Many banks show little interest in digital transformation: Experts

While Bangladesh is pushing for a cashless economy, Fintech experts and former banking executives warn that many commercial bank boards only focus on maintaining profits without showing interest in digital transformation.

Speaking at the "Economic Reform Summit 2025" in Dhaka today, experts argued that investing in financial inclusion and services for small-scale customers is the key to sustainable banking.

Md Arfan Ali, Chairman of Jaitun Business Solutions and former managing director of Bank Asia, presented the keynote on "Cashless Economy & Financial Inclusion." He was joined by Mohammad Rashed, additional director of the Payment Systems Department at Bangladesh Bank, and Shahadat Khan, CEO of TallyKhata.

Profit-first mentality

Arfan Ali highlighted a major resistance to change, stating that when the Bangladesh Bank called meetings with managing directors (MDs) to push for greater digitisation, many bank MDs expressed helplessness, citing board reluctance.

"The very banks that cited helplessness over digitisation are now in a very bad state," Ali noted. "Approximately Tk2 to Tk2.5 lakh crore has been misappropriated from these banks through various irregularities."

He said he personally witnessed board opposition at Bangladesh Bank meetings, where directors believed their duty was "solely to maintain their jobs or profits."

Ali also criticised banks for neglecting inclusion, pointing out that many commercial banks are unwilling to open accounts for customers with balances under Tk20,000 or issue chequebooks unless the balance is over Tk10,000. This is despite the Bangladesh Bank later mandating via circular that no charges should be applied for balances under Tk5,000.

"The question remains: can banks that declare annual profits exceeding a Tk1,000 crore not spend a portion of their earnings on inclusion or improving services for lower-income groups?" he asked.

According to Bangladesh Bank statistics, the country has approximately 13.34 crore savings accounts, covering about 12 crore people under banking services. However, Ali stressed that a large number of these accounts are dormant, with many people unaware that an account (often opened with Tk10) exists in their name.

Revival of interoperable payment system

Bangladesh Bank official Mohammad Rashed discussed the central bank's efforts to reintroduce an interoperable payment system linking banks, MFS, and PSPs.

"The central bank launched a unified Interoperable Payment System under the NPSB in 2020, but political pressure later forced its suspension," he said. "At the time, the government pursued its own platform, Binimoy, developed by the ICT Division's IDEA project at a cost of around Tk65 crore. That platform has since been discontinued under the current central bank leadership."

Rashed added that the revived system follows an open and competitive model, allowing banks and payment providers to compete on service quality. "Across banks and microfinance institutions, Bangladesh now has about 34 crore savings and current accounts. We expect leading microfinance institutions, including Grameen Bank and other major NGOs, to join the platform within the next month."

He also highlighted plans to make the unified "Bangla QR Code" for banks, MFS and payment service providers (PSPs) mandatory next year. "Each account or wallet will have a unique QR code, enabling instant transactions by simply scanning it – regardless of the provider. This will be a landmark step toward digital payments," he said, adding that the feature could reach up to 10 crore bank accounts nationwide.

Fintechs driving inclusion

TallyKhata CEO Shahadat Khan highlighted his company's role in bringing small businesses into the digital ecosystem. "Over one million shop owners currently use our platform to manage daily accounts and accept QR payments," he said. "With our PSP licence from the Bangladesh Bank, we now offer full digital payment services."

He pointed out that South Asian peers have already advanced significantly in interoperable payments. "India launched its Unified Payment Interface (UPI) in 2016, where an average user makes 21 transactions a month. Pakistan followed in 2022, and Sri Lanka in 2018. We are just beginning that journey," he said.

Shahadat noted that, unlike neighbouring countries, Bangladesh still charges between Tk1.5 and Tk8.5 per Tk1,000 transferred. "Despite nearly Tk20,000 crore in cash transactions entering digital channels each year, most of it eventually returns to cash form. To achieve a truly cashless economy, we must break this cash cycle," he added.