An innovation leap: Nagad Digital Bank aims to extend reach to the unbanked and underbanked

Nagad Digital Bank, the first full-fledged digital bank in Bangladesh, is all set to transform the local banking landscape. It aims to replace traditional physical interactions and paperwork with a comprehensive array of customer-centric services.

This transformation will streamline services and promote financial inclusion, fostering an integrated financial ecosystem.

“Our motto is to bring unparalleled banking convenience to the fingertips of millions,” said Tanvir A Mashuk, Nagad’s founder and managing director, during an interview with UNB.

“Nagad Digital Bank will redefine how people interact with their finances, emphasizing accessibility, security, and customer support. We’re ushering in a new era of inclusive and convenient banking,” he said.

“We will operate without physical branches, having only a head office and a call centre for customer support. Our services will be delivered through our website and mobile app, enabling financial transactions similar to those in a traditional bank branch,” the Nagad MD said.

Mashuk explained that customers would be able to perform many of the same services offered in physical branches, such as opening accounts, checking balances, transferring money, paying bills, applying for loans, and more.

“To meet the financial needs of individuals and small businesses, we will introduce digital lending. This will disrupt our financial industry,” he highlighted. By leveraging data on customer transactions and financial behaviour, Nagad Digital Bank will offer personalized credit solutions, making borrowing more accessible, he said.

The digital bank plans to offer single-digit, collateral-free loans for small informal businesses and farmers, who currently rely on moneylenders charging exorbitant interest rates. “To assess creditworthiness, we’ve developed an AI-based credit rating system. This system evaluates a loan seeker’s transaction data, using their National ID (NID) and mobile number, to instantly disburse loans. All will be done using Nagad’s app, eliminating paperwork and the need to visit bank branches. This will bring the informal sector’s money into the formal channel,” Mashuk said.

Regarding cost-effectiveness, Mashuk mentioned that the digital bank will have lower operating expenses than traditional banks due to the lack of physical infrastructure. This reliance on technology will result in lower charges and interest rates for customers.

Promoting financial inclusion is another key focus. Nagad Digital Bank aims to extend its reach to unbanked and underbanked populations. “Our user-friendly mobile app will act as a gateway to financial services for these marginalized people, enabling them to save, transact, and invest without a traditional bank account,” he added.

“We will also give utmost priority to security and trust. We are committed to ensuring the highest standards and have already enhanced our cybersecurity measures to safeguard users’ data and transactions.

“All our initiatives are strategically designed to promote the adoption of cashless transactions nationwide. This effort aligns with our government’s goal of achieving 75 per cent digital transactions across the country by 2027,” he noted.

“By advancing towards this target, we contribute to the vision of establishing a Smart Bangladesh by 2041, fostering a technologically advanced and digitally inclusive nation,” Tanvir A Mashuk said.