'Digital banks shouldn't be considered traditional ones' advanced version'

It would be a mistake to consider digital banks as simply an advanced digital version of traditional banks, said technology entrepreneurs as they highlighted the fact that digital banks have successfully revolutionised financial inclusion in other countries.

At a roundtable on the theme, "Digital Banks: Prospects and Way Forward," the participants observed that if a digital bank policy is formulated in the manner of the traditional banking system, the main objective of establishing digital banks will not be achieved.

Russell T Ahmed, president of the Bangladesh Association of Software and Information Service (BASIS), put forward several recommendations for creating digital bank licence guidelines.

"The more digital bank licences can be opened, the more innovation will come in this field. Specific conditions may be given if necessary," he said at the event organised by BASIS at its auditorium on Wednesday.

"There should be a requirement for at least one-third of the ownership of each digital bank to be owned by technology sector organisations or entrepreneurs. Banking experience should not be mandatory for one to become CEO of a digital bank," he added.

He said that as technology entrepreneurs in Bangladesh have successfully used technology to bring new innovations in the field of mobile financial services, digital banks should also be created under the leadership of technology entrepreneurs.

Of course, they will work with bankers as per their requirements. In this case, the government should take the necessary initiatives to ensure that the new digital bank licence is not limited to only large corporate groups, the BASIS president continued.

BASIS welcomed the government's initiative to establish digital banks but expressed disappointment over its not taking the opinion of the technology sector into account and ensuring the participation of technology entrepreneurs in this important endeavour aimed at creating a smart and cashless Bangladesh.

The roundtable saw the participation of representatives from over 50 fintech companies, financial software companies, banks and mobile financial institutions.

In a keynote presentation, Shahadat Khan, founder and CEO of TallyKhata, TallyPay, cited instances of how digital banks in other countries have drawn large unbanked populations into banking services.

He said that currently the most deprived in terms of banking services are traders involved in small and cottage industries. No bank wants to give them a loan because they don't have any information about them. These small entrepreneurs are forced to take out loans from NGOs at 24% interest per year. Digital banks can provide banking services to this large population at a much lower cost.

"It requires smartphone technology, data technology and artificial intelligence. Appropriate use of these technologies requires innovative technology entrepreneurs and technology professionals to lead digital banking," he added.

Former BASIS president and chairman of the fintech standing committee, AKM Fahim Masroor, conducted the discussion.