Key takeaways from National Financial Inclusion Strategy consultation in Dhaka

Our team is working with government to develop a draft National Financial Inclusion Strategy 2018-2021. Today, with the UN Capital Development Fund's SHIFT programme, we co-hosted a consultation with the country's Digital Finance Consultative Group to discuss the vital role of digital financial services in achieving the aims of the Strategy.

But what is financial inclusion? Here is the definition that we use: Access to the full range of financial services provided at affordable cost with quality and ease of access to everyone who can use such services with minimum risk through a competitive financial marketplace.

The National Financial Inclusion Strategy for Bangladesh is a public document roadmap to help excluded populations get access to financial services. The Strategy aims to:

  • Assist Government to adopt a coordinated approach across ministries, public and private sectors

  • Raise national awareness of the need for greater financial inclusion

  • Build trust and collaboration among stakeholders

  • Implement, coordinate and monitor actions

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The vision for the National Financial Inclusion Strategy for Bangladesh 2018-2021 is an integrated and accessible financial system that responds to the needs of the country’s population and enterprises and supports rapid and inclusive development of the country’s real sector.
 Fantastic group sessions today discussing the incredible potential of digital financial services for achieving greater financial inclusion in Bangladesh.

Fantastic group sessions today discussing the incredible potential of digital financial services for achieving greater financial inclusion in Bangladesh.

Vital role of digital financial services

Together, 100 representatives of government, private sector, fintech providers, INGOs, and financial institutions at the Radisson Hotel discussed the vital role of digital financial services in achieving greater financial inclusion in Bangladesh.

We heard presentations from an expert panel, engaged in group discussions to prioritise the recommendations proposed within the draft Strategy (see recommendations below), and collectively shared hopes, questions and concerns about the role that digital financial services can play in bringing financing opportunities to underserved citizens and businesses.

 Dr Mustafa K Mujeri is Team Leader of the National Financial Inclusion Strategy for Bangladesh. Today, he outlined the key recommendations for both financial service providers and policymakers and regulators included in the Strategy.

Dr Mustafa K Mujeri is Team Leader of the National Financial Inclusion Strategy for Bangladesh. Today, he outlined the key recommendations for both financial service providers and policymakers and regulators included in the Strategy.

We have identified 3 major target groups: women, youth, and MSMEs. These are the segments of the population where we have to work, as they are among the most deprived groups. We need to take the Strategy forward not only to ensure equity in distribution of financial services, but also exploit the opportunities that will be coming up for this country in future years.
— Dr Mustafa K Mujeri, Team Leader, National Financial Inclusion Strategy for Bangladesh

6 strategic thrusts within National Financial Inclusion Strategy

  • Expand consumer choice and convenience with broader range of financial instruments

  • Strengthen interconnections between financial service providers and digital ecosystems

  • Build common industry infrastructure fit for future

  • Strengthen customer empowerment and protection

  • Prioritize women, youth and MSMEs

  • Create enabling core policies and regulations

Recommendations for policy makers and regulators

  • Establish regulatory sandbox to promote innovative DFS

  • Expand financial services through digital delivery channels, for example, by enabling MFS providers to provide microloans

  • Develop roadmap for interoperability with diverse private and public sector stakeholders and industry associations

  • Incentivise providers, particularly MFIs, to integrate DFS into their operations

  • Incentivise payments adoption among small businesses to enhance the use case for spending digital money

  • Review and update policies and regulation on MFS and eKYC

  • Establish clear policy on USSD pricing

  • Promote usage of digital smartcards/NIDs

  • Promote expansion of connectivity infrastructure, particularly 4G, and ensure full penetration of 3G

  • Create enabling environment for Open-APIs

  • Track progress towards introduction and customer response to other DFS/ MFS products beyond cash-in/cash out and P2P transactions

  • Encourage partnerships between Banks, MNOs, MFIs, insurers, cooperatives and other stakeholders to leverage respective strengths when providing new services

  • Work with private sector to leverage public networks to expand the breadth of coverage, potentially using Union Digital Centres and Post Offices as pseudo-agent points

  • Work with private sector to facilitate a greater proportion of G2P and P2G payments via formal financial sector, with an openness to disbursing funds via a variety of channels

  • Work with private sector to adopt financial literacy programme that explores use of mass media and educational systems to spread basic financial literacy and protect consumers from common mistakes and scams

  • Ensure meaningful involvement of telecommunications companies in developing and delivering financial services

 Rajeev Kumar Gupta of UNCDF SHIFT leading the proceedings at today's event.

Rajeev Kumar Gupta of UNCDF SHIFT leading the proceedings at today's event.

Recommendations for financial service providers

  • Adopt customer-centric approach to design products tailored for underserved market

  • Invest in research and data analytics to increase resilience to fintech disruption

  • Enable offline card technology to deal with connectivity challenges, especially in rural areas

  • Work with the Government to assess gaps in financial infrastructure

  • Identify business case for linkages that are possible under the existing policy framework and test innovative partnerships

  • Work with industry associations and regulators to advocate for interoperability

  • Connect existing distribution channels to a broader suite of financial services. For example, partnerships can allow bank deposits to be distributed directly through MFS or MFIs such that banks earn through intermediation whereas MFS/MFIs earn fees;

  • Offer financial services to MFS agents to ease their float management for different DFS providers

 Representatives of the Digital Finance Consultative Group at today's consultation event.

Representatives of the Digital Finance Consultative Group at today's consultation event.