MFS industry ready for further jump to make cashless society

Bangladesh's mobile financial service (MFS) industry is getting prepared to provide a complete digital financial solution aiming to create a cashless society, said sector insiders and experts.

They also mentioned that the industry has the potential to receive another 4-5 large operators like bKash each with a $3 billion to $4 billion investment by the next decade to develop a digital financial ecosystem.

The existing top five MFS providers also have the potential to inject another about $4 billion fresh investment alongside the industry's current investment worth about $8 billion, they added.

Khondokar Shakhawat Ali, a sociologist, and researcher who has been in the MFS sector since its inception said the current operators have the potential for further investments to introduce new services and products, adding that new investments are required for technology and skilled manpower.

New investments may come from foreign sources if the central bank and other regulators provide policy support to make a complaint industry, he observed. This will help to ensure financial inclusion and create more scopes for self-employment and entrepreneurs, he said.

Quality investment, robust technology, distribution network, and quality management to maintain regulatory compliance are very important in attracting new investments for further development of the sector, Khondokar Shakhawat Ali said, adding, "Regulators may set standards based on best practices within the industry and make it more competitive within the service providers."

Policy should encourage reducing the use of cash-out to minimise consumer cost and increase people's MFS literacy to make them aware of its misuse, he added.

Cybersecurity will be a major challenge in the coming days for regulators and operators, and more investments will be needed in this area by both parties, noted Shakhawat Ali. The government may introduce insurance to provide protection for consumers' money, he suggested.

In this regard, Major General (retd) Sheikh Md Monirul Islam, chief external and corporate affairs officer of bKash, told TBS that as a fintech company, bKash's main goal is to bring freedom and capability to people's financial activities by making financial transactions easy, safe and hassle-free through innovation and customer-centric services.

Besides ensuring financial inclusion in this way, bKash is playing a role in creating a strong digital ecosystem in the country, he said. In this regard, foreign investments that consistently came at the right time have been instrumental in ensuring customer comfort and safety and playing an important role in creating a sustainable business model, he added.

bKash App is playing a role in creating a digital lifestyle for all types of customers by bringing daily transactions to their fingertips, he mentioned, adding that the MFS company will continue to launch new customer-friendly services and make technological innovations in the days ahead.

Binimoy, an interoperable digital transaction platform (IDTP) launched by the government recently, will make all kinds of financial services transparent and easy in the coming days, through which salary payments, remittance sending, tax payments, utility bills payments, and e-commerce transactions will be done soon, said Monirul Islam.

"Hopefully, this will bring dynamism to the economy and facilitate socio-economic progress. The exchange is soon going to contribute significantly to the realisation of the "Digital Bangladesh" dream," added the bKash executive.

Bangladesh Post Office's digital financial service, Nagad, has gained a strong customer base within a short time of inception.

Speaking about Nagad's future focus, its high officials told TBS that the company has received a handsome amount of foreign investments in different forms, and it is now waiting for the final approval of the authorities concerned to issue a zero-coupon bond worth around $30 million.

"Besides, observing the growth trend and prospects of Nagad, a good number of international investors and tech giants are showing interest in investing in this mobile money venture. Right now, I can only say Nagad will come up with some surprises for the industry in terms of foreign investments by 2023," said Nagad Managing Director Tanvir A Mishuk.

Nagad is now working on establishing a digital bank, which will help to bring the unbanked under financial inclusion and take users' life to a digital space, he added.

All financial services will be available on mobile phones over the next decade and Nagad wants to lead the market with its innovative and people-oriented services, including a good number of micro products, he further said.

New entrant upay, a subsidiary of United Commercial Bank Limited (UCBL), also envisions bringing innovation to the market in terms of security, convenience, and affordability, its Chief Strategy Officer Ziaur Rahman told TBS.

"We have set a target for changing the behaviour of MFS customers and improving the total ecosystem. We are working on new initiatives such as nano loan, savings, and insurance products for our customers in cooperation with banks and financial institutions. Besides, we are also focusing on segment-specific products targeting our women customers," he said.

People do not use the entire amount deposited in their MFS accounts. MFS institutions deposit the unused balance in various banks, and some invest in government treasury bills and bonds and earn huge interest.

The central bank has developed a "Trust Cum Settlement Account" policy to make sure no one can misuse customers' money.

The volume of customer deposits in MFS institutions was Tk9,293 crore in July this year. In April the highest Tk12,479 crore was deposited in the MFS accounts, while the second highest of Tk10,869 crore was in June.