Nagad Digital Bank, one of the leading mobile financial service providers in Bangladesh, is set to begin its commercial operation in July this year. The bank aims to offer branchless banking services to customers across the country, marking a significant step towards a new era of banking in Bangladesh.
To ensure a seamless customer experience, Nagad will initiate its in-house operation on March 26 as a trial run. Tanvir A Mishuk, the managing director of Nagad, emphasized the importance of providing customized services to their consumers.
In October last year, Nagad, along with another firm, received approval from the central bank of Bangladesh to establish digital banks. The primary goal of digital banks is to promote cashless transactions, drive digital transformation, and contribute to the government’s financial inclusion agenda.
Currently, Bangladesh has 61 banks, with most of them focusing on urban areas. Approximately 52 percent of the economy is driven by informal transactions, leaving formal channels to capture the remaining 48 percent. Nagad plans to bridge this gap by reaching the grassroots level, where traditional financial institutions have not yet expanded their services.
With a 38 percent stake in the mobile financial service market, Nagad holds a significant position in processing nearly Tk 4,000 crore transactions daily. The bank aims to leverage this position and focus on facilitating transactions worth Tk 1,300 crore every day.
Mishuk emphasized that Nagad will act as a bridge between traditional branch-based banks and mobile financial service operators. By working closely with renowned technological solution providers, Nagad expects to develop a platform that will enable it to become a full-fledged digital bank.
Having access to a database of 8.5 crore customers as an MFS provider, Nagad plans to use artificial intelligence to analyze customer data and design individualized products. They aim to cater even to the requirements of grocery store owners in remote areas by developing user-friendly technology.
Nagad initially plans to offer services through its 71 service centers and form partnerships with big banks, particularly state-run lenders with branches in rural and suburban areas. While this approach may incur higher costs compared to app-based services, it will enable Nagad to encourage digital adoption among customers who typically visit branches.
However, Nagad acknowledges that there are challenges in expanding digital banking in Bangladesh. Only 52.2 percent of households in the country own smartphones, posing a barrier to the penetration of digital banking services. Additionally, there is a need for increased financial literacy among the population.
The Bangladesh Bank has set guidelines for digital banks, prohibiting them from providing loans for foreign trades or to medium and large industries. Nevertheless, Mishuk suggests that allowing digital banks to support foreign trade would incentivize the industry and contribute to bringing in remittances.
Nagad is confident about the prospects of digital banks in Bangladesh, given the vast number of unbanked individuals. By striving to address the challenges and expanding their reach, Nagad aims to become a full-fledged bank and contribute to the ongoing digital transformation of the country’s financial landscape.
In conclusion, Nagad Digital Bank is gearing up to revolutionize the banking sector in Bangladesh with its branchless banking services. With a focus on customization and bridging the gap between traditional banks and mobile financial service providers, Nagad aims to play a pivotal role in transforming the country’s financial inclusion landscape.
