This focus note providing an overview of financial inclusion in Bangladesh, including its current state, the recent trends driving usage in the financial sector and a view on the challenges and opportunities that exist to unlock the potential of FinTech.
Bangladesh is both an inspiration and a challenge for policymakers and development practitioners. While efforts in poverty reduction to date have been extraordinary, Bangladesh still faces daunting challenges with nearly 51 million people living below the poverty line. Basic access to banking services and products remain a challenge in Bangladesh.
However, the government has shown firm commitment through conducive policies aimed at advancing financial inclusion. The microfinance movement has led the way in terms of reaching out to the masses. Since poverty remains acute in Bangladesh, the importance of microfinance is crucial – especially for the lower-income segments located in the northern and southern part of the country.
With the rapid adoption of mobile phones in the country, the MFS sector has experienced significant growth in the number of users as well as agents that provide mobile money services. However, the MFS market in Bangladesh is yet to move beyond basic transactions, such as cash-in, cash-out, and payments – many of which are conducted over-the-counter by unregistered users. Fintech players in Bangladesh, primarily led by the MFS players, have a huge potential to address the key constraints that hold back financial inclusion and to facilitate the integration of underserved segments into the formal financial services sector.
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