Banking in your hands: The promise of digital banks in Bangladesh

Illustration: TBS

In the dynamic economic landscape of Bangladesh, where technological strides are steering the nation towards a digital future, the imminent arrival of branchless digital banks emerges as a pivotal contributor. 

These innovative banks are not mere financial institutions; they are pioneers of transformation, set to reshape how people in Bangladesh access and manage their finances. With their impending introduction, they are poised to play a significant role in propelling the digital evolution of the nation. The traditional banking paradigm is evolving to embrace the era of digital inclusivity.

In a country already acquainted with Mobile Financial Services (MFS), agent banking, and traditional brick-and-mortar branches, the ascent of branchless digital banks represents a paradigm shift. Bangladesh is poised to redefine the concept of banking itself. These digital banks are set to revolutionise how individuals access and engage with financial services. The emergence of branchless digital banks will shape the financial horizon.

Around the world, countries have harnessed the power of branchless digital banking to redefine financial inclusion. The success stories of Kenya's M-Pesa and India's Paytm Payments Bank serve as inspirations. These examples underscore how digital platforms can bridge financial divides, empower communities, and stimulate economic growth. As Bangladesh treads the path of digital banking, these stories offer invaluable insights.

The transition to branchless digital banks is a significant stride towards Bangladesh's aspiration of becoming a digital nation. With a population that is increasingly connected through the internet, social media, and mobile devices, the convenience and accessibility of digital banking align perfectly with the government's Digital Bangladesh vision. These digital banks will bridge the gap between urban and rural areas, ensuring that all citizens can avail themselves of financial services with ease.

As financial activities move into the digital realm, cybersecurity becomes paramount. Safeguarding customer data, sensitive financial information, and transactions from cyber threats becomes non-negotiable. Robust cybersecurity measures, encompassing encryption, multi-factor authentication, real-time monitoring, and regular audits, form the foundation of secure digital banking.

Crafting a cybersecurity strategy for branchless digital banks requires a multi-layered approach. The "Defence in Depth" strategy layers security mechanisms, creating a resilient defence. "Security by Design" integrates security into every stage of development. The "Zero Trust" approach treats every interaction sceptically, fostering an environment of constant vigilance.

To ensure the longevity of secure digital banking, a cybersecurity roadmap should be established. This roadmap might encompass regular security assessments, stringent encryption protocols, advanced threat detection systems, continuous employee training, and collaboration with cybersecurity experts. This proactive approach fortifies the digital infrastructure against evolving threats.

The rise of branchless digital banks has the potential to breathe new life into Bangladesh's economy. With reduced costs associated with physical branches, these banks can channel resources into offering more competitive interest rates and services. Tailoring financial products through data analytics enhances customer satisfaction and loyalty, catalysing economic growth.

Digital banks offer a transformative opportunity to enhance financial inclusion. They can bridge geographical barriers and provide access to banking services to those who were previously excluded. This is crucial in a country where rural communities often lack access to traditional bank branches. The digital platform allows individuals to conveniently manage their finances and engage in transactions, promoting financial literacy and inclusion.

Branchless digital banks also have the potential to embrace green banking values. By operating digitally, they can reduce the need for paper transactions and minimise their carbon footprint. This aligns with global trends towards sustainable banking practices and resonates with a population that is increasingly environmentally conscious.

One of the most promising aspects of branchless digital banks is their potential to uplift rural communities. By providing easy access to financial services, these banks can facilitate micro-loans, agricultural financing, and small business support. This empowerment can drive economic growth at the grassroots level, contributing to poverty reduction and rural development.

The emergence of digital banks can also play a pivotal role in enhancing digital literacy among youth. As the younger generation engages with these platforms, they develop familiarity with digital transactions, payments, and financial management. This, in turn, fosters a tech-savvy population that is better prepared for the demands of a digital economy.

Branchless digital banks can align with government initiatives aimed at financial inclusion and digital empowerment. Collaborative efforts can integrate these banks into the fabric of national policies, driving financial accessibility to all corners of the country and contributing to the realisation of digital Bangladesh.

Strategic marketing efforts are paramount to ensure the success of branchless digital banks. Organisations can launch awareness campaigns through these platforms by leveraging the population's affinity for the internet, social media, and mobile devices. Engaging content, informative webinars, interactive tutorials, and partnerships with influencers can promote digital banking and encourage its adoption.

The imminent rise of branchless digital banks is set to usher in a new era of financial services in Bangladesh. The country stands on the brink of a financial revolution that will enhance accessibility, elevate green banking values, empower rural communities, nurture digital literacy, and collaborate with government initiatives. 

By embracing these forthcoming financial institutions, Bangladesh propels itself not merely towards a digital future but towards a future that is equitable, prosperous, and in sync with the rhythms of environmental responsibility.

B M Zahid-ul Haque is a CISO and cyber digital transformation strategist. He can be reached at bmzahidul.haque@gmail.com.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.