Tech entrepreneurs should lead digital banking

Tech entrepreneurs have expressed strong dissatisfaction and concern over the lack of consultation with them in formulating the digital banking guidelines.

This is because they feel excluded from the decision-making process, which could impact innovation and hinder the growth of digital banking services.

"Who will control digital banking? Will there only be people of traditional mentality? Who will be the owner?" said Russell T Ahmed, president of the Bangladesh Association of Software and Information Services (BASIS).

He was speaking a seminar titled "Digital bank: prospect and way forward" organised by the BASIS standing committee on fintech and digital payment.

After the event, Ahmed told The Daily Star that digital banking is a disruptive idea and its policy formulation requires knowledge and consultation of the tech industry.

"BASIS was a part of the digital Bangladesh taskforce and smart Bangladesh taskforce. Our members implemented most of the digital projects. So, why are we not part of the policy?" he added.

Ahmed then said that traditionally, only people with huge amounts of money become the owners of a bank, but tech entrepreneurs should be in the leading role of digital banking.

He went on to say that digital banks will ensure more transparency in the financial sector.

"The need for introducing digital banking is immense. As traditional banks so far could deliver the huge demand of microcredit and SME finance, digital banks would play an import role in these areas," he said.

However, it is not possible to set up proper digital banks without tech entrepreneurs, Ahmed added while stating that tech entrepreneurs should get at least 20 per cent of the ownership of digital banks.

AKM Fahim Mashroor, CEO of Bdjobs.com and AjkerDeal, emphasised that involving tech entrepreneurs in the digital banking sector is essential for fostering innovation and ensuring its success.

Globally, fintech founders typically fall within the 30 to 40 age bracket.

"Therefore, if the guidelines mandate extensive banking sector experience as a prerequisite for key roles in digital banks, it will impede innovation within the digital banking industry," he said.

Ahmed then said BASIS has the capacity to contribute to the digital banking policy framework while its members have the capacity to be a part of the digital banking ecosystem.

Some of the BASIS members could acquire licenses to this end while others can be part of the licensing process.

"Banking experience should not be mandatory to become the CEO of a digital bank, Ahmed said.

As technology entrepreneurs in Bangladesh, without experience, have successfully used technology to bring new innovations in the field of mobile financial services, digital banks should also be created under the leadership of technology entrepreneurs.

"Of course, they will work with bankers as per their requirement. In this case, the government should take necessary initiatives to ensure that the new digital bank license is not limited to only large corporate groups," he added.

Shahadat Khan, founder and CEO of TallyKhata and SureCash, said technology companies have priority in getting digital banking licenses across the world.

Digital banking is a comprehensive financial solution that encompasses mobile financial services, credit and deposit services. It operates without a cash-in or cash-out limit and includes insurance and investment management features.

Bangladesh Bank yesterday approved a digital banking guideline to promote financial inclusion through various means, such as artificial intelligence, machine learning, blockchain, and so on.

A digital bank is a financial institution that offers banking services such as checking and savings accounts, loans, payments and transfers by primarily operating online through a website or mobile app.

It does not have physical branches or ATMs, relying on technology, automation and artificial intelligence to streamline their operations and reduce costs, he added.