The dialog on financial inclusion is currently dominated more by regulatory issues (bank-led vs. telco-led) and supply-side concerns (mobile money vs. other instruments, interoperability) rather than by demand-side considerations (what products do the poor need without thinking of the poor as a black box). That dialog needs to change if the next transformation is to truly benefit the billions of unbanked and under-banked population, and also make money for the financial service providers.

1. Digital Financial Inclusion in Bangladesh:
A Citizen’s Perspective
Anir Chowdhury
Policy Advisor, Access to Information (a2i)
Prime Minister’s Office, Bangladesh
February 13, 2016

2. Digital Bangladesh Vision 2021
1. Strong middle-income economy
2. Inclusive development
3. Citizen-centric service transformation
4. Bottom-up execution
5. No digital divide

3. Digital Financial Inclusion: Components
Savings
Saving A/C,
Transactions,
Statement
Loans
House, Livestock,
Business, Education
Insurance
Health, Life,
Accident,
Crop, Livestock
Fund
Transfer
P2P, P2G, B2P,
P2B
G2P (Salaries,
Pensions, Social
Payments)
Status
1. Access has increased
significantly
2. Usage is still low
3. Digitization for mostly
P2P fund transfer
4. Inadequate products
5. Financial literacy low

4. Where Are We?
 Tk 10 accounts
 Reduced exclusion rapidly
(15+ million accounts)
 Mostly dormant
 Mobile money
 30 million customers, $60+M transacted a day, 1
dominant player (85%)
 80+% OTC  limited usage of own wallets but
huge P2P
1. Are we focusing on non-P2P digital payments?
2. Individual wallets necessary for most non-P2P
Payments &
Remittances
P2P, P2G, B2P,
P2B
G2P (Salaries,
Pensions, Social
Payments)

5. Sarbati
Above 90 years
Widow
HH Monthly Income: Only allowances
that she receives from Govt.
She needs to be
accompanied
by a member of
the family to
collect the
allowance
She has to spent
120 taka
conveyance fare
to collect the
allowance from
bank.
She needs to wait
for hours in queue
often in harsh
weather conditions
REALITY:
Persona 1: Unbanked Hard-Core Poor
1. Need to have G2P cashout points nearby
2. What other financial products will she need?
3. What does financial inclusion mean to her?

6. Persona 2: Partially Banked
Salma
36 years, mother of 3
Housewife, husband sends remittance from Malaysia
HH Monthly Income: BDT 70,200
If she uses mobile
money to receive
remittances, she has
to go 3 times a month
because of daily
limits.
So, she has to
deposit into a
DPS savings
scheme in a
traditional bank
account 8km
away.
REALITY:
1. Mobile money has reach but not necessary product
variety
2. Need innovative financial products from MFS actors

7. Persona 3: Visually Disabled, Accessibility issue
Vashkar
36 years,
Development worker, Innovator
- He is a 10 taka account holder but
- Banks refuse to give him any electronic Card
based services due to his disabilitiesREALITY:
1. The needs and challenges of disabled and other
vulnerable marginalized groups are not adequately
addressed.

8. Financial Inclusion through
Whose Lens?
Savings
Loans
Insurance
Payments &
Remittances
Safeguard
against
shock
Store &
Retrieve
Borrow & Repay
Pay & Receive
Expert’s
Perspective
Poors’ Perspective
FinancialMaturity

9. 138 min
BDT 596
3 visits51min BDT 212
1 visit
Average time Avrage cost Average Visit
P2G: Fee Payment for
Electronic Land
Records
63%
75%
75%
180 min
BDT 136
2 Visits40 min
BDT 65
1 Visit
Average TimeAverage Cost Average Visit
G2P: UP Salary Payment
78%
50%
52%
9
1
2
4
3
3.3
1.3
1
0.6 0.5
1
0
0.5
1
1.5
2
2.5
3
3.5
Average time
(day)
Average
Cost (USD)
Number of
Visit
Mobile Banking
Before
After
82%
65%
0%
Digital Financial Products
Time, Cost, Visit (TCV) Reduction
4.31
0.92 1.2
0.34 0.22
1
0
1
2
3
4
5
Average time
(day)
Average Cost
(USD)
Number of
Visit
P2G: Electricity Bill
Payment
Before
After
92%
76%
17%

