Cash to cashless

‘What got us here won’t get us there’ is not only a maxim for the corporate professionals but is also equally true for each and every individual of the society. We have come a long way and progressed over the last fifty years in various aspects of socio-economic development. 

The SDG Progress Award recently conferred on our prime minister at the UN is a strong testimony to that fact.

However, there are many more miles to go. In order to achieve continuous improvements on all verticals of the SDGs, we would require constant focus, judicious utilisation of our limited resources and proactive participation from all the citizens.

In today’s world, everything is changing at the speed of light. So is currency and the way we transact. In this piece, I would like to emphasise cash – the paper currency. Cash has been there for our day-to-day transactions for a few hundred years now. A change in our behaviour and the new adoptions would, I believe, give us significant benefits on cost, speed, efficiency and transparency when we deal with transactions. 

The alternatives to cash have been there, though on a limited scale, for quite some time now in various forms. It’s Covid-19 that opened our eyes and minds. Covid compelled us to stay home and restrict our movements to a bare minimum to avoid a probable contraction of the virus. 

Sitting at home, we had to find alternative ways to do day-to-day essential transactions such as paying bills, purchasing essentials, furnishing periodic payments of loans and deposit accounts as well as helping many individuals in need. We had used a combination of internet banking, mobile app, mobile financial services, e-commerce, as well as cash.

Interestingly, the transaction volume at the bank branches and ATMs gradually decreased while internet banking, e-commerce and MFS transactions grew significantly. More importantly, this trend continues even today - in a post-pandemic situation. 

In my own household, we moved to digital means of transactions. We used BRAC Bank Astha app for transferring money and for payment of school tuition fees. We have also used bKash app for paying utility bills as well as sending money to those in need in my village. We have used debit and credit cards for e-commerce transactions.

The cash currency took a back seat not because it can’t do the job any more but because there were cheaper and smarter alternatives available for us. This is the story of millions of Bangladeshis. We have learnt how to do regular banking transactions from our homes.

Covid has changed many of us.

However, the vast majority of the populace still prefer the conventional way of doing financial activities - they would draw cash, commute long distances, wait and sweat in long queues, expose themselves to Covid and waste valuable productive hours.

Many of us have shared these narratives with our near and dear ones which did encourage them to connect with and subscribe to today’s digital way of life. 

That was a liberating experience for many. However, the buck doesn’t stop here.

We know that most of us don’t want to share much about our financial dealings with others – where and how we bank, what tools we use, which products we buy, what are the most convenient ways to do things and what to avoid. 

What if we do so? If my experience can help others, it would mean a collective win. 

Bangladesh Bank along with many banks have taken innumerable steps in recent months to digitalise with varying degrees of success. All-out efforts to engage human resources in the bank branches, sales teams and call centres have produced a significant growth of internet banking registration, alternate channel usage (ATM, CDM and call centres), e-statement subscription, etc. 

Thanks to Bangladesh Bank for sending out a number of directives for increasing the limits for cash withdrawal and fund transfer through different channels so that the customers can avoid visiting branches. 

As a result, the active internet banking customers and digital transaction volumes grew manifold. 

If our experience is any indicator, these drives are expected to continue even after the pandemic.

Interoperable Digital Transaction Platform (IDTP), Bangla QR and micro-merchant initiatives are also progressing well and are expected to ride on the continued digital adoption momentum and take country’s digitalisation drive to a greater height.

The SME customers, banking with us, have also started taking an interest in the automated channels and are asking for further increase in daily fund-transfer limits. The more our customers are inducted into newer ways of transacting as well as doing business, money will get its motion. 

The macro-economic impacts of a cashless society are a little too early for us to measure. Cash will still be the king, at least for a few years.

Although small, the transaction cost or merchant service fee at times may hold us back. This is the time to consider incentives or subsidies for small merchants to encourage digital payment modes. I won’t attribute it as cost - it is an investment towards making an inclusive and efficient economy.

With the advent of various digital means, digital frauds and identity thefts will also surface. Continuous cybersecurity awareness programmes, responsible use of credentials and safeguarding valuable personal information will help mitigate this risk.

A few years ago, the apparel workers used to get their pay cheque in cash. Now, many companies prefer bank accounts or MFS for their workers’ salary disbursement. 

Bangladesh Bank’s nudge to disburse garment workers’ salaries through MFS during the pandemic was thoughtful. A few banks recently distributed Covid assistance among the distressed through their MFS accounts.

The benefits of moving out of the ‘old normal’ are many. Facilitation through appropriate automation, regulatory direction, designing incentives or disincentives, national awareness programme – all of these will have to work in tandem to break us free from cash. 

The cash would still be the king for some time, but it is bound to lose its lustre in time.

We as a civilisation have attained a point where we may have to transform our cash into cashless. The continuous nourishment of digital wisdom to achieve a cashless society would drive us home.

The author is Deputy Managing Director and Chief Operating Officer of BRAC Bank.