Bangladesh's banks should not worry about the advancement in financial technology, also known as fintech, as it can create a huge opportunity for greater financial inclusion and expansion of basic services, according to an analysis of HSBC Bangladesh.
The banking giant said the new wave of fintech is often portrayed as a disruptive force that threatens banks with new, agile and savvy competitors.
But fintech is transforming the way people and companies connect with their banks, and the way banks manage their back-office operations, the bank said.
“Fintech complements rather than threatens banking institutions,” said Francois de Maricourt, chief executive officer of HSBC Bangladesh, in a statement.
“In my experience, banking has always been about technology, so today's financial-technology innovation boom represents evolution rather than revolution for traditional banking. It is supplementing and diversifying the existing financial system – not replacing or disrupting it.”
Fintech market in Bangladesh is at an early stage. However, it can be used as a powerful means to expand access beyond financial services to other sectors, including agriculture, transportation, water, health, education, and clean energy.
“Digital solutions and new technologies will help overcome the massive challenge of providing access to financial services to the poor and will contribute towards achieving the government's goal of universal access to financial services by 2021,” said HSBC Bangladesh.
Fintech innovators harness the internet, mobile technologies and big data to offer a range of tools and services -- from tech-enabled payments and crowd funding to currency exchange, online lending and wealth management services.
The statement said bank-led mobile financial services have seen rapid growth and become an important “tool of the trade” for extending banking services to the unbanked and banked population.
There are 52.68 million registered mobile banking accounts as of May 2017, according to Bangladesh Bank data.
“However, despite this rapidly growing number, cash is still the most prevalent form of financial transaction.”
It is expected that cash transaction will go down in the next few years and mobile money will grow, as more and more people will start paying for private and government services through mobile wallets.
The sector witnessed major technological innovations in the recent past – credit cards, automated teller machine and online banking, to name a few.
“Those changes provided huge advances in convenience for consumers, but they did not revolutionise the financial landscape: financial institutions remained the dominant players and adapted to these changes,” said Maricourt.
Source: http://www.thedailystar.net/business/new-tech-deepen-financial-inclusion-hsbc-analysis-1441207