10. Potential TCV Reduction in G2P
through Digital Payments
14 major
G2P

11. Digital Bhata (Allowance) Management
Piloted by a2i Integrating 3 Ministries,
6 Allowances for 100k Beneficiaries
• Linked to NID
• Directorate of Social Services in the
process of upscaling for 5.5M
beneficiaries with technical support from
0
20
40
60
80
100
Before After
Avg Time
0
10000
20000
30000
40000
50000
Before After
Avg Cost
0
5
10
15
20
25
Before After
Avg Visits72%
82%
77%
Dimension1:
Management

12. Digital Payment Pilot for Citizens: a2i, DSS and
PO for 8K Old and Disabled Persons
• Finger vein biometric
• Delivered to doorsteps by Post Office (ward or
home) – postal cash card
• ‘Services coming to beneficiaries’ – huge TCV
reduction
• Opportunity to link with other financial products
Dimension2:
Payment

13. Bangladesh Kenya
Distance to reach bank 1.4km 6.5km
Distance to reach
agent
0.6km 1km
Access is Mostly Solved.
Need to Focus on Usage
Driving usage needs appropriate products

14. No One Digital Payment Panacea
for all Situations
Digital
Payment
Option
Full
Service
Banking
Store
Funds
Indefinitely
Access funds
from
mainstream
financial
infrastructure
Deposit
additiona
l funds
Access
other
financial
products
Mobile
Money
No No No Yes Limited
Agent
Banking
Yes Yes Yes Yes Yes
Postal
cash card
No No Yes Yes No
Prepaid
card
No No Yes Yes No

15. The Poor May Need More Integrated Products
than What We (Non-poor) are Used to
Tk. 500
safety
net
payment
Tk. 300
cashout
Tk. 100
forced
savings
Tk. 100
insurance
premium

16. Example of an Integrated Product Appropriate
for the Poor: Ekti Bari Ekti Khamar
 2.5 million poor households
 Matching grant to individual account: $2.5/mon
 Matching grant to cooperative account: $1,875/yr
for 2 yrs
 Total savings: $91M (GoB) + $108M (beneficiaries)
 Leverages agent banking
 488 Upazila level agents
 7,900 ‘physically mobile’ agents coordinating in
households
 Exploring agent banking in UDCs

17. Paradigm Shift Needed
 Shift in thinking
 Need to direct focus away from mere extension of
access towards fostering meaningful usage
 Offering existing (pro-non-poor) products to the poor
may not be meaningful
 Need to understand the BOP market for financial products
 Chang the dialogue from concentrating on regulation to
a much more citizen-centric focus
 Shift in technology
 Silo to integrated, interoperable platforms
 Strong standard-based biometric
 Integrated with NID/Civil Registry

18. Digital Financial Inclusion:
Meeting Citizens Demands
Appropriate
Products
Need demand mapping and
experimentation
Transition cash
to Digital
Payments
Gradual transition of cash to digital
payments (G2P, large private sector
employers, merchant payments)
Access point
Need to develop a network among
Digital Center, Post e-Center and
private sector access point
Financial
Literacy
Digital Centers can provide financial
literacy and create awareness
Banks
MNOs
UDCs
PO
Private
Agents
Ministries
Employer
s
MFIs

19. Digital Financial Inclusion:
Policy Context
Strategy
Development
Steering committee co-chaired by
Principal Secretary, PMO and
Governor
Interoperability
CGAP/Gates/Better Than Cash are
supporting framework development
Joint
Investment
Banks, MNOs and MFIs need to
invest jointly in appropriate products-
Inclusive Finance Lab for Innovation
Coordination
Taskforce under PMO
(representatives from agencies,
public and private sector)
PMO
BB
BFID
FinDiv
MRA
Ins Dev
Reg
Authority
BTRC
DPs

20. Thanks