Digital banks may define the future

The onslaught of the Covid-19 pandemic has instituted myriad changes in how society works, operates, and pursues livelihood. A number of sectors, previously defined by person to person interaction are transitioning to digital connection. Suppose one looks for a silver lining in the cloud of Corona induced pandemic. In that case, it has to be the impact on accelerating digital services and making the masses more tech-oriented.

Keeping the globe's predisposition towards digital operation in mind, the government in Bangladesh has made the first draft guideline for digital banking. A TBP report states that the finance minister, in his FY23 proposed national budget, observed that the government will examine all the possibilities of establishing such institutions in the country.

With every passing day, society as a whole is becoming more dependent on net based applications, and it only makes sense to make banking a digital operation. For a developing country like Bangladesh, financial inclusion has been widely acknowledged as a key enabler for reducing poverty and ensuring prosperity. Digital banking takes banking services to remote parts with the help of mobile internet connections, thus allowing people in the villages to avail themselves of the facility.

Once banking plus other related benefits like loans are available through a few clicks, the government's digital revolution will become a truly comprehensive effort.

However, this sort of banking is still in its infancy in other countries like India, Singapore, and Malaysia. These nations are reportedly experimenting with digital forms of banking. Therefore, it would be a prudent move to first analyse the initial results of others.

There is a comprehensive understanding that once banking goes digital, the work scope for IT experts will expand, thereby creating employment. While this is certainly encouraging for those aspiring to be IT professionals, the possibility of a decline in the demand for traditional banking staff cannot be ignored. Unless current employees in conventional banking are trained in digital banking skills, there may be a massive job cut, leaving countless people in mid-level careers without work.

Technology's increasing role in our lives now and its increasing presence in the days to come cannot be underestimated. While human society has progressed by accepting the new, any transition must happen in stages, not through one giant leap.

The government's guideline is believed to be in line with the existing Bank Company Act, and future digital institutions must comply with it.

Before the digital banking is put into full action, banking sector experts need to assess the pros and cons.

From a general perspective, this sort of banking will prove to be exceedingly popular with the rising young tech-savvy population who are more comfortable with online and mobile-based applications.

However, everything that is digital cannot guarantee one hundred per cent security, especially in an age of hackers. Any digital operation is vulnerable to manipulation by dark web users. Therefore, full-fledged digital banking may not be the solution for the immediate future.

A symbiosis between conventional banking and digital services can be the first step that will allow conventional bankers time to upgrade themselves while minimising the risk of intrusion by unscrupulous net users.

There has been a lot of hype about a cashless society with many staunch advocates of net-based financial services stressing the need for full online banking; however, without a population that is comfortable with technology, discarding traditional services will be a flawed move.

Numerous credit card thefts at local ATMs in the last few years by local and international fraudsters proved the glaring lack of modern security systems and changes to the safety facilities were carried out only after the thefts. Keeping this in mind, all attempts to introduce digital banking should come after a thorough evaluation.