Can dialogue lead to DFS uptake? – PERSPECTIVES FROM MSTAR/BANGLADESH

As mSTAR’s project in Bangladesh comes to a close this fall, mSTAR/Bangladesh staff write on their perspectives from four years of a successful project, where mSTAR/Bangladesh helped enroll over 24,000 individuals—most of whom are women—into digital financial service accounts and helped USAID IPs and beneficiaries transact around $1.83 million digitally. The activity brought two new financial products to market with Bank Asia and IFIC Bank, including micro-credit to farmers with lower interest rates and more favorable repayment terms than any other alternative on the market today. Through this effort, mSTAR/Bangladesh facilitated loan disbursement to 795 farmers. Both banks are interested in scaling up these efforts.  

By Tasnuba Sinha, mSTAR/Bangladesh Digital Financial Services Associate

In a world where we want to make an impact across borders, cultures, viewpoints and motivations, dialogues such as stakeholders’ meetings, conferences, formal network gatherings and seminars play an integral role. Dialogues like these allow for networking and relationship building, for role models to inspire next generation change makers, and for the exchange of experiences.

mSTAR/Bangladesh recognizes the potential and the importance of dialogue facilitation and has organized 11 dialogue facilitation programs in Bangladesh over the past four years. I have been fortunate enough to be a part of mSTAR/Bangladesh and have organized numerous events over the past 11 months including Mobile Money Consultative Group meetings, a Financial Inclusion Week Event and an Agricultural Value Chain Insights: Opportunities in Bangladesh report launching event.

In the last few years, our team at mSTAR/Bangladesh has built a strong local and international network of representatives from development organizations, donor agencies, digital financial services (DFS) providers, mobile network operators, technology solution providers, insurance companies and regulatory bodies – people who are doers and makers, who believe what we believe: that Bangladesh has all the potential in the world. Without this community, our work in supporting acceleration and adoption of digital payments would not be possible.

The first Mobile Money Consultative Group (MMCG) meeting was first held in August 2014 and ever since then, it has successfully created a community of passionate individuals who believe in the benefits of using digital financial services and ultimately building an inclusive digital ecosystem where all segments of society have access to formal financial services, particularly those at the bottom of the pyramid. MMCG provided a platform for change makers to come together and discuss challenges and innovative solutions. Held quarterly, the MMCG has been covering various issues from the importance of financial literacy to the need for innovation in mobile financial services products. Furthermore, several digital financial service providers have expressed many times during the meetings that they see all the challenges as an opportunity for them to develop their products in such a way that the challenges can be eliminated. Most importantly, our team believes in promoting collaboration, trust and community – the tenets of a strong digital financial ecosystem and after successfully conducting nine MMCG meetings, we can say that is what we have attained.

Another major event that mSTAR/Bangladesh (mSTAR/B) has hosted that I am particularly proud of is the Financial Inclusion Week event in October 2016. Aligning with the global theme ‘Keeping Clients First in a Digital World,’ mSTAR/B hosed an event entitled ‘Increasing the Uptake of Formal Financial Services through a Client-Centric Approach.’ The event successfully explored how different actors, from development organizations, to financial service providers, to government programs, have supported the development, promotion and uptake of digital financial services in Bangladesh. mSTAR/B was one of the very few organizations who took part in this global conversation. The modality of the workshop was designed in such a way that it provided the participants to perform a lively, interactive discussion where they explored scenarios reflecting existing needs, barriers to accessing formal financial services in Bangladesh and the actions and steps required to further accelerate financial inclusion.

The core purpose behind hosting any dialogue facilitation is to help people connect. Dialogues give organizations opportunities to see what other people are working on and understand challenges, and the need to develop new innovative products that would benefit all segments of the population. For us, that was the main objective. We aimed to provide such platforms that would help a development organization connect with a DFS provider or other development organization and inspire individuals to think of building the ecosystem through collaboration.

Tasnuba Sinha has been with mSTAR/Bangladesh since August 2016. During that time, she organized five events promoting dialogue facilitation. She has always been passionate about working in the development sector and graduated with a degree in Economics. Prior to mSTAR/Bangladesh, Tasnuba worked at a tech startup in Bangladesh.

Empowering Technologies for the Field: Josh Woodard Presents mSTAR’s Fintech Innovations in Bangkok

By Paul Gostomski

The “Financial Technology for Development Workshop” recently took place in Bangkok, Thailand. The workshop is part of RDMA’s Frontier Learning Series, a set of events focused on exploring emerging opportunities at the intersection of science, technology, innovation, partnerships, and international development. The goal of the workshop was to help sort out fiction from reality and offer practical advice to the development community interested in leveraging digital development.

Among other top fintech experts presenting at the workshop, mSTAR’s Josh Woodard, Regional ICT & Digital Finance Advisor, presented on “Tools of the Trade: Empowering Technologies and Methodologies for the Field.” Josh’s presentation focused on digitally-enabled alternatives to informal credit options for farmers in Bangladesh, where 47 percent of the labor force is employed in agriculture. Access to formal credit options in Bangladesh is highly limited, forcing many farmers to choose informal credit options with interest rates as high as 25-31 percent. Moreover, repayment of these informal credit options is due weekly, which is challenging for farmers with limited income generating activities outside of farming, which doesn’t tend to generate income on a weekly basis. The challenging repayment terms and high interest rates lead farmers to rush to sell their harvests. In a rush to sell their goods, farmers do not get their harvests’ full market value.

Josh’s presentation demonstrated the alternative mSTAR has created with two different banks in Bangladesh, Bank Asia and IFIC Bank Limited. mSTAR partnered with both banks to launch two new digitally-enabled micro-credit products for farmers. One uses NFC-enabled debit cards, and the other uses mobile wallets. At 10 percent APR, both of these products have much lower interest rates than alternative options offered by microfinance institutions, as well as much more attractive repayment terms—a single repayment after six months, instead of weekly installments. With these products, farmers can pay after harvest. No longer in a rush to see their produce, they are more likely to receive a better price. In a country where most people work in agriculture, these new products could be critical to stemming poverty and breaking a cycle of debt.

To date, around 700 farmers have already received loans through the two products, with plans to reach at least 10,000 farmers by next year.

To learn more about additional opportunities for digitizing financial services in the agriculture sector in Bangladesh, take a look at the infographic, Digital Financial Services for Agriculture: Opportunities in Bangladesh, and for additional resources on this topic check out our other publications on the mSTAR Bangladesh Microlinks page.

Paul Gostomski is a Program Assistant for FHI 360’s Mobile Solutions Technical Assistance and Research (mSTAR) project. Paul is a recent graduate from the College of William and Mary, where he studied economics. His work at FHI 360 supports mSTAR’s initiative to foster the rapid adoption and scale-up of digital finance, digital inclusion and mobile data in developing countries.