. According to one of the oldest and prominent news paper The Daily Star, in 2016 12% of total transaction went through digital means and rest of the 88% by cash. The picture of course changed in last 2 years. In the same report we learned that in 2018 digital 18% of total transaction went through digital means. 50% increase in 2 years. This number is increase because of card based payment system, mobile finance service, app based payment and digital wallets.
How Mobile Financial Services (MFS) is growing in Bangladesh
According to the report from Bangladesh Bank website, in 2015 $18,665 million were transacted through mobile finance service and in 2018 that value went up to $44,823 million. In 3 years it increased 250%. That’s incredible and a clear sign that people are considering mobile finance service convenient. In January 2015, average daily transaction through MFS (mobile finance service) was $44 million that increased 300% in 2018 and the daily transaction (average) amount is $122.4 million. Tech Matra created a chart based on the data found from Bangladesh Bank statistics.
Note: Reports are based on the data found from Bangladesh Bank. All values are in BDT currency
Card based payment system is growing in number
More people are feeling convenient to do their day to day transaction via credit/debit card. According to a report released from Bangladesh Bank, in February 2019 there were total 146,60,431 debit card, 11,36,473 credit card, 2,32,971 prepaid cards issued by various banks in Bangladesh. Last couple years Banks increased credit card selling. Also for traveling and online purchase purpose people feel convenient to use prepaid card.
People are now using POS terminal to purchase items from store. From the same report, Tech Matra has revealed that in January 2018 there were total 3,55,265 no. of POS transaction. Banks and other financial institutions are encouraging store owners to use POS terminal for their store. In almost all major cities, popular shopping malls have the POS terminal payment facility. But still lots of people feel comfortable to buy things with cash instead of card. In this growing economy the most important challenge is for the government is to ensure security and prevent fraud and abusing of the modern financial systems.
E-Commerce is flourishing so fast
In Bangladesh, E-Commerce industry is growing super fast. Already there are some major players are in the e-commerce game here as well as few local companies are getting foreign investment in e-commerce sector. Still, there is a big lacking of logistics and transportation facility in Bangladesh specially for e-commerce but new new services are growing fast to provide better and smart logistics facility to the e-commerce provider.
95% of the transaction in Bangladeshi e-commerce are still in “Cash on delivery”. This is a major weakness in the industry. To remove this weakness, people should feel secure when they will buy something from e-commerce with their card or mobile money. Outside Dhaka city, people are not still feeling comfortable to pay the seller before getting products because of trust and reliability. But of course the situation will eventually change.
We traveled through Dhaka streets, shopping malls and most of the people are now keeping at least one credit or debit card in their wallet. Young generation of this country are more conscious and they are getting habituated to the modern system.
Businesses are booming for mobile based payment service provider
bKash is the most popular mobile based payment service provider in Bangladesh. bKash placed their position in Fortune magazine “change the world” list in 2017. According to Fortune magazine, 22% of adults (year of 2017) are now using bKash for their daily financial transactions. Besides bKash, there are lots of mobile based payment service providers like Nagad (by local Govt.), Rocket by DBBL Bank, T-Cash and so many more.
Services you can avail from mobile phone
Currently almost for every service you can pay bills, buy items from your mobile phone. Here is a list of few services Bangladeshis are enjoying right from their mobile phone –
- Mobile recharge
- E-Commerce payment
- Mobile payment at shop
- Utility bill payment
- P2P (Person to person) fund transfer
- Load money from Bank, withdraw from Bank
- Receive foreign remittance in mobile wallet
- Pay tuition fees to financial institutions
Technology advancement means there are new challenges
As much as you will implement modern technology infrastructures, you need will face some growing challenges. Bangladeshi top financial regulatory institution Bangladesh Bank already faced a very hard loss due to Bangladesh Bank cyber heist that occurred in February 2016. This means security should be a top priority for the government and other financial regulatory bodies. Financial fraud and abusing the technology is another challenge. Due to lack of proper training and consciousness sometimes bad people are stealing money from digital payment system (mobile money service providers, ATM fraud, etc). Even recently bKash started running a TV commercials to grow awareness to people for preventing unauthorized access to their bKash account. Most recently there was another ATM booth fraud happened and that was covered by almost all local print and online media. So all this is a sign of major setback. Authorities are also protecting consumers proactively. Security and awareness can be the most challenging factors in Bangladeshi growing economy. It requires strict policy, central authority, monitoring and other necessary and effective measure to prevent slowing the speed of going cashless.
Also app based digital wallet like iPay and other services are doing great to make a successful “cashless” nation. So if we closely see all the facts and statistics of Bangladeshi digital payment system, it seems revolutionary and certainly Bangladesh is moving towards a “cashless” nation very soon. But there are lots of challenge ahead for the government, financial service authority and other related parties to gain trust from people, ensuring security, reliability, privacy, money laundering and other factors. We hope one day Bangladesh will be transformed from developing to developed countries and that day is just knocking on the door of Bangladesh.