Edging the DFS market to the tipping point
Speakers at a high-level roundtable stressed on the urgency for an appropriate regulatory framework to incentivise providers and investments in financial literacy to create demand and minimise risks.
Organised by the UN Capital Development Fund (UNCDF), this roundtable acknowledged the leadership of Bangladesh in Digital Financial Services (DFS), with necessity for more practical and real data availability in-country to inform and further drive financial inclusion. There is an opportunity to use available data to create evidence that can shape appropriate regulation and risk management frameworks.
Striving to contribute to bringing about Bangladesh's national development objectives, as set forth in the Seventh Five-Year Plan (SFYP), major stakeholders including regulators, government officials, researchers, telecommunications officials, bankers, and MFS and DFS providers attended this UNCDF discussion.
Lauding the Bangladesh's regulatory framework on mobile financial services, the former Bangladesh Bank’s (BB) Deputy Governor, Mr. Rumee Ali, said it was time to revise the framework, with adequate incentives and encouragement from the regulators, for further acceleration and deepening of DFS.
Speakers suggested that the regulatory framework should have sufficient safeguards to prevent fraud and abuse given the context of low financial literacy, which was flagged as additional barrier to the fast expansion of DFS in Bangladesh.
Discussants agreed that considering the phenomenal growth in the DFS sector with products like Bkash and Rocket becoming household names, Bangladesh is an example for many other countries in the world.
Kamal Qadir, head of Bkash, said that Bangladesh had a large volume of data from the last six years that many global players are examining over for solutions. This same data would also be adequate to point towards solutions to accelerate DFS for Bangladesh, as well.
The speakers recommended introduction of interoperability among DFS providers, thus facilitating increase in access and use of DFS and thereby hastening sectoral growth for sustainable and inclusive economic growth and poverty reduction.
Mr. Md. Eunusur Rahman, Secretary of the Bank and Financial Institutions Division (BFID) of the Ministry of Finance (MoF), attending as a chief guest, highlighted that "DFS is the only alternative to deliver financial service to 60% unbanked adult population of the country."
Eminent economist, Dr. Mustafa K Mujeri, said, while presenting his keynote paper, that inclusion of women as DFS agents would be beneficial and more viable as women perform better than men in managing liquidity, building trust and giving confidence to the clients.
Bangladesh Bank deputy governor, Mr. S. K. Sur Chowdhury, suggested that the regulators, policymakers and providers would have to collaborate and work together to find ways to limit hundi through digital channels and better management of risks in DFS.
The high-level roundtable dialogue titled “Role of Digital Financial Services in Promoting Inclusive Growth: Challenges and Opportunities” held at Pan Pacific Sonargaon Hotel in Dhaka was also attended by Dr Shahjahan Mahmood, Chairman of Bangladesh Telecommunication Regulatory Commission (BTRC), and Mr Sudipto Mukerjee, Country Director of the United Nations Development Programme (UNDP).
Mr Feisal Hussain, UNCDF Regional Coordinator for Asia, moderated the dialogue.
Among others, Mr. Md. Ashraful Alam, from UNCDF’s Dhaka Office, representatives from the BB and BTRC, policy think tanks and research organizations, banks and financial institutions, financial service providers and Mobile Network Operators and business associations attended the event and shared their ideas and opinions on aspects of digital and mobile financial services.