In developing countries like Bangladesh, Digital Financial Services (DFS) usually refers to transactions made over the mobile phone, using variants of the system pioneered in Kenya by m-Pesa. There is much optimism that DFS can revolutionise financial inclusion, though some people are far more cautious, pointing out that just having a mobile money account doesn't mean someone is 'financially included'. In this context, we looked at what the Hrishipara Daily Diaries show us about DFS use in central Bangladesh.

1. what do the Hrishipara Daily Diaries
tell us about the use of
Digital Financial Services
in central Bangladesh?
Stuart Rutherford
July 2017

2. the data
daily records of all money
transactions, obtained from 50
‘diarists’ over many months
total: almost 30,000 days containing
275,000 transaction records
comprising 1.6 million data points
collected between May 2015 and June 2017

3. who are these ‘diarists’?
their daily per-person incomes:
14 extreme poor: less than 60 taka a day per person (USPPP$1.50)
15 very poor: 61-100 taka (PPP$1.50-2.40)
17 medium poor: 101-400 taka (PPP$2.40-10)
the remaining four have slightly higher incomes
day labourers, casual workers, boatmen, fishermen, rickshaw drivers, farmers,
newspaper vendor, dressmakers, shopkeepers, barbers, maid-servants, garbage
recycler, factory workers, hospital orderlies, brick-breakers, faith-healer, teacher,
Imam, farmers, housewives, washerman, mason, plumber, and more…….
31 are men 19 are women
household sizes range from 1 to 9

4. inflows, outflows, and the share that went through
Digital Financial Services (DFS)
we collected 118,745 records of ‘inflows’ (money coming into the
hands of the diarists), with a combined total value of 38,374,704
taka ($PPP 960,000)
we collected 155,466 records of ‘outflows’ (money leaving the
hands of the diarists), with a combined total value of 37,951,951
taka ($PPP 950,000)
of the inflows, 243 (0.2%) came through DFS, accounting for
442,719 taka (1.15%)
of the outflows, 118 (0.08%) went through DFS, accounting for
305,571 taka (0.81%)

5. what was DFS used for?
Use
Number of
records
%
Value of
transactions
%
receive overseas remittances 23 9.4 taka 171,500 38.7
act as a go-between 9 3.7 94,600 21.4
receive domestic transfers 30 12.3 51,935 11.7
trade in airtime 181 74.5 14,244 3.2
the main uses for inflows via DFS were:
the main uses for outflows via DFS were:
Use
Number of
records
%
Value of
transactions
%
sending money home to the village 62 52.6 192,490 63.0
act as a go-between 3 2.5 33,400 10.9
pay educational fees 2 1.7 10,150 3.3

6. who used Digital Financial Services?
26 of our 50 diarists have used DFS in some way:
9 used it only once or twice; 8 used it more than 10 times
the 8 diarists who used DFS more than 10 times:
User, poverty level, and use # records
value
inflows
value
outflows
shopkeeper (very poor) to trade in airtime, receive remittances 179 108,528 74,500
day labourer (medium poor) to send money to home village 25 - 70,010
housewife (medium poor) to receive remittances from husband abroad 13 65,400 -
widowed farmer (medium poor) to receive remittances from son abroad 11 56,000 200
day labourer (extreme poor) to send money to home village 18 1,000 40,600
tea-stall holder (extreme poor) to receive gifts and act as go-between 11 26,695 150
trainee carpenter (very poor) to send money to home village 13 1,000 26,870
mason (extreme poor) to receive pay, pay worker, buy materials, buy airtime 30 10,796 996
the single most frequent user was a small shopkeeper (very poor, 86 taka per person per
day) who used it 169 times to sell airtime to his customers

7. our diarists and their phones
we surveyed 40 ‘core’ diarists in early 2016 and again in mid 2017: there has been a
steady rise in phone ownership and quality
February 2016 July 2017
phone
ownership
and
access:
32 out of 40 diarists owned their own
personal phones
34 own their own phones
of those without their own phone, all but
2 had access to one in the household
all but 1 have access (that one
diarist is the poorest in our sample)
5 diarists owned smartphones 8 own smartphones
we recruited 20 new diarists in July 2017:
of them, 18 have their own phones, 1 has access to a phone in the household, and 1 has no
access to a phone at all
of the 18 with phones, 7 have smartphones

8. our diarists and DFS
we surveyed 40 ‘core’ diarists in early 2016 and again in mid 2017: there has been
almost no change in the use of and attitudes towards dfs
40 core diarists: early 2016 and mid 2017
DFS accounts 12 of the 40 own a dfs account
DFS use 21 of the 40 (including the 12 account holders) have used dfs
What is dfs? almost all of the 40 have heard of dfs, but only about half believe they
understand it
Trust no-one expressed distrust in the dfs providers, but about half expressed
anxieties about using it
we recruited 20 new diarists in July 2017:
of them, 17 own dfs accounts: in many cases recently opened to receive school
scholarships, but also to receive and to send domestic remittances, and in one case to
receive a monthly salary (we also have one diarist who is a dfs agent)

9. DFS and financial inclusion: putting it into perspective
while our 50 diarists were pushing and pulling a total of
748,290 taka through DFS, they were also:
pushing and pulling 12,976,929 taka through 25 different MFIs
and co-operatives (17 times as much)
and pushing and pulling 6,493,026 taka through informal
financial arrangements - samities (clubs) and saving and
borrowing with neighbours and relatives (9 times as much)
and some used banks and insurance companies as well

10. strong conclusions:
 Digital Financial Services play a very small role in the money
management of our diarists
 It is most useful to some very poor migrant workers sending money
back to home villages, and to some moderately poor households
who receive remittances
 Our diarists use intermediation services (saving and
borrowing) intensively, but DFS has no role in this
 Our diarists have phones, are aware of DFS, and
have access to it
 We have a long way to go before DFS plays
any serious role in financial inclusion

11. tentative conclusions:
 Trends such as lower phone prices, greater service availability, and
growing public awareness, will continue to enlarge the role of Digital
Financial Services
 But until DFS can offer intermediation services that compete
with those offered by MFIS, Co-operatives and informal
practices, it may not play a large role in financial inclusion
questions and comments to Stuart Rutherford at
write.ser@gmail.com
https://sites.google.com/site/hrishiparadailydiaries/home