Access to financial services has been an increasingly important topic over past decades as developing nations strive towards improving standards of living and ending poverty. Financial inclusion enables and empowers both individuals and communities as individuals will gain the ability to better manage their own wealth while collectively they can enjoy inclusive growth. China has achieved exceptional success in this aspect (rate of account ownership seeing a significant jump from 64% in 2011 to 80% in 2017, with credit given to effective regulatory policies and high levels of mobile adoption and e-payments, driven by government support.
Bangladesh has also come a long way in bringing affordable and sustainable financial products and services to its citizens. Recent efforts like the push for Mobile Financial Services (MFS) in 2011 have steered the nation on the right trajectory. MFS is the approach of leveraging the combination of banking and mobile wireless networks to provide financial services to even the most rural parts of the nation. An important aspect of MFS is the use of bank designated agents to allow financial transactions to be made at locations outside of the bank branch network using mobile phones.
Since then, Bangladesh has improved on many of the key metrics – 41% are financially included (up from 32% in 2011) and 13.8% of the population live below the international extreme poverty line (down from 18.5% in 2010). According to these figures, about 8 million Bangladeshis have climbed out of poverty since 2010. Bangladesh also has a rapidly growing MFS industry, with currently 18 banks in the service and over 800,00 agents. The use of mobile money has also seen a steady increase over the past years, both frequency and size of transactions.
A frontrunner has emerged in the MFS industry. As at July 2016 bKash, a subsidiary of BRAC Bank, captured about 89% of total mobile transactions. However, these transactions in Bangladesh are largely basic – mainly cash in and cash out. As the nation captures more of the unbanked moving forward, there is an opportunity to provide a better and more comprehensive service such as merchant and utility payments to the underbanked Bangladeshis.
Ant Financial, operator of Alipay, has recognized this opportunity and recently announced a strategic partnership with bKash in April 2018 to promote financial inclusion for both communities – the unbanked and underbanked. Besides the monetary investment, bKash will be able to tap on the expertise of Ant Financial. bKash can look to learn from the success of Alipay in China, increase its technological capabilities and bring about greater value to Bangladeshis. This is not the only investment the Chinese behemoth has made regionally as it has forayed into many Asian markets through joint ventures and investments.
In short, the financial inclusion situation of Bangladesh looks to evolve in the coming decades. Innovative solutions like bKash will help in moving the nation forward, supporting both the unbanked and underbanked communities of Bangladesh. External parties like in the case of Ant Financial, will also give impetus to financial inclusion in Bangladesh.