It is rather common knowledge in economics that we can speed up growth in other parts of the economy by speeding up monetary transactions. That is, increasing the speed of monetary transactions can play a big role in our advancement. And mobile financial services can play a crucial role in increasing the velocity of transactions in the economy.
Every month, Tk70,000 crore is being channelled through the mobile financial services with an annual growth of 40%. Such growth is expected since these services are user-friendly, time-saving and grants marginalised communities access to the financial market with ease. People can now make instant transactions with just the touch of a finger on a few buttons of a mobile phone.
Certainly, mobile financial services have sped up our life. However, not every sector has yet adopted this method. The manual method is still dominant in many sectors and is one of the few bottlenecks standing in the way of our progress.
According to the latest report of the Centre for Economics and Business Research, a British economic research organisation, Bangladesh will be the 25th largest economy in the world by 2035. It made the forecast under the assumption that the rate of economic growth in Bangladesh will persist into the coming years.
According to the report titled 'World Economic League Table 2021', we finished 2021 at the 41st position in the world in terms of economic power. According to the forecast, there is an opportunity to leapfrog 16 steps in the next 13 years.
However, to maintain and build upon the pace at which we are moving forward, the digitalisation in the financial sector must be allowed to continue smoothly and in some cases, may even require significant acceleration.
To do so, those of us who work with digital services in the financial sector have a role to play. Besides, policy support has to come from the decision-makers.
As the financial sector moves towards increasing adoption of digital platforms, new business models have begun to emerge in recent years. In keeping with the continuous growth of the global economy, local and international trades are also becoming more complex and dynamic. Digitalisation of the financial sector can equip domestic firms to keep up with changing dynamics in the global market and remain competitive.
The proliferation of new online marketplaces in the area of free trade has brought about a paradigm shift in the way we typically send and receive money. Due to the Covid-19 pandemic, the supply chain system has also undergone major changes.
To keep up with all these changes, it is essential to have a smooth transaction system. This can only be taken forward through digitalisation. If you can't transact happily with a few touches of your fingers, it would be very difficult to survive in this digital world.
We do not yet have a specific roadmap for the full digitalisation of the financial sector in Bangladesh. The private sector is following the digital path for its own needs. Sometimes we receive cooperation from the policy-makers, but in many cases, we are bound to walk slowly because of their slow-moving strategy.
In Bangladesh, mobile financial services were born long before the policy framework was developed. This is often the case with new technology. In 2019, when Nagad's journey started with the postal department, the country's financial sector entered a new era of digitalisation. Nagad introduced e-KYC in the country. It was criticised in the beginning by many but Bangladesh Bank accepted it and approved it very quickly.
The e-KYC is transforming the financial sector of the country. Not only mobile financial services but conventional banks and other financial institutions also depend on e-KYC for customer registration to cut their cost of doing business.
As the customer registration process becomes easier and smoother, it has the added benefit of ensuring increased financial inclusion. Last year, three and a half crore new financial accounts were added to the country's financial system through Nagad alone.
These small innovations are playing a major role in moving forward. The process of distributing government allowances is changing as well, riding on mobile financial services.
The disbursement of government allowances and social safety net funds using mobile financial services has ensured transparency and the government has prevented the wastage of hundreds of crores of taka.
In the last financial year, the government disbursed about Tk 10 thousand crores among the poor through mobile financial service. I believe that this amount will increase manifold in the days to come.
Eventually, the use of e-money will help the country to get rid of printing money and the huge cost to manage it. At the same time, the speed of money will increase, which will ultimately fast-track the economic expansion.
People should not use MFS just during emergencies like the pandemic. We want to move forward as a nation through a process where mobile transactions will emerge as a way to make everyday life easier for all clients and consumers.
The finance minister's budget speech also talks about mobile financial services. While that is a significant recognition of reality, we have not yet been able to do the right thing in many places.
Surely, we are working for that day when everything will be done at the touch of a finger. That is, the role of mobile financial services will not be limited to just sending money or carrying out small transactions. Instead, MFS will be used to provide a range of services starting from getting a loan from the convenience of one's home, to major tasks involving large amounts of money such as import-exports.
If it happens, the cost will go down, time will be saved and the revenue of the government will increase. Life will be much easier and more affordable to all of us than ever before, which will give us more improvement in the development index.
Then, we may not advance just 16 steps in 13 years. I believe in a few years the World Economic League Table or more such research organisations will come up with their new forecast.
The author is the Managing Director of Nagad, the digital financial service of the Postal Department.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.