4G coverage in Bangladesh is still not very good. The four main operators cover 65 to 80 percent of the land area of Bangladesh. The video experience is less than 50%, the voice experience is less than 75%, and the download speed is between 6.2-7.2 Mbps, the latency experience is between 56.6 and 66, 7 ms. There were 66.44 million internet users (or 41%) in Bangladesh as of January 2020. 76.6% of mobile users in Bangladesh are cell phone users.
Smartphone penetration in Bangladesh is therefore still very low. The falling cost of smartphones and mobile data plan as well as 4G coverage can play a vital role in digital product innovation and process innovation. In some cases, mobile operators are unwilling to improve their broadband coverage in remote areas due to their low profitability. This hinders the growth of financial inclusion. There is therefore a viscous cycle. Low profitability does not encourage operators to improve the broadband network and low accessibility to digital service (including financial products) prevents end users from owning a smartphone and / or enjoying digital service.
Bangladesh has done a remarkable job in product innovation and process innovation in recent days. But in the model innovation category and the information category, we are far behind the international standard. We are not so focused on the final level of service. Our financial sectors are more concerned with the Core Banking System (CBS), the development of mobile applications, the alternative distribution channel, the operation of cards, etc. But in most cases, the products are not made to measure. It’s like a store with a few products and the end user has to choose their product from the shelf.
Bangladesh currently has around 600,000 credit card users. In the first quarter of 2018, the total number of plastic cards in circulation was 13,023,769. Like American Express in the United States, our banks / NBFI / MFS can promote the partnership of prepaid accounts with big box retailers and / or d ” other reputable retailers of different products / services / brands to offer differentiated products / services in a wider range for the same family offering different degrees of control (spending limit, alerts, product embargo, zone preference, etc. ).
In recent days, Bangladesh has made remarkable strides in payment systems and working capital loans for businesses that digitize transactions. Some of the mobile financial service providers allow the transfer of funds between banks and MFS. But it should offer more interoperability. Even users should be allowed and facilitated to transfer their / her from one MFS to another.
The inclusion of innovative products is a must at this time. It is high time to bring in a blockchain product that will integrate depositors, lenders and traders. In this regard, banks / NBFIs can provide cloud-based ERP to its merchant customers so that borrowers can enjoy greater flexibility in their record keeping. Another problem is the lack of technical and financial knowledge of traders. But it is obvious that our compatriots learn quickly. Whenever someone comes up with something new and innovative, a large part of the population adopts it. But banks / NBFIs need to go the extra mile in this regard.
The P2P platform is more and more popular around the world. In Bangladesh the only p2p platform might not work. But p2p based on a reliable platform can cause disruption. Suppose a farmer needs capital in a rural area, but no financial institution is likely to offer him capital. So (s) he must take his capital from an NGO at a very high interest rate like 30-40 percent. A job holder in a metropolitan city can easily finance a rural farmer at a rate of 15-20%. Both parties can benefit from such an agreement. Even SMEs could have access to the capital required in such a model.
So far, Bangladesh has made remarkable achievements in the field of international online remittance services. Agent banking and mobile financial services are becoming popular day by day. In this regard, international remittances are exceptionally made through the banking channel rather than the non-banking channel.
A product like instant online personal loan can provide more liquidity in the market. A merchant can meet their sudden need for capital with the availability and accessibility of an instant personal loan online. But lenders must have access to the customer’s transaction profile to automatically approve this loan. In Bangladesh, mobile phone operators offer an emergency balance to its customer based on historical usage. This could be an example of how to strategically think about designing a product like instant personal loan online. Recently, a local bank, a partner of the largest MFS provider, is offering such a product on a pilot basis. Super app like Sheba, Shohoz, Bkash can play a vital role in the introduction of online personal loan because they have access to the transaction profile of large merchants.
So many startups in Bangladesh perform on price comparison sites (eg pickaboo, amartaka) and service aggregators (sheba, shohoz, handymama). But the comparison is not from apple to apple. This often misleads customers.
The provision of financial information and education is not at all satisfactory. Often times people indulge in schemes like Ponzi and lose their hard earned money. A large portion of retail stock market investors exhibit speculative trading behavior. It is therefore high time to take the necessary steps to launch a national financial literacy program.
To achieve remarkable financial inclusion, nationwide broadband installation and innovation in financial services are essential.
Muhammad Oarisul Hasan Rifat, startup analyst.