This digital artifact has been prepared as part of the WBG group course on Unlocking Investment and Finance in Emerging Markets and Developing Economies (EMDEs) course

1. Accelerating Digital Financial Services
Adoption in Bangladesh
Final Project for the course
UnlockingInvestmentandFinanceinEmergingMarketsandDevelopingEconomies(EMDEs)
This digital artifact has been prepared as part of the course requirement under WBG Unlocking
Investment and Finance in Emerging Markets and Developing Economies (EMDEs) course from
International development practitioners perspective.

2. Bangladesh
Bangladesh the small south Asian country with a population of more than 165 million is going
through high GDP growth over the last decade averaging about 6.5 and in 2018 it recorded 7.00%
GDP growth. There is a growing momentum for digital financial inclusion among the Government
Ministries and the private sector such as banks and non bank financial intermediaries. The
Government of Bangladesh (GoB) has prioritized Financial Inclusion and Digital Financial Services
(DFS)as one of the key strategies towards achieving middle income country status by 2021.
Rapid growth in mobile money customers coupled with demographic, economic, social and
technological changes offer opportunities to accelerate the adoption and usage of DFS in Bangladesh
and expand access to and use of products and services to all people of Bangladesh, especially women
and micro, and small businesses who are significantly under-represented.
Evolving regulatory framework, protectionist policies, ineffective coordination with DFS providers
coupled with nascent supervisory capacity have deterred the private sector from investing in DFS.
This lack of involvement consequently jeopardizes the dramatic growth potential of these high value
financial services in Bangladesh, leaving almost 82 percent of Bangladeshis without a digital account,
in particular women and small businesses.

3. DFS Status
According to Intermedia 2018 survey findings, Bangladesh is progressing in terms of mobile
money accounts. Financially inclusion has increased from 37% o to 47% during 2014 and 2018
among the adult people while Mobile money has grown from 5% in 2014 to 17% in 2018.
Given However, improvements within the regulatory space for mobile money may lead to bigger
growth is both accesses and usage along with reduction in gender gap in MFS.
The other frontiers of digital financial services in Bangladesh is the ‘Agent Banking’. Regulators
and policy makers are also putting great emphasis on this.

4. The Gaps
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03
04
05
06
Lack of public and private sectors’ recognition of the value and role
DFS plays for low income people and in overall economic growth
Absence of national financial inclusion framework to guide national
efforts
Inadequate regulatory capacity
Rregulatory inertia towards innovation and transformational change
out of inadequate understanding of risk and the value of innovation.
Limited DFS product offerings
Restricted investment space and limited competition
There are a number of issues that are relevant in understanding the DFS gap in Bangladesh

5. Why these Gaps
Lack of coordinated efforts to support the government in creating the enabling regulatory environment for DFS that can truly motivate the interest
and capacity of the government and the providers such as banks and MNOs to engage in DFS in a sustained and effective manner is key to these gaps
1. Lack of public and private sectors’ recognition of the value and role DFS plays for low income people and in overall economic growth – Why?
 Lack of proper understanding of the value and potential of MFS
 Low prioritization over bigger issues
 Lack of use cases
2. Absence of national financial inclusion framework to guide national efforts – Why?
 Lack of understanding of coordinated efforts
 Lack of initiatives to transform vision into action
3. Inadequate regulatory capacity - Why?
 Low prioritization as a policy area
 Individual driven rather than institution driven priority
 Low priority towards capacity building
4. Rregulatory inertia towards innovation
 Inadequate understanding of risks management in innovation
5. Limited DFS product offerings, - Why?
 Lack of competition
 Lack of investment
 Lack of financial and fiscal incentives for digitizing or using mobile money
6. Restricted investment space and limited competition. – Why?
 Obsession with a particular business model
 Lack of long term vision on payment industry growth

