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Finds study by pi STRATEGY
The digital financial services (DFS) helped limit the spread of coronavirus to some extent by creating an avenue for digital payments that facilitated social distancing protocols, found a recent study by pi STRATEGY.
The study entailed surveying more than 1,000 people across Bangladesh and interviewing more than 30 senior officials of mobile financial service providers, banks, microfinance institutions, insurance agencies, among others.
The findings of the study titled “DFS in the Time of Covid-19” was launched on Monday in partnership with the a2i Programme of the government and Dhaka Tribune at a webinar hosted by the national daily and streamed live on social media.
During the pandemic, DFS adoption increased, with nearly 8 per cent of the people using mobile money wallets for merchant payments and over-the-counter transactions reaching an all-time low close to 20 per cent, the study found.
“Human beings are uncannily adaptive. Whatever you throw at them, they first find a coping mechanism and then explore opportunities to thrive,” said Pial Islam, managing partner of pi STRATEGY, in his keynote presentation.
One of the areas where the country did reasonably well is in its usage of digital payments to reach the vulnerable populations quickly with government subsidies.
More than 2 million mobile money accounts were opened within six weeks – many in the garment sector.
“Wages in the garment sector were paid digitally. Social safety net payments were made digitally. Other use cases like airtime top-up, utility payments, and merchant payments also experienced greater adoption,” the report said.
DFS in Bangladesh has somehow managed to find a way to harness the ills of Covid-19 towards a fortuitous end, Islam added.
“I see this as COVID dividend and we are obviously in a dividend period,” said Anir Chowdhury, policy advisor to a2i.
The pandemic had a significant impact on people’s income: 77 per cent of the respondents mentioned reduced household income.
However, those with mobile financial service accounts were better able to withstand the shock.
“When you have access to finance, you can save money and be able to take money from family and friends. People use the network,” said Kamal Quadir, chief executive officer of bKash, which has an 81.4 per cent share of the MFS market.
Talking on the MFS transaction pattern, Quadir said cash-out transactions are going down.
“It did not happen accidentally but COVID helped to accelerate. If there is a network people will participate. We urged people to not cash out as it costs money. On the other hand, customers are moving towards more digital payments,” he added.
Meanwhile, DFS also contributed to narrowing the gender gap in financial inclusion, which came down to 24 per cent from 29 per cent in 2017, the study found.
Reimagining financial products and how women interact with those who hold the key to creating greater impact in closing the gender gap further.
Nearly 40 per cent women are financially included now — a commendable adoption rate given our country context, Islam said.
At a broader level, the national financial inclusion metric reached 50 per cent, with MFS making the most significant contribution towards that achievement.
“Reducing the gender gap in financial inclusion is very important and DFS is narrowing the gap,” said Arfan Ali, managing director of Bank Asia.
A convenient environment has been created and agent banking is giving a boost to reducing the gap in male and female financial inclusion.
Among Bank Asia’s agent banking customers, female inclusion is 52 per cent and male is 48 per cent, while the overall inclusion male-female ratio is 52 per cent and 48 per cent.
During the pandemic, agent banking use by the mass people in urban and rural has increased.
“Agent banking showed resilience during COVID and we are going to village level through micro-merchants,” Ali added.
(DT)
