Bangladesh's upcoming digital banking landscape
The Bangladesh economy is on an outstanding growth trajectory, with a 57% rise in financial inclusion between 2013 and 2018, and a 31.5% internet penetration rate at the start of 2022. To accelerate financial inclusion, Bangladesh Bank is promoting digital banking to encourage the broad adoption of financial products and services. The number of Internet banking customers in February this year was 3.38 million, and the number of total mobile banking accounts including the popular Mobile Financial Services (such as Bkash, Rocket, etc.) was 194.1 million.
Bangladesh Bank also launched Real Time Gross Settlement (BD-RTGS) system on 29th October 2015 to facilitate safe, secured and efficient interbank payment system. Banks face challenges in implementing digital banking such as shifts in banking habits and products through innovation, infrastructure issues, security concerns, technical issues, lack of personal relationships, and growing customer expectations. Payment Systems Department (PSD) reviews market demand, business rationale, and regulatory requirements.
The Bangladesh government has shifted its focus to E-KYC (Electronic Know Your Customer) to encourage people to include themselves financially and eliminate tax fraud. Bangladesh Bank has published a guideline to increase their e-KYC within 2024-25, which states that using digital methods to quickly confirm a customer's identity or biometric information speeds up the KYC procedure. The rule is applicable to all businesses with BB licenses, including banks, non-bank financial organizations, insurance providers, capital market intermediaries, and others. The government is also considering a Bangladesh Bank digital currency, which will facilitate currency in virtual transactions and encourage startups and e-commerce businesses. However, payment fraud is one significant risk that can be attributed to the increasing use of digital money. The regulator and all relevant parties should work together to prepare proper planning and framework for implementing and operating digital banking in Bangladesh.
To establish digital banking, the idea of digital identity should be considered with the utmost priority. Digital identification is crucial in the Bangladeshi financial model to ensure access to government services, financial inclusion, and secure online transactions. It can also help reduce fraud and corruption while promoting transparency and accountability. 12iD aims to facilitate these services in the Bangladesh market by not only providing a digital identity solution but also letting the autonomous bodies stay in data control with our blockchain ledger technology, where we don't store, share, process or capitalize on data.
Image by pvproductions on Freepik