6. What is being done presently
Problem – Why the problem – What is the market response – which stakeholders involved – what activities being undertaken
Key priority constraints identified for the immediate future
Use simplified electronic KYC
 Currently Bb is working to workout a guidelines on piloting eKYC where a2i, BTRC, NID authority and osme of the G2P payment provider banks
are participating as member. UNCDF shift is working towards providing market participants view to the BB for bringing out a market friendly
regulation. – Bangladesh Bank is working to issue a revised regulations for MFS
Interoperability among MFS providers with access to NPSB
 Interoperability issue is now a topic of discussion when there is a discussion on MFS and DFS
 No visible initiatives yet from others
 UNCDF is going to organize a roundtable on this a2i is also talking about the issue
USSD – Lack of uniform access and pricing policy
Bangladesh Bank and BTRC have established a working group on this and BTRC are also exploring working with ITU
UNCDF is working with BTRC on how we can support this initiative

7. What can accelerate DFS further
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1. Increased use of evidence and
policy analysis by DFS regulators to
draft national DFS policy,
regulations and national strategies
in Bangladesh
2. Improved understanding of how
DFS works and how to regulate it
among DFS regulators, DFS
providers and key stakeholders by
2019
3. Improved national advocacy
capacity in support of DFS and
Financial Inclusion by 2019
4. Strengthened coalitions and
cooperation among DFS regulators,
DFS providers, meso level
organizations and businesses on
DFS by 2019
5. NFIS includes strong DFS module
and strategy
1. Communication campaigns to
inform meso level organizations
and women's associations about
national DFS strategies, business
models and DFS pros/cons
2. Influencing before decision
making events - ahead of the
annual budget targeting policy
makers, opinion shapers and a
variety of GOB Ministries
Improved policies and country
strategies for DFS adopted by the
Government of Bangladesh by 2019
1
Increased investments from the
private sector in DFS by 2019 in
Bangladesh
2

8. Need for twin strategy
1. Working with the Regulators and Policy makers (Engaging in national level policy and regulatory issues)
 Understanding regulatory and policy concern
 Understanding regulatory and policy level capacity
 Capacity building support to regulators and policy makers
 Creating a coordination and sharing of information mechanism among policy makers and regulators
 Influencing policy and regulatory changes by providing demand side insights through policy briefs (Research/study),
providing exposure to private sector and development partners opinion(Conference/round tables/workshops) and showing
best practices (exposure visits to international best practices or bringing international experience to the policy makers and
regulators)
2. Working with the private sector (DFCG and other external influencers)
 Capturing providers concerns
 Identifying key constraints from providers perspectives
 Creating a strong platform where market participants and advocates of DFS can express their concern
 Creating a platform and conduit for channeling the market voices to the policy makers and regulators
 Creating a strong voice for pro DFS advocacy
 Providing real sector perspective to the regulators and policy makers

9. Advocacy Focus of the project
In country advocacy will focus on addressing six key challenges that currently contribute to
disenabling environment for DFS. These are: 1. Absence of National Financial Inclusion
Framework; 2. Inadequate Regulatory Framework; 3. Limited penetration of DFS; 4. Limited
involvement of the private sector in DFS; 5. Inadequate information, knowledge and capacity;
and 6. Inadequate understanding of consumers’ needs.

10. How we can achieve this
Policy and
technical
briefs
Capacity
building
through
training and
knowledge
exchange
visits
Regulatory
and policy
workshops/
meetings
Establishing
coalitions that
independently
of SHIFT
advocates for
DFS
Peer-to-peer
knowledge
exchange
dialogues
between DFS
regulators

11. Our In-Country Approach
Catalytic Capital
Policy Advice Country Presence
Technical Support

12. By 2021, We Hope to Achieve:
More entrants
to the market
Increase in number
of active Service providers
More active
users of DFS
More active role
private sector
plays in DFS.
Improved policies and country strategies
for DFS adopted by the Government of
Bangladesh.
Increased investment from the private
sector leading to enhanced product
offerings in Bangladesh.
Leading to:

13. Our advocacy approach is dynamic and will continue to change as national situations change while
ensuring that the project priorities and aims are taken into account.
Through assessments, we identified the following key policy issues deterring acceleration of DFS:
Key Policy Areas to Tackle in 2019-2021
USSD
Pricing
KYC
DFS
Investment
Climate
Advancing
use of
e-wallets
FinTecs
- the future of
DFS market
in Bangladesh
Increasing
women’s
participation
in DFS
Merchant
Acceptance
Mobile Money
Transaction
Monitoring &
Data Tracking
Interoperability
Advancing DFS
with National
Financial
Inclusion Strategy

