Many making beeline to start digital bank

The Bangladesh Bank (BB) has received a total of 52 applications from banks and various other entities that are interested in setting up digital banks in the country.

The central bank Sunday revealed the number of applications and said it was now scrutinising the same, before giving the go-ahead.

"We had received 52 applications until the deadline came to end on August 17," Md Mezbaul Hoq, a spokesperson for the BB, told the FE.

He wouldn't disclose when and how many no-objection certificates (NOCs) could be issued for setting up digital bank-a latest switch in banking in tune with the dawning of the era of digital finance globally.

The central bank would notify on the matter later on.

The BB issued a circular in June last asking interested firms to apply for licence which opened the process of receiving applications between June 21, 2023 and August 17.

It introduced a Licensing and Regulatory Framework for Digital Banks in line with international best practices.

The framework was the first step towards introducing full-fledged digital banks which are expected to provide all the banking services by digital means without customers needing to visit bank branches physically.

In response to BB's licensing and regulatory framework for digital banks, applications were received from a diverse range of interested players, such as commercial banks, insurers, mobile financial-service providers, IT firms, and startups.

People familiar with the matters told the FE that the BB would pick and choose the eligible ones through "a thorough and rigorous assessment process as per the requirements of the framework".

Applicants will be assessed on various parameters that include fitness and propriety, experience and financial strength, business plan, implementation plan, funding and capital plan, IT and cybersecurity strategy and outsourcing arrangements.

Contacted for their view, an executive of Patho, a ridesharing startup, said globally digital banks are founded by startups who have the tech know-how, dynamism, and innovation to deliver the service at low cost.

"Pathao is uniquely positioned to provide a one-stop banking solution to our 10 million customers, who are mostly youth and digital native," said Fahim Ahmed, Managing Director & CEO of Pathao.

Traditional banks, with their full-fledged banking licences, can already offer the same services as digital bank. Yet they have failed to address the needs of this vast market segment. "It would be unfortunate if digital-banking licences are issued to the same players," he said.

Now is time to break the status quo, and to deliver the fintech products that the aspiring Bangladeshi youth truly deserve, the Pathao CEO told the FE.

Meanwhile, on the cusp of global journey on the metaverse, digital-financial services have pivoted to decentralized finance or DeFi using emerging financial technology that challenges the current centralised banking system.

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