The Government of Bangladesh, through the Ministry of Information and Communications Technology, supports the implementation of Digital Bangladesh – also known as Vision 2021 – through leveraging technology effectively and efficiently to drive economic growth, measuring impact through indicators such as improvements in the quality of education and health, poverty reduction, and decreasing unemployment rates. For more than a decade, Bangladesh has made advancements in the integration of technology in various sectors and streamlines good governance practices and affairs. One key tool being used to propel digital developments is through the country’s 171+ million cellphone subscribers, among whom 112+ million internet subscribers. Services such as digital bill payments, online tax returns, academic institution registrations, digital health services, and online banking systems have allowed greater opportunities for financial inclusion and technology adaption. However, with the increasing reliance on the usage of newer technologies, a gap remains in digital literacy and access.

The push to digitize Bangladesh during COVID-19

Vision 2021 was capitalized on during the start of COVID-19 in order to rapidly digitize and utilize platforms to streamline processes, especially for the vulnerable, underserved and underreached communities. Though mobile financial services were already growing quickly in Bangladesh, the advantages of using mobile financial services (MFS) through mobile phones to access financial services and execute financial transactions with simple cashless payment experiences, were still not broadly anchored across the nation.

Throughout the COVID-19 pandemic, there has been an increased dependence on digital solutions focusing on user experiences in product and service design to facilitate adaption in the context of the “new normal”. Further, an increase in adapting MFS has also been due to the guidelines set and enforced by expert health agencies (e.g., World Health Organization) recommending cashless transactions whenever possible to control the spread of the novel coronavirus in the communities. The increased use of digital transactions and financial inclusion has accelerated and strengthened the foundation of digital financial services globally. Bangladesh is no exception with MFS providers experiencing tremendous upturn in the number of customers; from March 2020 to November 2020 alone, around 10 million clients were added, taking the number of registered clients now to 96.4 million.

Mobile financial services includes access to financial services for both transactional as well as non-transactional purposes via a mobile phone. The flexibility of having access of financial services allows for customers to keep money in their mobile wallets and send and receive money at anytime, from anywhere and anyone. During the pandemic, when people have been encouraged or required to remain in their homes, MFS offered services beyond just money transfers. Consequently, communities now habitually buy groceries and other daily necessities online, often paying through mobile wallets. Fewer people stand in a queue now to pay water, gas and electric bills, as mobile wallets offer convenient and easy bill payment. From February to November 2020, utility bill payments nearly doubled from Tk 4.41 billion to Tk 8.31 billion. Additionally, the Government of Bangladesh has been providing direct cash support to 5 million COVID-19 affected families through four major MFS operators.

The combination of fintech innovation, technological development, and increased access to mobile phones creates a range of opportunities for customers. Salaries are now disbursed through mobile wallets, most notably in the ready-made garment (RMG) industry and for other unbanked populations such as informal workers. In July 2020, 87% of garment workers were brought under the digital wage system; however, in November 2020, digital wage payments dropped to 54% due to receded incentive of the government stimulus, lagging integration of digital wage systems in the factories, and lack of workers’ education and confidence about mobile financing and banking. Donations are more effectively distributed to marginalized communities more and Zakat money is increasingly sent through MFS to various welfare foundations. Remittance, payments for government services, toll payments, credit card bill payments, insurance premiums, and payments for digital healthcare services, among others, are also taking place more often through digital platforms.

Currently, 15 banks in Bangladesh are providing MFS with over 1.03 million agents countrywide. The pioneer MFS operator, bKash, has been operating under the authority of Bangladesh Bank as a subsidiary of BRAC Bank Limited and has added approximately 10 million new customers, bringing its total customer base to 50 million with current daily transactions of over Tk 10 billion. The popularity of the bKash platform is due to the diverse services provided such as sending or adding money, mobile recharge, cash out, payments, tickets, news, and partner offers with recent additions during the pandemic to cover donations and pay bills (e.g., utility bills, government fees, education, credit card, etc.). Nagad, a joint venture launched in 2019 and operating under the Bangladesh Post Office, is the country’s fastest-growing mobile financial service operator and currently serves over 2.5 million customers. Rocket, a mobile banking application by Dutch Bangla Bank Limited, is the third leading MFS operator in the country. With the cooperation of central banks and government entities, Bangladesh has made tremendous growth in the MFS sector. To have growth of the MFS industry, there must be favorable regulatory environments promoting sandboxes and other mediums to test and provide guidelines and regulations to increase MFS opportunities and protect consumer interests.

The emergence of the mHealth Sector

The introduction of digital health services and remote health care access was gaining traction prior to the pandemic but was propelled forward by quarantine measures. The digital health leaders in Bangladesh include Digital Healthcare Solutions, Praava Health, and Maya Bangladesh are addressing challenges in providing access to health services, affordability through health financing, and health education to increase awareness. Digital health services have had innovative solutions that have been able to remotely diagnose, cloud-based monitoring of health systems, and rapid dissemination of information to patients and medical professionals.

The complicated history of healthcare in Bangladesh has led to a fragmented system. Through key partnerships, digital health leaders are learning to better address the health and financing needs of the patients they serve. However, these companies are still met with many regulatory hurdles. For example, the companies providing digital health services fall under the Ministry of Health but may also need authorization by the Information and Communication Technology (ICT) division and other authorities depending on licenses obtained, whereas the financial services sector is regulated under the Ministry of Finance. The National Digital Health Strategy initiated in 2019 and recently revised in December 2020 provides guidelines of digital technology usage to strengthen health systems. As the focus continues to be on digital health, the need for Fintech for Health partnerships is increasingly important.

Future of MFS in Bangladesh

The opportunities to leverage fintech to support health wallets are many in Bangladesh. In many ways, the modern digital healthcare experience has been shaped by MFS through continued usage of daily cashless experiences and refined user experiences, particularly in the health sector for medical expenditures. In March 2021, patients used discount and special bundled offers through partner health system, Square Hospital in the form of making payments for their healthcare packages. Payments are also accepted through digital transactions at United Hospital through Dutch Bangla Bank Limited. This is just the beginning of the Fintech for Health story in Bangladesh. Through further conversations between sectors, partnerships, and the continued evolution of payments and health behaviors, the future of MFS in healthcare is all the more promising.

Tawfiq Hasan, Senior Partnership Consultant, ACCESS Health International Southeast Asia

Munia Islam, Independent Consultant, ACCESS Health International