Financial market’s contribution to GDP expected to reach $5.5B by 2025
BIGSTOCK
Tribune Report
Publish : 29 Nov 2021, 07:09 PMUpdate : 06 Mar 2022, 02:37 PM
Bangladesh’s financial service market is one of the top ten FDI-attracting sectors with a market size of $4.5 billion contributing to 3.4% of GDP and is estimated to rise to $5.5 billion by 2025, from its $3.8 billion contributions to GDP in the fiscal year 2020-2021.
With policies driving sectoral growth valued at $12 billion, the industry has been growing at 8% for the last five years.
Currently, 10 crore people are using financial services, with an estimated 3.5 crore people to reside within the middle and affluent class by 2025. This in turn will increase the demand for fintech, mobile, and online banking.
Investors can leverage the evolving market of Bangladesh's financial services in diverse areas ranging from fintech to green banking, as well as the insurance and microfinance segments.
Experts were speaking at the panel called “Financial Services” at the two-day International Investment Summit 2021 on Monday.
“Bangladesh will be a $500 billion economy by 2026, creating huge investment opportunities in financial services, as it’s also aspiring to be a high-income country within 2041,” said Naser Ezaz Bijoy, CEO of Standard Chartered Bank (SCB) who moderated the session.
“Leveraging strategic location, demographic dynamics, competitive wage advantages, simplified regulatory framework, liberal financial flows, risk-adjusted returns for foreign investors, large domestic market, steady performance, and resilience of the economy offers opportunities for global investors to capitalize on,” stated Fazle Kabir, the Governor of Bangladesh Bank (BB) in his keynote speech.
The central bank governor also pointed out; there are significant opportunities of investing in productivity gains through technology adoption and inclusiveness through mobile-based solutions with robust IT-enabled services rapidly increasing.
“Leveraging technological advances is considered to be a game-changer in financial services such as that of e-payment systems. An enabling IT environment with digital financial infrastructure has laid the foundation for the smooth operation of new businesses,” he added.
Experts pointed out Bangladesh’s geographic location also allows investors to tap into two of the biggest neighbouring markets in the world, India and China, apart from leveraging its young demographic dividend.
Additionally, with high internet and telecommunication penetration of 67% and 110.76 million internet users in 2020, there has been an emergence of fintech companies that helped Bangladesh increase financial inclusion from 16% in 2011 to 60% in 2020.
According to experts, the startup ecosystem has the potential to reach a valuation of $10 billion by 2025 from $1.45 billion with opportunities to develop and launch innovative technologies such as artificial intelligence (AI) and distributed ledger technology.
Citing the country’s economic development and growth over the last decade Selma Rasavac-Avdagic, manager, Creating Markets Advisory Services (CMA), South Asia, International Finance Corporation (IFC) stated: “IFC is significantly looking to step up our efforts in Bangladesh to increase our investments from the current $2.5 billion to $4 billion in the next years. For this, the reforms in the financial sector need to continue.”
Minister of Planning, M A Mannan MP, chaired the session where Kevin Green, managing director of The Hongkong and Shanghai Banking Corporation Limited (HSBC); Ali Reza Iftekhar, chairman, Association of Bankers Bangladesh Limited; M Mosharraf Hossain, FCA, the chairman of Insurance Development and Regulatory Authority (IDRA); and Abdur Rouf Talukder, senior secretary of Finance Division, Ministry of Finance attended as panellists.
Financial market’s contribution to GDP expected to reach $5.5B by 2025
Bangladesh’s financial service market is one of the top ten FDI-attracting sectors with a market size of $4.5 billion contributing to 3.4% of GDP and is estimated to rise to $5.5 billion by 2025, from its $3.8 billion contributions to GDP in the fiscal year 2020-2021.
With policies driving sectoral growth valued at $12 billion, the industry has been growing at 8% for the last five years.
Currently, 10 crore people are using financial services, with an estimated 3.5 crore people to reside within the middle and affluent class by 2025. This in turn will increase the demand for fintech, mobile, and online banking.
Investors can leverage the evolving market of Bangladesh's financial services in diverse areas ranging from fintech to green banking, as well as the insurance and microfinance segments.
Experts were speaking at the panel called “Financial Services” at the two-day International Investment Summit 2021 on Monday.
“Bangladesh will be a $500 billion economy by 2026, creating huge investment opportunities in financial services, as it’s also aspiring to be a high-income country within 2041,” said Naser Ezaz Bijoy, CEO of Standard Chartered Bank (SCB) who moderated the session.
“Leveraging strategic location, demographic dynamics, competitive wage advantages, simplified regulatory framework, liberal financial flows, risk-adjusted returns for foreign investors, large domestic market, steady performance, and resilience of the economy offers opportunities for global investors to capitalize on,” stated Fazle Kabir, the Governor of Bangladesh Bank (BB) in his keynote speech.
The central bank governor also pointed out; there are significant opportunities of investing in productivity gains through technology adoption and inclusiveness through mobile-based solutions with robust IT-enabled services rapidly increasing.
“Leveraging technological advances is considered to be a game-changer in financial services such as that of e-payment systems. An enabling IT environment with digital financial infrastructure has laid the foundation for the smooth operation of new businesses,” he added.
Experts pointed out Bangladesh’s geographic location also allows investors to tap into two of the biggest neighbouring markets in the world, India and China, apart from leveraging its young demographic dividend.
Additionally, with high internet and telecommunication penetration of 67% and 110.76 million internet users in 2020, there has been an emergence of fintech companies that helped Bangladesh increase financial inclusion from 16% in 2011 to 60% in 2020.
According to experts, the startup ecosystem has the potential to reach a valuation of $10 billion by 2025 from $1.45 billion with opportunities to develop and launch innovative technologies such as artificial intelligence (AI) and distributed ledger technology.
Citing the country’s economic development and growth over the last decade Selma Rasavac-Avdagic, manager, Creating Markets Advisory Services (CMA), South Asia, International Finance Corporation (IFC) stated: “IFC is significantly looking to step up our efforts in Bangladesh to increase our investments from the current $2.5 billion to $4 billion in the next years. For this, the reforms in the financial sector need to continue.”
Minister of Planning, M A Mannan MP, chaired the session where Kevin Green, managing director of The Hongkong and Shanghai Banking Corporation Limited (HSBC); Ali Reza Iftekhar, chairman, Association of Bankers Bangladesh Limited; M Mosharraf Hossain, FCA, the chairman of Insurance Development and Regulatory Authority (IDRA); and Abdur Rouf Talukder, senior secretary of Finance Division, Ministry of Finance attended as panellists.
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