People are now increasingly using digital banking services rather than traditional ones during the pandemic, a Bangladesh Bank study has found.
The study also found simplified policies and user-friendliness as reasons behind the clients’ preference to digital services.The central bank’s research wing published the study report this month, titled “COVID-19 pandemic in Bangladesh: Policy Responses and its Impact”.
It shows that the COVID-19 pandemic accelerates the number of internet banking customers because “it is more convenient rather than general banking after the disruptions in public movement.” Both customers and transaction numbers show an increasing trend from the pre-COVID to COVID period. Total number of customers increased from 2.65 million in March 2020 to 3.47 million in March 2021 and stood at 3.44 million in April 2021. The number of transactions increased from 1.85 million in March 2020 to 2.60 million in March 2021 and stood at 2.59 million in April 2021. Since COVID-19 emerged, the mobile financial service (MFS) providers witnessed a tremendous surge in the number of customers along with number of transactions. Both the MFS account and transaction, a very positive phenomenon is noticed regarding the COVID-19 incident.
The number of transaction through MFS has risen after the incident of COVID-19 compared to the pre-COVID situation and it stood at 307.3 million in March 2021, the report said.
The number of account has also increased to 307.3 million in March 2021.
During the COVID-19 lockdowns, the digital financial services provided an enabling government to provide quick and secure financial support to people and businesses.
As part of the immediate response to COVID-19, the digital finance industry has been playing a key role in developing and providing services amidst the crisis and acting as an alternate channel for banking services which faced disruptions during pandemic on multiple aspects of people’s lives and financial sector.Before the incident of COVID-19, a vast amount of transactions has taken place through debit cards, credit cards, and ATMs, the report said.
The credit card transactions were fewer compared to debit cards and ATMs.
According to the report, a sharp fall in transaction numbers in all mediums in April 2020 has occurred.
This drastic fall is supported by the announcement of the lockdown that started on March 26, 2020.
However, Bangladesh Bank has taken several policy measures to remove this sluggish nature of the economy which have created a positive impact on the mentioned mediums of transaction, the study report said.
To ensure adequate liquidity supply in the market, the central bank issued directives for keeping an adequate amount of cash at bank branches and ATMs.
Besides, the BB withheld any type of late payment fee, charge, penal interest, additional revenue or any other fee, charge due to delayed credit card bill payment from 15 March 2020 to 31 May 2020.
ATM transactions’ number increased from 17.62 million in March 2020 to 20.30 million in March 2021 and stood at 17.94 million in April 2021. The number of transactions using credit card increased from 2.19 million in March 2020 to 2.87 million in March 2021 and stood at 17.94 million in April 2021.