digital financial inclusion in bangladesh: a citizen's perspective
TRANSCRIPT
Digital Financial Inclusion in Bangladesh: A Citizen’s Perspective
Anir ChowdhuryPolicy Advisor, Access to Information (a2i)
Prime Minister’s Office, BangladeshFebruary 13, 2016
Digital Bangladesh Vision 2021
1. Strong middle-income economy2. Inclusive development3. Citizen-centric service
transformation4. Bottom-up execution5. No digital divide
Digital Financial Inclusion: Components
SavingsSaving A/C,
Transactions, Statement
LoansHouse,
Livestock, Business, Education
Insurance
Health, Life, Accident,
Crop, Livestock
Fund TransferP2P, P2G, B2P, P2B
G2P (Salaries, Pensions,
Social Payments)
Status1. Access has
increased significantly
2. Usage is still low3. Digitization for
mostly P2P fund transfer
4. Inadequate products
5. Financial literacy low
Where Are We? Tk 10 accounts
Reduced exclusion rapidly(15+ million accounts)
Mostly dormant Mobile money
30 million customers, $60+M transacted a day, 1 dominant player (85%)
80+% OTC limited usage of own wallets but huge P2P
1. Are we focusing on non-P2P digital payments?2. Individual wallets necessary for most non-P2P
payments
Payments & Remittances
P2P, P2G, B2P, P2B
G2P (Salaries, Pensions, Social
Payments)
SarbatiAbove 90 yearsWidow HH Monthly Income: Only allowances that she receives from Govt.
She needs to be accompanied by a member of the family to collect the allowance
She has to spent 120 taka conveyance fare to collect the allowance from bank.
She needs to wait for hours in queue often in harsh weather conditions
REALITY:
Persona 1: Unbanked Hard-Core Poor
1. Need to have G2P cashout points nearby
2. What other financial products will she need?
3. What does financial inclusion mean to her?
Persona 2: Partially BankedSalma36 years, mother of 3Housewife, husband sends remittance from MalaysiaHH Monthly Income: BDT 70,200
If she uses mobile money to receive remittances, she has to go 3 times a month because of daily limits.
So, she has to deposit into a DPS savings scheme in a traditional bank account 8km away.
REALITY:
1. Mobile money has reach but not necessary product variety
2. Need innovative financial products from MFS actors OR increase the reach of traditional banks
Persona 3: Visually Disabled, Accessibility issue
Vashkar36 years, Development worker, Innovator
- He is a 10 taka account holder but- Banks refuse to give him any electronic Card
based services due to his disabilitiesREALITY:
1. The needs and challenges of disabled and other vulnerable marginalized groups are not adequately addressed.
2. How do we enable meaningful financial inclusion for individuals like Vashkar?
Financial Inclusion through Whose Lens?
Savings
Loans
Insurance
Payments &
Remittances
Store & Retrieve
Borrow & Repay
Pay & Receive
Expert’s Perspective
Poors’ Perspective
Finan
cial
Mat
urity
Average time
Avrage cost Average Visit
138 min
BDT 596
3 visits51min BDT 2121 visit
P2G: Fee Payment for Electronic Land
Records
63 % 75 % 75 %
Average Time
Average Cost
Average Visit
180 min
BDT 136
2 Visits40 min
BDT 65
1 Visit
G2P: UP Salary Payment
78 % 50%52 %
9
12
43
Average time (day)
Average Cost (USD)
Number of Visit
0
1
2
33.3
1.3 10.6 0.5
1
Mobile Banking
BeforeAfter
82%65%
0%
Digital Financial ProductsTime, Cost, Visit (TCV) Reduction
Average time (day)
Average Cost (USD)
Number of Visit
012345 4.31
0.92 1.20.34 0.22
1
P2G: Electricity Bill Payment
BeforeAfter
92%76%
17%
Potential TCV Reduction in G2P through Digital Payments
14 major G2P
Digital Bhata (Allowance) Management Piloted by a2i Integrating 3 Ministries, 6 Allowances for 100k Beneficiaries
• Linked to NID• Directorate of Social Services in the
process of upscaling for 5.5M beneficiaries with technical support from a2i
Before After0
20406080
100
Avg Time
Before After0
1000020000300004000050000
Avg Cost
Before After05
10152025
Avg Visits72
%
82%
77%
Dim
ensio
n 1:
M
anag
emen
t
Digital Payment Pilot for Citizens: a2i, DSS and PO for 8K Old and Disabled Persons
• Finger vein biometric• Delivered to doorsteps by Post Office (ward
or home) – postal cash card• ‘Services coming to beneficiaries’ – huge
TCV reduction• Opportunity to link with other financial
products
Dim
ensio
n 2:
Pa
ymen
t
Bangladesh
Kenya
Distance to reach bank
1.4km 6.5km
Distance to reach agent
0.6km 1km
Access is Mostly Solved.Need to Focus on Usage
Driving usage needs appropriate products
No One Digital Payment Panacea for all Situations
Digital Payment Option
Full Service Banking
Store Funds Indefinitely
Access funds from mainstream financial infrastructure
Deposit additional funds
Access other financial products
Mobile Money
No No No Yes Limited
Agent Banking
Yes Yes Yes Yes Yes
Postal cash card
No No Yes Yes No
Prepaid card
No No Yes Yes No
The Poor May Need More Integrated Products than What We (Non-poor) are Used to
Tk. 500 safety net payment
Tk. 300 cashout
Tk. 100 forced savings
Tk. 100 insurance premium
Example of an Integrated Product Appropriate for the Poor: Ekti Bari Ekti Khamar
2.5 million poor households Matching grant to individual account:
$2.5/mon Matching grant to cooperative account:
$1,875/yr for 2 yrs Total savings: $91M (GoB) + $108M
(beneficiaries) Leverages agent banking
488 Upazila level agents 7,900 ‘physically mobile’ agents coordinating
in households Exploring agent banking in UDCs
Paradigm Shift Needed Shift in thinking
Need to direct focus away from mere extension of access towards fostering meaningful usage
Offering existing (pro-non-poor) products to the poor may not be meaningful Need to understand the BOP market for financial
products Chang the dialogue from concentrating on
regulation to a much more citizen-centric focus Shift in technology
Silo to integrated, interoperable platforms Strong standard-based biometric Integrated with NID/Civil Registry
Digital Financial Inclusion: Meeting Citizens Demands
Appropriate Products
Need demand mapping and experimentation
Transition cash to Digital
Payments
Gradual transition of cash to digital payments (G2P, large
private sector employers, merchant payments)
Access point
Need to develop a network among Digital Center, Post e-
Center and private sector access point
Financial Literacy
Digital Centers can provide financial literacy and create
awareness
Banks
MNOs
UDCs
PO
Private Agents
Ministries
Employers
MFIs
Digital Financial Inclusion: Policy ContextStrategy
Development
Steering committee co-chaired by Principal Secretary, PMO and
Governor
Interoperability
CGAP/Gates/Better Than Cash are supporting framework
development
Joint Investment
Banks, MNOs and MFIs need to invest jointly in appropriate
products-Inclusive Finance Lab for Innovation
Coordination
Taskforce under PMO (representatives from agencies,
public and private sector)
PMO
BB
BFID
FinDiv
MRA
Ins DevReg
Authority
BTRC
DPs
Thanks