A quiet revolution propelled by a mobile remittance app has embarked on reshaping Bangladesh's economy in the days to come. This novel transformation within the financial landscape exerts a multi-faceted impact on the lives of the people. Rawshon Ara, a mother facing financial challenges and residing in Dhaka's Moghbazar area, stands as a shining illustration.
During my recent visit to Dhaka Community Hospital, where I was attending to dengue patients, Rawshon Ara caught my attention. Her smile was radiant as her baby showed signs of recovery. However, Rawshon Ara is well aware that her current state of mind is a far cry from her earlier reality, a time when she found herself financially strained as her baby fell ill with fever.
"I remember a time when I lacked the financial means to cover my son's medical expenses. I was unable to borrow money from anyone," she recounted noting that she was terrified as she had no available funds and no one nearby her residence to borrow money for her baby's urgent treatment.
Suddenly, someone suggested to Rawshon Ara that she could quickly receive money from her brother living in Saudi Arabia through mobile financial services (MFS) providers like bKash. Without wasting a moment, she contacted her brother Babul, a construction worker who was working several miles away from town. Within seconds, Tk 25,000 was transferred to her bKash account from her brother's bKash account – enough for her baby's urgent medical expenses. Immediately, she rushed her baby to the doctor.
"It felt like a magical event. I never expected my brother to be able to send money immediately, especially because he works in a remote area far away from town in Saudi Arabia," Rawshon Ara shared. The hospital was overwhelmed with dengue patients as the number of cases continued to rise day by day. For financially disadvantaged people like Rawson Ara, bearing the expenses of dengue treatment, which requires various clinical and pathological tests, is a daunting challenge.
"I usually use bKash for my urgent financial transactions, but I never imagined that my brother could instantly send money to my bKash account from Saudi Arabia using his own bKash account," Rawshon explained her mental state when she was anxious about her sick baby. "My brother told me that bKash recently integrated a direct remittance sending feature in its app for Bangladeshis living abroad, thanks to Bangladesh Bank's pro-people regulations, enabling Bangladeshi people to send remittances instantly to their relatives at home through legal channels."
In today's interconnected digital world, necessity compels people like Rawshon Ara to rely on mobile payment solutions. This is especially true for those living in remote rural areas where physical bank branches have yet to reach. These rural people, particularly those outside the formal banking channel and dependent on remittances from abroad, had few options to meet their urgent needs until the introduction of mobile remittance apps, which actually started a new revolution for them.
People around the globe are increasingly turning to mobile remittance apps for their speedy and efficient services, shunning the traditional wait times for money transfers. Bangladesh is not far away from this race as banks and fintech operators are going to facilitate remittance apps to Bangladesh diasporas for sending remittances instantly to their homes. Both fintech companies, banks and central banks are working towards ensuring real-time remittance flows, which, in turn, boost the official remittance volume.
Here's another story - Ruma Akhter (35), a housewife living in the village of Uddomdi in Matlab South upazila under Chandpur district, faced a similar situation a couple of years ago. She urgently needed money for her child's medical treatment. She managed to inform her husband, Mejbah Uddin, who was working in Saudi Arabia, to send money quickly. Although Mejbah Uddin tried his best to send remittance immediately through the banking channel, it still took the usual time, and his wife had to travel to the nearest bank branch to collect the money. The process was slow, causing Ruma Akhter anxiety, and resulting in delayed treatment for her child - an agonizing experience for any mother.
However, things have rapidly changed since the introduction of the remittance-sending feature on the mobile apps introduced by some banks for expatriate Bangladeshis. Bangladeshi migrants require their national ID, departure seal/exit stamp on their passports, and phone number of the country of residence to open the wage earners’ bKash account, which is like a regular account but allows the expatriates to send remittances. After opening the account, expatriates can ‘Cash In’ money as remittance to their wage earners’ bKash account through the agent or app of bKash’s partner money transfer organizations (MTO) in their respective countries.
Today, people like Ruma Akhter and Rawshon Ara, who rely on remittance income, can receive funds instantly on their phone from the bKash account of their relatives living abroad. This advancement has opened up opportunities for Bangladesh to grow faster and move towards its vision of becoming a Smart Bangladesh by encouraging more remittances through formal channels instead of hundi or unofficial channels.
Remittance is the lifeline of the economy. Officially recorded remittance flows to low- and middle-income countries (LMICs) are estimated to grow by 1.4% to $656 billion in 2023 as economic activity in remittance source countries is set to soften, limiting employment and wage gains for migrants, according to the World Bank’s latest Migration and Development report. bKash, the country’s leading mobile financial services operator (MFS) has developed a dedicated remittance app that enables Bangladeshi expatriates to remit money to their families instantly anytime from anywhere without visiting bank branches or exchange houses. Other banks and MFS operators are going to jump to this potential business area with their own remittance apps. The good news is that the remittance inflow through the bKash app is rising day by day. Remittances from over 10 million citizens residing abroad are crucial for Bangladesh and garment exports as they form key sources of foreign exchange earnings.
Professionals from GSMA assert that mobile money is revolutionizing the international remittance industry by capitalizing on the widespread mobile penetration. People around the globe are increasingly turning to mobile remittance apps for their speedy and efficient services, shunning the traditional wait times for money transfers. Bangladesh is not far away from this race as banks and fintech operators are going to facilitate remittance apps to Bangladesh diasporas for sending remittances instantly to their homes. Both fintech companies, banks and central banks are working towards ensuring real-time remittance flows, which, in turn, boost the official remittance volume.
One notable example of the impact of mobile remittance apps is Kenya, where remittance inflows increased tenfold over the last 15 years, reaching a record USD 3,718 million in 2021 following the launch of the GlobalPay app by M-PESA. The Central Bank of Kenya conducted a survey in 2021, revealing that Kenyan diasporas prefer digital service providers due to the convenience, speed, and ease of access they offer. These channels demonstrate high efficiency, with recipients typically receiving funds on the same day. For instance, Kabayan Remit is the leading single corridor online money transfer platform in the UK, focusing solely on money remittances to the Philippines.
According to published reports in Bangladesh, remittances from approximately 90 countries are flowing through bKash, facilitated by more than 80 international money transfer organizations (MTO) and settled in 18 commercial banks. bKash, one of the largest mobile money providers globally, made a significant announcement in 2018, allowing bKash account holders to directly receive international remittances on their mobile phones. To encourage remittance inflow through legal channels, the government raised the rate of incentives from 0.5 per cent to 2.5 per cent in January 2022. This move has encouraged more remittance earners to use official mobile financial service (MFS) channels, significantly reducing the cost of transactions and delivery. Moreover, as these MFS operators partnered with banks, the central bank can effectively monitor real-time fund flows through such remittance apps.
While Bangladesh ranks as the eighth largest receiver of international remittances globally, its foreign exchange reserves have faced pressure due to a decline in remittance inflow. This has led the government to seek loans from the IMF under challenging terms to meet import demands. To further boost remittance inflow, more operators need to step forward with robust remittance apps, catering to workers with a particular focus on Middle Eastern countries, enabling them to send money instantly from their workplaces. Further research is needed to explore untapped opportunities in this domain.
( The writer is the Editor of THE BANGLADESH EXPRESS)
