Digital Financial Inclusion of the Rural Poor in Bangladesh


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Bangladesh Financial InclusionConsidering Bangladesh’s lack of development and a predominantly rural context, it would have been difficult to imagine even a few years ago that an elderly widow living in a remote corner of this impoverished South Asian country could be receiving money from her son living in Dubai sitting right at home or making petty payments through her mobile phone. Not any more, though.

Bangladesh has recently emerged as a curious case of digital innovation to widen coverage and reach remote pockets. The country reached the lower middle income country status in 2015, and has showcased the potential of combating rural poverty through inclusive digital financial services.

This has proved to be an effective weapon to eliminate poverty and secure the sustainable development goals (SDGs) while the country advances towards Vision 2021 — lifting millions of Bangladeshis out of poverty. Innovation and digitization will surely set Bangladesh firmly on the path to becoming a middle-income country. Although ambitious, it is exactly what both the government and private sector are working towards.

Access to the formal financial system remains a challenge for the rural poor in Bangladesh even though the central bank announced a plan for inclusive digital financial programmes in 2015.

The progress seems to have stalled despite the popularity of mobile money transaction services from private companies such as bKash and Dutch-Bangla Bank Mobile Banking in a context where the microfinance system is already prevailing.

Our preliminary assessment finds that an overwhelming proportion of the population remain unbanked, and records further show that poor farmers living in remote villages are the most deprived. This naturally calls for a further in-depth investigation and evaluation of digital financial programmes to forge a path.

Initial data from our ongoing rigorous survey in rural Bangladesh states that the prevailing top-down mind set, as far as the banking service is concerned, needs to be overhauled and transformed into a bottom-up approach that appreciates the perception of the poor and their needs of financial services.

Concepts like savings, loans and insurance have little meaning to rural Bangladeshis. Instead what might matter to them are tools that safeguard their families from the economic and natural shocks through which they could ‘pay & receive,’ ‘borrow & repay,’ and ‘store & retrieve’ money.

Thus conventional concepts and products must be broken down to their basic functions that convey what they truly mean — safeguarding/storing/growing their money (savings & insurance) and spending/borrowing/investing money (loans) and so on.

Therefore, moving away from the conventions and exploiting the full potential of digital technology is imperative for digital financial inclusion.

Experts have to work towards a simple and affordable financial tool which acts as a cushion during times of urgent need. This tool should keep the family from having to borrow heavily during crises. It should prevent their plunge into further debt and in the long run contribute towards lifting them out of poverty.

The branch-based banking system fails at inclusion since rural villagers deal mostly in cash. But the cost of these cash transactions will have to be passed on to the customers, meaning that they would end up having high service charges to cover the overhead of rural branches of banks. Difficult as it is, to bring the poor illiterate rural farmer into the fold of a formal financial system, a high service charge would make it next to impossible.

Digital tools towards the same goals are accepted to be far more effective for the rural populace. Towards that end, electronic cash cards, agent banking, mobile phones and other digital means are opening up the possibility to connect rural households with reliable financial services and tools.

While it is yet to be seen that a comprehensive inclusive scheme has been developed, the Digital Financial Services (DFS) Lab+ — a joint initiative between Bangladesh Bank and A2I — is trying to come with an inclusive system.

This system will primarily strive for payment digitalisation, assisted e-commerce, behavioural communication change and increased financial literary among the poor farmers living in rural villages and especially the remote pockets of Bangladesh.

The A2I Project at the Prime Minister’s office is working with the Bill and Melinda Gates Foundation on the Consultative Group to Assist the Poorest (CGAP) to support product design experiments based on behavioural insights that addresses every aspect of the system including design features, price incentives, and marketing messages leading to widespread consumption of financial services. It is imperative, of course, that the services remain user-friendly, cheap and sustainable.

Securing effective access to capital for the rural poor is a challenge as well as the key to wholesome development for developing countries.


Join the Conversation

Mir Mohammad Ali Khan
March 16, 2017

Thanks for sharing !
Mir Mohammad Ali Khan

kaysan islam
March 19, 2017

I'm very much interested jointly or partnership or volunteer work this projects,for knocking our remote and rural areas people's,for this projects, if you give me opportunity or have any options please get involved me, im feeling very much glad,hopefully our remote and rural areas people's more more time benefited from other's bank.and if our remote and rural areas students get from any kind of facility from this projects also the can something for they're self and families who staying remote and rural areas,and this project get successful vision.I'm waiting your soft response.
Kaysan Islam
Contact number:+8801711401741

John BaRoss
April 10, 2017

There appears to be a simple answer that may explain the stalling of the advance of financial inclusion in Bangladesh: government policy/regulations. Each industry permitted to offer digital financial services in Bangladesh will serve a subset role in helping Bangladesh realize its full potential for advancing financial inclusion.
You mentioned bkash and Dutch-Bangla (DBBL). These two have the top market share in mobile money in Bangladesh (in 2015, ~58% and ~17% respectively, followed by mCash [~9%], Ucash [~8%] and MYCash [~3%]). The common denominator across these 5? They are all (only) from the banking/ traditional financial services industry.
Since Vodafone/Safaricom m-Pesa became the global flagship for mobile money and the advance of financial inclusion, some countries have faced the reality of having a powerful traditional financial service provider industry with enough influence on national government policy makers to slow or stop new regulations that permit non-traditional industries from helping with advancing financial inclusion (notably telecom and tech).
In neighboring India, in addition to banks, at least 5 telecoms offer mobile money solutions, as do tech firms. Further, visionaries at the Reserve Bank of India have encouraged all these and other industries to become involved with the experimental Payments Banks to onboard primarily the rural unbanked. Of the 41 Payments Banks applicants almost 2 years ago, 11 were initially approved by the RBI, and now 8 remain. Telecoms are involved with operating 4 of the remaining 8 Payments Banks today.
Similarly, neighboring Bangladesh to the southeast, the Central Bank of Myanmar licensed Telenor to offer mobile money (Wave Money) to help with that nation's efforts to advance financial inclusion.
Over 80 nations globally have telco operator-carriers operating mobile money, plus dozens of other countries have evolved their banking and telecom regulations to permit other forms of innovative digital financial services from telecom and tech to help advance financial inclusion (i.e.: Telecom Carrier Crowd Funding in Côte d’Ivoire, Carrier Commercial Banking in Zimbabwe, Carrier Super Agents in Nigeria, Carrier Water ATM in Kenya, Carrier Health Micro Insurance in Uganda, Carrier e-Cooperative in Indonesia, Carrier Farming Insurance in Kenya, etc.). is a non-profit global industry association made up of global industry volunteers. We can assist you and the Prime Minister’s Office with finding and cross-pollinating success-knowledge pertaining to leveraging telecom-carriers to help optimally advance and sustain financial inclusion progress – without fees or obligation. Premise being that financial inclusion challenges faced in Bangladesh have been seen and overcome elsewhere by telecom carriers. FINCCLUDE strives to help industry stakeholders learn of and apply proven success methods to help accelerate the advance of financial inclusion. We’re here to help you with efforts to advance financial inclusion faster.
John BaRoss
Founder & President

Md.Abdullah Al Mamun
March 18, 2019

I'm Mamun from Chapai Nawabganj, Bangladesh. I've involved to supply arsenic free safe drinking water. Now I wish to serve safe drinking water in educational institutions. But I have not a water treatment plant. I need some fund to setup plant. How I can get help from World Bank .
I'm waiting for your response.