Mobile financial services democratising the payment industry

Nothing is free – almost everyone says so – therefore, purchasing has become peoples' most common activity. Payment is an important part of every business across the world, which is why payment providers are rushing to provide superior services for their customers. Financial technology (fintech) companies are bringing about these positive changes and overhauling the payment industry with the help of technology.

Last year was memorable for the fintech industry, while 2020 stands to be a year of next-generation networks. Billions of networks will be connected ubiquitously to create a better-connected and intelligent world of technology. Most of the manual machinery – even the paper currencies in our wallets – will go through a massive digital transformation. As the use of cash is reducing drastically, e-money is going to be the future of financial transactions. In an ambit of burgeoning e-services, mobile financial services are becoming a convenient and smart solution to people's financial needs.

Bangladesh is a gold mine of opportunities. Despite a sluggish progression in GDP, the growth rate was 8.15 percent in FY2018-19, up from 7.86 percent in the previous fiscal year. Professor Dr. Shamsul Alam, member of the General Economics Division of the Ministry of Planning called it "impressive growth." Every aspect of life is going through notable changes. Mobile financial services (MFS) are playing a vital role in this regard and this industry is also going to experience a paradigm shift in customers' consumption, patterns and demand. Mobile Money is replacing traditional financial services as it is a much better way to reach customers' doorsteps and ensure broader financial inclusion.

A country where only 15 percent of people were connected to formal banking system – less than a decade ago – is now seeing a meteoric rise in financial inclusion. A commendable success was had when a large portion of the unbanked population was given access to financial services. Among the 16 MFS providers in Bangladesh, bKash did that job quite perfectly while others – like Rocket, Nagad, etc. – are trying to catch up the momentum. What bKash did was focused only on providing mobile financial services to every sphere of the country, commencing from the root level. By reaching out to every citizen with basic financial services, and democratising the whole payment industry, the company played a significant role in making Bangladesh digital.

The future of fintech is about a string of interactive and user-friendly apps – some of which are already being produced by mobile financial service providers. In 2018 – with the launch of a simple app by the leading MFS provider of Bangladesh – financial transactions started being revolutionized across the country. In 2019, they renovated the app with an advanced design to maneuver multifarious utility. 

Tonnes of customer's financial needs are being served by these apps starting with: self-registration, sending money, adding money from banks to mobile wallets or wallets to banks, taking out cash, making payments at a wide range of merchant points, paying utility bills, buying tickets, topping up mobile balances, receiving geocentric offers at a variety of shopping outlets, paying credit card bills, and whatnot! MFS operators should keep making such qualitative changes in people's lives and make Bangladesh a cashless society.

Let's predict what can happen globally and locally in 2020. Automated processing, artificial intelligence (AI) banking, blockchain, cryptocurrency – these are going to be key movers. According to Forbes, investment in fintech is expected to exceed $30 billion by 2020. This investment will help the world transform into a cashless society. It is also expected that blockchain in fintech will reach $6,700 million by 2023 in the United States. The rest of the world will emulate the trend as the economy is rapidly evolving. Even, experts predict that more partnerships are going to form among fintech companies in 2020. According to Deloitte's research, 84 percent of business executives believe blockchain will become mainstream.

According to Forbes, peer-to-peer, or digital, lending – another segment of fintech – was worth US$43.16 billion after 2018. It is expected to reach US$567.3 billion in 2026 with a compound annual growth rate of 26.6 percent. According to McKinsey, the biggest fintech product worldwide is digital payment – which comprises 25 percent of the fintech ecosystem. Statista's report says that mobile payments will break the US$1 trillion mark in 2020. Right now, three out of every four people, worldwide, have used a fintech service – according to a FinancesOnline report. Fintech is creating an enormous network of digital money.

Customers want instant and hassle-free payment. Tech giants – like Google, Apple, Tencent, and Alibaba – have already created their payment platforms rich with features like biometric access control, fingerprint recognition and face detection. The most popular payment methods in China are WeChat Pay and Alibaba's Alipay. Alipay is now the world's largest mobile payment platform with an estimated worth of US$75 billion, according to Investopedia. In Bangladesh, bKash has a partnership with Alibaba's Ant Financial. They are creating programs and offers based on users' transaction patterns, AI and location. AI is expected to improve the accuracy, security and personalization of transactions. It will also help monitor customer's financial behavior and innovate new services like digital lending, insurance, etc.

One-third of Bangladesh's population is financially excluded. However, the scenario is changing apace. People's consumption behavior is changing and usage of different e-services is rising significantly due to increased internet usage. According to Internet World Stats, Bangladesh has the second-highest internet penetration rate in the South-Asian region with 57.2 percent of the total population covered. Mobile internet has changed the banking experience with the rise of e-banking and tech-driven mobile financial services. The growth of mobile subscribers and internet users is proven to be one of the major drivers of realising a digital Bangladesh.

The author, Salekin Himel, is a PR professional working at Corporate Communications Department of a leading MFS provider in Bangladesh.