How financial institutions are navigating through the pandemic
The collective initiatives of financial institutions made it easier for us to navigate through the pandemic and take our nation a step closer to achieving the vision of digital Bangladesh
Gone are the days of traditional banking when customers would visit a bank in the morning to check account balance, withdraw cash, or make a deposit. In 2020, we entered a time of the new normal as a result of the pandemic where customers had to adapt to their lifestyles.
Customers had to forgo years of traditional practice and replace it by researching and educating themselves with new and safer methods that would ensure their safety and well-being in the current context of society today.
According to Bangladesh Bank's statistics, in 2019, 95% of banks in Bangladesh offered internet banking facilities. Customers have been using internet banking facilities for the past few years and the pandemic accelerated its usage. For the first time, many customers began withdrawing money from ATMs instead of visiting banks due to health safety concerns.
Previously, customers would visit banks to deposit their cash but now many ATM booths offer cash depositing facilities as well. The majority of commercial banks offer smartphone applications where customers can view the account balance and perform transactions as well.
The pandemic encouraged many to install and use such apps for the first time to conduct transactions such as paying credit card bills.
Unlike commercial banks, NBFIs (non-banking financial institutions) do not conduct day-to-day transactions in cash; they depend on an intermediary bank to channel their funds.
As a result, NBFIs had to face unavoidable procedural delays during the pandemic while serving customers. In addition, NBFIs also have a more limited footprint compared to commercial banks which made it more challenging for them to reach customers during the pandemic.
Some financial institutions recognised the challenges during the pandemic and successfully converted them into opportunities. They developed innovative solutions to address the new challenges being faced by the customers.
Mobile financial service (MFS) providers such as bKash and Nagad are playing a pivotal role in enabling the masses to make fast and steady transitions towards a cashless society.
Customers are using MFS to pay for daily shopping, utility bills, and receive their salaries as well. The prevalence of MFS has made it easier for customers and businesses to navigate through the challenges faced during the pandemic.
The City Bank partnered up with bKash to launch a collateral-free digital loan. Through this, customers can request loans of up to Tk10,000. For the first time, such loan schemes are allowing the unbanked population of Bangladesh to access instant loans and promote financial inclusion.
Mutual Trust Bank launched an innovative new deposit product for its retail customers in collaboration with Guardian Life Insurance Limited. Customers making a minimum deposit of Tk100,000 can claim interest on the deposit as well as benefit from Covid-19 life insurance coverage. Customers felt more assured during the pandemic by availing this service.
IPDC Finance Ltd, the country's first private NBFI, being the frontrunner in providing innovative financial solutions, aimed to fulfill the need for customers' convenience by ensuring accessibility and presence of their retail deposit services to prospective clients through a digital channel.
IPDC has partnered with Aamartaka, the country's first online aggregator of financial products and services, to develop an online portal with an end-to-end online application where customers can digitally apply to avail deposit services.
Customers can now enjoy a hassle-free experience of being able to deposit funds to IPDC from the comfort of their homes.
Now, customers do not have to visit banks, they can fill up online applications and upload documents to the online portal. Customers who apply through Aamartaka to make a deposit at IPDC enjoy an exclusive promotional rate of 0.25 percent over the card rate.
The collective initiatives of these financial institutions made it easier for us to navigate through the pandemic. These initiatives contribute to taking our nation a step closer to achieving the vision of digital Bangladesh.
The author is a Senior Executive of Products and Marketing at IPDC Finance.
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.
