When Alexander Graham Bell invented the telephone in 1876, little he did know his invention would be a tool to transform life, society and economy hundred years later.
When Guglielmo Marconi invented a wireless communication system based on electromagnetic waves in 1895, little he could imagine, a young engineer would, one day, succeed in blending wireless strengths with telephonic concepts to develop the first-ever mobile telecommunication network.
This is how the telecommunication era made its evolution over the years, facilitating us with enormous comfort, increased efficiency, well-knitted networking, and, above all, a plethora of conveniences.
There has been progressive development and continuous refinement of the telecommunication system, its network, devices, and outreach benefits. Globally, the telecommunication sector had the most vigorous research and development in pursuit of enabling people with as many benefits.
In the last five decades, cutting edge technological innovations were made in devising appropriate network architecture while at the same time developing devices to integrate as many services, from dialogues to conferencing, from sending messages to interacting on internet, from shopping to photographing and so forth.
Today, the mobile phone is almost like an inseparable part of our daily life. Perhaps, more people in the planet have mobile phones than a toothbrush, wristwatch, or pen.
During the last decade, the usefulness of mobile phones has reached phenomenal altitude. It is no more merely a device to communicate but to facilitate our lives on as many fronts, particularly for financial services. In fact, the mobile financial service (MFS) has brought revolutionary benefits for all and sundry.
One can now use the small device to send or receive money to make payments for online shopping, travel tickets, hotel reservations, utility services bills, educational fees, and many other services. The MFS industry is rendering wide-angled conveniences, ensuring ease and comfort to our lives.
It has been a decade since the MFS has been rolled out in Bangladesh, extending great relief to the vast unbanked population, particularly in the rural and offshore areas.
Even the banked people felt the relief of carrying out transactions without the need of physically going to a bank branch, whether near or far. So, a revolutionary change was apparent in the banking sector in the country.
Dutch Bangla Bank Ltd and bKash, as a subsidiary of Brac Bank Ltd, were the front-liners.
Two years ago, the MFS landscape saw the emergence of Nagad as a digital financial service of Bangladesh Post Office. Though it is yet to obtain its formal licence from Bangladesh Bank, it has been operating under a no-objection certificate from the central bank. Through massive campaigns and tempting offers, it has succeeded in enrolling a sizeable segment of the MFS seekers.
In recent weeks, another MFS provider, tap, has begun its commercial activities. The entry of tap, a joint venture between Trust Bank Ltd of Bangladesh and Axiata Digital Services of Malaysia, indicates the growing opportunities of the MFS market here.
Remittance inflow has increased in recent times as MFS ensures conveniences of both the senders and the beneficiaries, with time and security of the transactions. MFS providers have been playing a dominant role during the pandemic when much of the transactions are being done through them, enabling social distancing and respecting other restrictions.
As it seems, MFS is a fast-growing sector and becoming a one-stop solution for various services and massively contributing to socio-economic progress. The operators are bringing in conveniences to the people, making their life easier.
MFS providers are not only helping the state attain financial inclusion of a vast majority of the people but also greatly contributing to the national exchequer through paying VAT and other taxes.
MFS is a dominant part of financial technology (fintech). There is a fintech revolution going on all around. The world is moving towards a cashless society where anything or everything will be paid through digital payment systems.
We have already seen how credit cards have been in wide use for transactions. Now, as it looks like, the days of credit cards would come to an end soon with the mass usage of digital payments, mainly through mobile phone devices.
The success of fintech largely depends on connectivity and accessibility. In a recent report, the Global Fintech Index 2021 ranked Bangladesh 78th out of 83 countries. So, it is quite evident that we have a long way to go to achieve finesse in financial technology adaptation.
Digitalisation is in progress in Bangladesh, and the scenario looks very promising. The government has put sufficient emphasis on this domain. Construction of hi-tech parks to train youth on software development, enabling investment in IT infrastructure and encouraging e-commerce are positive signs.
The Covid-19 pandemic has also boosted the country’s e-commerce and digital payment systems like in the rest of the world. The MFS providers now handle daily transactions of more than Tk 2,000 crore.
Connectivity and accessibility are distinctively crucial for the growth of MFS or, for that matter, fintech. While connectivity will depend on massive investment in IT infrastructure, accessibility depends on the availability of appropriate devices at affordable costs. It is a positive sign that almost 80 per cent of the smartphones are now being manufactured or assembled in Bangladesh, and that these are at least 15 to 20 per cent cheaper than the imported ones.
It is expected that with government incentives in place, manufacturers like Walton, Nokia and Samsung will bring a host of affordable devices in the market, so that majority of the population enjoy the benefits of the fintech revolution.
However, the important point is to be noted about ensuring the security of the digital transactions. It is quite likely that in case of such a whirlwind revolution in enabling a wide array of conveniences to the vast number of people, there could be loopholes to be exploited by vested and disruptive quarters.
The regulatory authority, in this case, the Bangladesh Bank, needs to be on toes to monitor the MFS providers for their intents, capability and quality of services, the authenticity of the customers and satisfaction of their customers.
The author is an analyst. He can be reached at mohicsr@gmail.com.
