A survey conducted recently makes it clear that the number of Bangladeshis with bank accounts needs to be increased, as we editorialised yesterday.
But there is a problem. Because of the high overhead costs of operating conventional banks, it is generally not feasible for traditional banks to accommodate the poor and underprivileged, who find it hard to maintain the minimum balance required to make maintaining an account worthwhile for a private bank.
The best solution to this problem is mobile banking. As the success of mobile banking services shows, mobile banking can bring more people into the financial system than a traditional bank with a physical location ever can. Mobile banking services do not require large savings, and cater to a section of the population that would not be considered as attractive customers by conventional banks from a profit-making point of view.
Mobile banking services, by not needing physical bank branches, and operating through agents who work on commission, can bring their overhead costs down significantly. Because of their reduced expenses, mobile services can be offered to the poorest of the poor.
For years, financial inclusion has been used as an excuse to keep open state-owned banks, with the argument that private banks were profit-seekers. But perpetually loss-making state-owned banks that hurt the economy are not the solution. Most people in Bangladesh own a mobile phone – using this technology for banking is the right way to go.