14. Our Programmatic Approach
The key programmatic approaches are:
Increased use of
data & evidence for
capacity building
and policy
formulation around
DFS
• Capacity
development of
regulators, service
providers and key
stakeholders
• Improved national
advocacy capacity
Improved policies
and country
strategies for DFS
adopted by the
regulators
Strengthened
coalitions and
cooperation among
DFS regulators, DFS
providers, meso
level organizations
and businesses
Increased salience of
DFS on the financial
inclusion agenda of
policy makers, DFS
providers, financial
institutions and meso
level organizations in
the DFS eco - system in
Bangladesh
Data and Evidence Building Capacity Policy Development DFS Coalition Mobilization Raising Awareness

15. Coordination: SHIFT will
coordinate with these
organizations.
Strategic Partnerships: SHIFT will
collaborate with these
organizations on specific issues
within the project.
Partnerships to Implement
Activities: SHIFT will jointly
undertake activities with these
groups.
Beneficiaries: These groups will
benefit from the SHIFT SAARC in
Bangladesh.
Coordination
DFID, WB, BMGF, USAID, UNDP
Partnerships to implement activities
BB, a2i, BIBM, InM, Dnet, FBCCI
Beneficiaries
Clients: Low-income people, especially women
Government: Ministry of Finance, Bangladesh Bank,
Bangladesh Telecommunication Regulatory Commission
Providers: Banks, MFS providers, Technical partners (Fintechs) and
MNOs
Market Enablers: Key sectors associations –
Association of Bankers
Who Are We will be
Working With? Strategic Partnerships
AMTOB, IFC, DFCG, AFI, CGAP, BTCA, BB, BFIU,

16. Key Strategy of the development project
• Development Goals
• Remove regulatory and policy barriers around Digital Financial Services landscape
• Support regulatory improvement and human centered product design by the DFS provider for greater
accessibility by low income groups with particular focus on women and micro, and small businesses
• Increasing active DFS user and use of DFS by low income groups with over increase in financial inclusion
• Supporting poverty reduction, employment creation and reduction in income inequality

17. Financing sources available
• Institutional funding from my agency
• Impact investment fund
• Overseas Development Assistance Fund

18. Potential access to additional sources of
funding
• Domestic
• Private sector investment
• Enterprise contribution towards project implementation
• Local Financial Services Providers lending support due to UNCDF’s engagement, additionally we can use, guarantee and capacity
building support which will create confidence in the private lenders
• International
• International private equity and impact investors investing in the local enterprise.

19. Application of Maximizing Finance for
Development approach financing my project
The UN Capital Development Fund makes public and private finance work for the poor in the
world’s 47 least developed countries (LDCs). With its capital mandate and instruments, UNCDF
offers “last mile” finance models that unlock public and private resources, especially at the
domestic level, to reduce poverty and support local economic development.
UNCDF’s financing models work through two channels: financial inclusion that expands the
opportunities for individuals, households, and small businesses to participate in the local
economy, providing them with the tools they need to climb out of poverty and manage their
financial lives; and
localized investments that show how fiscal decentralization, innovative municipal finance, and
structured project finance can drive public and private funding that underpins local economic
expansion and sustainable development.

20. Cont.
The UNCDF while taking up projects always look for the following criteria to be fulfilled-
• Country ownership
• Investment friendly ecosystem development
• Prioritize commercial finance
• Blend concessional resources with public and private capital; and
• Review incentives for concerned parties
Maximizing Finance for Development (MFD) approach of WBG look for Identifying the right investment taking
the financial risk to initiate them effectively and efficiently
MFD seeks to leverage private sector investment for development via creating the right imperative to leverage
private sector for economically beneficial, sustainable investment that contribute to SDGs
MFD also strive for optimizing scarce public resources by accessing public resources only where sufficient
incentives for private capital investment is not available.
My project also employ this framework approach in financing the project by establishing partnership with the
development agencies, impact investors, and the local private sector to leverage private capital investment that
has economic viability and proper incentives for the private sector.

21. Thank You!