Beyond mobile money: Is Bangladesh ready for the next phase of fintech?

In the history of Bangladesh's economy, some changes are clearly visible in factories, bridges, and power plants. Others unfold quietly, shaping people's everyday habits. Fintech belongs to this latter category of silent transformation.

Just a decade ago, banking meant standing in long queues at urban branches; today, a simple mobile phone has become the primary gateway for financial transactions. This shift is not merely technological; it carries deep implications for the structure of the economy, the distribution of economic power, and the country's future growth trajectory.

Fintech, or financial technology, broadly refers to the use of technology to simplify, accelerate, and enhance the inclusivity of financial services. Globally, the rise of fintech has been a response to the limitations of traditional banking systems. Bangladesh has followed a similar path. After independence, the country developed a largely state-owned, bank-centric financial system. Over time, inefficiency, a culture of loan default, and an urban bias in service delivery meant that this system failed to meet the needs of ordinary citizens. Rural communities, women, and small entrepreneurs were effectively left outside the formal banking net. It is within this vacuum that fintech gradually found its footing.

The most visible success of Bangladesh's fintech industry is undoubtedly the mobile financial services (MFS). bKash, Nagad, and Rocket are now household names across the country. bKash, launched with the support of BRAC Bank, has grown into Bangladesh's first and only fintech unicorn. Nagad, a digital initiative of the Bangladesh Post Office, plays a critical role in everyday transactions as well as in the distribution of government allowances. Rocket, pioneered by Dutch-Bangla Bank, was among the earliest MFS platforms to pave the way for digital banking. Alongside them, platforms such as Upay, Dmoney, and SureCash serve specific segments and use cases, enriching the broader ecosystem.

Statistics underscore the scale of this transformation. Bangladesh is now among the world's leading countries in MFS adoption. As of October 2024, more than 230 million MFS accounts had been registered. In fiscal year 2023-24, transactions through MFS exceeded Tk15 trillion. These figures represent more than technological progress; they signal a fundamental shift in financial behaviour. Garment workers' wages, remittance inflows from expatriates, and farmers' sales proceeds are increasingly flowing through digital channels.

Alongside the success of MFS, the digital payments ecosystem has expanded rapidly. Payment gateways such as SSLCommerz, AmarPay, ShurjoPay, and LebuPay have created a strong foundation for e-commerce and the SME sector. Nearly 700,000 merchants now accept QR-code-based payments. In urban areas, online and contactless transactions have become part of everyday life. Dependence on cash is gradually declining, leaving behind digital transaction trails that are crucial for tax collection and financial transparency.

Yet behind this visible progress lie deeper structural questions. The first is whether the expansion of digital transactions is translating into higher investment and production. The reality is sobering. Private investment growth has remained below expectations in recent years. At the same time, the government's growing reliance on bank borrowing has constrained credit availability for the private sector. Increased government borrowing from banks has created a "crowding out" effect, limiting resources for businesses and entrepreneurs.

In such a context, if fintech remains confined to facilitating transactions alone, its long-term economic impact will be limited. This is where digital lending and fintech-based credit solutions emerge as a potentially transformative force. Initiatives such as Shadhin FinTech, ShopUp's digital credit model, and iFarmer's invoice-based financing are opening alternative funding channels for SMEs and small entrepreneurs. Artificial intelligence-based credit scoring and the use of alternative data have made it possible to extend loans without relying solely on formal credit histories. In Bangladesh, digital lending and invoice factoring are growing at an estimated annual rate of around 30%, reflecting strong unmet demand.

Even so, these opportunities come with significant risks. Without clear and robust regulations, digital lending can easily become a source of high interest rates, opaque terms, and consumer exploitation. Experiences from neighbouring countries show that unregulated digital credit can trigger social distress. Innovation in this sector must therefore go hand in hand with strong consumer protection and transparent oversight.

InsurTech and WealthTech remain relatively nascent in Bangladesh but hold considerable promise. Digital insurance platforms can simplify health and life risk management, while WealthTech solutions can draw young and middle-income groups into formal investment channels. Yet here too, low levels of financial literacy and limited trust pose major barriers. Technology alone cannot deliver solutions; credible institutions and effective regulatory frameworks are essential.

Within this evolving ecosystem, Bangladesh Bank plays a pivotal role. The central bank has laid important foundations through MFS guidelines, the interoperable digital transaction platform "Binimoy," Bangla QR, the National Payment Switch Bangladesh, and the launch of the national debit card "TakaPay." The Regulatory FinTech Facilitation Office and sandbox initiatives have sent positive signals to innovators. Still, gaps remain.

Digital lending, data privacy, and cross-border payments lack a coherent, forward-looking policy roadmap. Data protection and cybersecurity have emerged as some of the most pressing challenges facing fintech. As digital transactions grow, so do the risks of fraud and data misuse. Yet Bangladesh's data protection laws and enforcement mechanisms remain weak by international standards. Trust is the cornerstone of any financial system, and without it, fintech cannot be sustainable. This is a reality policymakers must urgently confront.

Another critical issue is the digital divide. Disparities between urban and rural areas and between educated and less-educated populations remain stark. Limited access to smartphones, affordable internet, and financial knowledge continues to exclude many from the digital revolution. If fintech is to be genuinely inclusive, priority must be given to infrastructure development, affordable connectivity, and large-scale financial literacy programmes.

International experience offers valuable lessons. Fintech ecosystems reach maturity only when interoperability and open banking are firmly in place. India's Unified Payments Interface (UPI) now processes billions of transactions each month. China has integrated payments, commerce, and social platforms through Alipay and WeChat Pay. Bangladesh is moving in this direction, but bolder decisions are needed, particularly to simplify international payment gateways, remittance flows, and cross-border transfers.

Fintech presents Bangladesh with both opportunity and obligation. If it remains confined to moving money faster, its economic impact will be modest. But if backed by clear policy, strong regulation, and a deliberate link to investment, productivity, and job creation, fintech can reshape how growth is financed and shared. The shifts now visible in 2025 from telco-led financial services, such as Banglalink's expanding role to deeper integration between payments, credit, and everyday commerce, suggest that the industry is entering a more consequential phase.

Whether this momentum translates into broad-based economic value will depend on choices made today. The real question is no longer whether fintech will grow in Bangladesh, but whether it will grow in a way that strengthens the economy rather than merely digitising its transactions.

The writer is a fourth-year student of the Mass Communication and Journalism Department at University of Dhaka.

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.