Savings through MFS: A timely and beneficial approach for financial inclusion

Ever since the invention of the wireless handy telephone, popularly dubbed as mobile phone, the adoption of this new information and communication technology has skyrocketed. 

This staggering growth has been propelled by the mobile phone's immense power to connect people across the world. But mobile phones nowadays are so much more than that. They are essential tools for our daily activities, ranging from paying your utility bills to ordering something online. 

And their importance was probably best felt during the Covid-19 pandemic when e-commerce bubbled up in every nook and corner of the country, enabling the locked down humanity to continue to meet their basic needs by making payments through this device. Perhaps the fatalities and casualties would have grossly multiplied without the support of such a device. 

In a country like ours with a bigger segment of the population living in rural areas, this simple cellular device proved to be a boon for the largely unbanked population. During the pandemic, mobile financial services providers like bKash, Rocket, Upay, Nagad and others widely expanded services to include, end-to-end money transfers, payments for shopping or utility bills and even remittance transactions from abroad. 

Illustration: TBS

However, the story does not end there. In recent months, there has been another silent revolution, which would financially enable a huge unbanked population, especially the underprivileged rural women. The country's leading mobile service provider bKash along with a well-known financial institution IDLC launched a savings scheme.

Saving has its merit. Savings are crucial in our lives. Savings help us navigate our life with a sense of assurance. It helps meet emergency financial obligations and can boost financial security to develop or achieve some targeted goals in business, property, etc. In short, savings help grow financial empowerment. Although saving requires awareness and patience, lack of access to financial opportunities remains the most important factor affecting savings habits. And this is where the bKash-IDLC saving scheme comes in. 

Following the success of a pilot program that ran over a year, bKash and IDLC could reassure themselves, their customers and obviously, the regulators that a digital saving scheme could be viable and made available to people currently outside the domain of traditional banking facilities. Now they could also enjoy term-deposit benefits. 

While IDLC is a well-established non-banking financial institution, it does not have similar levels of outreach as bKash to the common people. On the other hand, bKash has the widest MFS operations throughout the country including the remote corners. So, this partnership looked beneficial and forward-looking.

The savings scheme under the umbrella of this collaboration allows any bKash customer to make savings in monthly installments ranging from Tk500 to Tk3,000. With no hassle of any paperwork or waiting, as required for opening a savings or deposit account in a bank or financial institution, this is a boon for small traders, farmers, workers, students and anyone alike.

Against the backdrop of our socio-cultural and economic scenario, millions of people, particularly women, remained outside the purview of any saving opportunity. No wonder they always felt insecure and thus could not sketch any blueprint for their future. 

Whenever they tried to use the nascent and domestic means to keep their savings, they were often exploited and they continuously drew the devil's attention. Now, those fears have gone as they can maintain their savings at a regulated platform with all incremental benefits.     

The bKash-IDLC endeavour will certainly contribute to the development of savings habits amongst all, particularly the low-income group or the lesser privileged ones or the lesser literate ones. 

With very simple technological devices and applications, they can store their desired savings without worries or fear. This gives them the empowerment to make investments with their own money whenever the opportunity arises. When they realise that a penny saved is a penny earned, the culture of savings would grow stupendously.

Savings and growth are correlated. Savings make not only the individuals happy but the society as a whole. Millions of our people have been failing to save even a small portion of their hard-earned money due to the lack of appropriate opportunities. As a result, not only their financial freedom was denied, but perhaps a lot of money had been wasted. 

Now that bKash and IDLC have taken the timely approach to sensitise the vast savings domain in the country, things would bode well for financial inclusion and prove that mobile financial services can touch lives to enable economic empowerment. It goes in the right direction to prove the words of the celebrated US President Benjamin Franklin, whose facial image is featured on US dollar bills----waste neither time nor money, but make the best use of both.  

Mohiuddin Babar is the CEO at Bizcare.

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.