Following the advent of the pandemic, several banks have started to rely on providing financial services through social media platforms such as Facebook, Messenger, Whatsapp and Viber.
Dhaka Bank introduced WhatsApp banking in 2020, whereas Prime Bank introduced WhatsApp banking a few months back and has already served 70,000 registered clients.
Eastern Bank Ltd, in 2021, also served 2 lakh clients with social media banking after it started offering financial services through Facebook Messenger and Viber.
However, the central bank thinks that financial services provided through such platforms pose data security risk, as access to consumer data will be controlled by foreign companies that operate outside the borders of the country, going against the ICT policy of Bangladesh.
According to the local ICT policy, any manufactured, collected and processed data have to be stored inside the country in line with data localisation rules.
Adhering to the policy and security concern, the central bank had also rejected the proposal of multiple banks who wanted to roll out social media banking and issued a letter to all banks on January 12, seeking information on services provided using such a framework.
Mutual Trust Bank (MTB) rolled out social media banking in June of 2021 and saw its proposal of rolling out the service get rejected by the central bank after it had already started operating through the platforms a month earlier.
Prior to getting rejected in October 2021, MTB had already registered 11,000 clients with its platform to avail services through WhatsApp.
The central bank also warned about a potential threat to the interest of clients and their financial data on the use of such platforms citing the need for data localisation to secure consumer data by storing it within the borders of the country.
Confirming the matter to Dhaka Tribune, a central bank official said that the Bangladesh Bank is considering barring banks from providing such kinds of financial services through social media platforms in the days to come.
However, a top official of one such bank, on the basis of anonymity, told Dhaka Tribune that it would severely damage banks that had already invested in such kinds of digital banking tools.
“If the central bank decides so, it will be a huge blow to banks who have already rolled out programs to cater to the tech-savvy consumer segment. This would also increase our expenses as we will have to depend on call centers, going against recruitments already made to cater for consumers using social media,” the private banker explained.
Among such services, clients can make balance inquiries, receive account statements, transfer funds from one bank to another, recharge mobile phones, and pay utility bills, largely through WhatsApp.
Syed Almas Kabir, a former president of the Bangladesh Association of Software and Information Services, said that every entity would have to preserve their data inside the country as per the data localisation rule of the ICT Policy.
“Take a look at India, where WhatsApp set up a server in 2019 so that data generated in the country can be stored locally. The government can request WhatsApp to set up a server in Bangladesh, which will resolve the problem," Kabir said.
