The shift from manual banking to its digital means is certainly not a new phenomenon for the banking industry in Bangladesh. But the advent of the coronavirus pandemic has caused customers from all walks of life to focus on online banking to reduce the risk of contracting the deadly flu.
Transactions through online banking stood at Tk 20,559 crore in December, up 154% year on year and 21% from a month ago, according to Bangladesh Bank data.
Central bank and commercial bank officials say the banking industry has started to take a wide range of initiatives since 2010 as part of its efforts to encourage the adoption of digital means.
Yet the majority of clients have long shown reluctance to embrace digital methods due to their long history of working with manual methods.
Although the downturn in business resulting from the coronavirus pandemic has taken a toll on the entire economy, it has created a paradigm shift in such a way that customers now prefer cashless transactions more than what they used to do at the pre-pandemic era.
People were avoiding going to shops or banks as much as possible during the peak of the pandemic to protect themselves from the flu, using alternative mobile apps and credit and debit cards to buy essentials to continue their life.
As the pandemic is now beginning to wane, people in general are still eagerly clinging to internet banking, thus helping the government’s agenda for digital Bangladesh gain momentum.
The number of customers using internet banking stood at 44 lakh in December, up 37% from a year ago.
A BB official said the central bank had also extended its regulatory support to banks at the height of the pandemic so they could expand their internet banking operations.
In September 2020, the BB increased the limit on interbank funds transfers via online banking for customers, allowing a maximum of Tk 5 lakh per day from the previous Tk 2 lakh.
The central bank has also doubled the single transaction cap to Tk 1 lakh from Tk 50,000.
Customers are now allowed to settle up to 10 transactions per day, up from five previously.
Commercial banks have also deployed various products in an effort to augment their internet banking.
For example, almost all banks have already introduced mobile apps for customers, enabling location-independent banking.
Mashrur Arefin, managing director of The City Bank, said the perspective of banks as physical entities is no longer the main feature as customers have come to accept that bank branches are in smartphones.
“A long queue of people outside bank counters is barely visible as customers now deposit their money or transfer funds from one bank to another, using mobile apps.”
City Bank customers have transacted a staggering 18,000 crore of Tk using its app which will further increase in the coming years, Arefin said.
Central bank platforms – Bangladesh Real Time Gross Settlement (BD-RTGS) and Bangladesh Electronic Funds Transfer Network (BEFTN) – have also helped popularize digital banking schemes.
People are now able to instantly settle high-volume trades through RTGS, while BEFTN helps them complete retail trades within a day.
“Different types of payments, ranging from utility bills and school fees to those for booking flights or bus seats, can now be made from anywhere, which was difficult to understand a while ago. six or seven years,” Arefin said.
The availability of smartphones at affordable prices has also contributed to the expansion of internet banking services in recent times.
Brac Bank recently launched a mobile application “Brac Bank Astha”, which has gained immense popularity among customers.
With its user-friendly features, the app now offers customers an effortless and most secure banking experience, said Md Mahiul Islam, Head of Retail Banking at Private Commercial Bank.
“It has increased the volume of Internet banking.”
There were 43,000 such transactions in the banking sector in December, up 83% year-on-year.
“We look forward to further investment for the expansion of our digital banking operations,” Islam said.
A central banker says branch banking is already in decline, alongside the spread of internet banking, ultimately reducing banks’ operational costs.
“It also benefits customers because they can opt out of visiting branches to settle transactions, which helps them use their valuable time for other productive purposes.”
In addition, digital settlement of transactions has boosted economic activities as money now circulates more than in the past, he added.