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Microfinance Institutions (MFIs) in Bangladesh face high-level human touch and intense field operation challenges, said a UNCDF-commissioned study.
It argues that the majority of the MFIs are willing to adopt a digital platform but regulatory limitations often impede the transformation.
The Shaping Inclusive Finance Transformation (SHIFT) in Bangladesh Program of the UN Capital Development Fund (UNCDF) conducted the study titled ‘Digital Transformation of MFIs in Bangladesh: Opportunities, Challenges and Way forward’.
The MFIs in the country have been serving nearly 33 million clients, particularly the bottom of the pyramid individuals, of whom 90 per cent are female.
The study focused on the gender gap and the prospects, potentials and challenges of MFIs to serve their clients in the era of digitization.
It observed that basic digital operations exist among large MFIs such as real-time loan management system (LMS) and Enterprise Resource Planning (ERP); adoption of new digital technologies like Digital Field Application (DFA) for loan origination, cashless loan disbursement, repayments and the collection of saving is still limited to pilot.
The research demonstrated that Digital Field Application (DFA), Digital Credit, Artificial Intelligence enabled tools such as chat-bots, robo-advisors which MFIs in Bangladesh can adopt.
The UNCDF-commissioned study recommended providing access to National Identity Database (NID), which would enable MFIs to authenticate clients and verification, integration of MFIs with the national payment system, revision of cash withdrawal limit from mobile account and to formulate an IT policy guideline for the prospective digital transformation of MFIs.