Bangladesh is rapidly including people financially: 30 million plus MFS accounts. However, the financial inclusion is limited to P2P only. Comprehensive and aggressive efforts are needed to digitize G2P, P2G, B2P and P2B payments. BTCA's toolkits will be used to plan better, execute faster and move together.

1. Digital Financial Inclusion in Bangladesh:
Planning Better, Executing Faster,
Moving Together
Anir Chowdhury
Policy Advisor, Access to Information (a2i)
Prime Minister’s Office, Bangladesh
February 27, 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
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 OR
increase the reach of traditional banks

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.
2. How do we enable meaningful financial inclusion for

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 a2i
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
AvgVisits72%
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’ – hugeTCV
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
additional
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. BTCA Toolkits: Gov, Biz, DP
Planning Payment Digitization
Better planning, faster execution,
moving together

19. Better Planning, Faster
Execution, Moving Together
 Taskforces
 GoB Salaries, Pensions, MPOs – Finance Division
 GoB Safety Nets – Cabinet Division
 DP Safety Nets – Cabinet Division
 Private Sector Salaries, Payments – a2i, PMO
 Payments Architecture – a2i, PMO + BB
 National Financial Inclusion Strategy – BFID
 Monthly coordination meeting
 Quarterly review meeting with Principal
Secretary’s inter-ministerial committee on DFI
 Secretarial and Strategic Support – a2i, PMO
Payment
digitization
Demand mapping
(including demand
creation)
New product
experimentation
through Digital
Centres (LGIs,
POs, private
sector)
Strategy and
policy
development

20. Thanks