An Overview of FinTech in Bangladesh: Problems and Prospects

An Overview of FinTech in Bangladesh: Problems and Prospects

Sheikh Abu Taher, Masatsugu Tsuji
Copyright: © 2022 |Pages: 14
DOI: 10.4018/978-1-7998-8447-7.ch006
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Abstract

How the future financial industry is going to be reshaped by technological innovations is now a concern. Financial technology (FinTech), a much-discussed topic around the globe, is changing the overall financial system. The trend is not an exception in developing countries like Bangladesh. In this chapter, the authors aim to explore the current state of FinTech in Bangladesh in light with the possible challenges for growth, opportunities, and future prospects. The growth of FinTech helps a large percentage of people to become banked or has given possible access to formal finance. For having access to finance, high rate of mobile phone penetration, smooth mobile internet access, and high cost of access to formal finance are some factors that have enhanced FinTech penetration in Bangladesh for the past few years. In line with the given prospects, there are problems too. Therefore, using an in-depth study, this research addresses those issues, provides recommendations, and looks for possible solutions for the smooth operation of FinTech in Bangladesh.
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Introduction

The rapid growth of Information and Communication Technology (ICT) has made enormous changes in the business eco system which is now called Industry 4.0. The changes are visible in all sphere of our daily life to solve complex issues. People’s financial behavior are rapidly changing because of massive adoption of FinTech (Anshari, Almunawar & Masri, 2020). Machine learning (ML), Internet of Things (IoT), and Big Data that are all to step industry into next level (Clark, 2019). The rapid changes are apparent in the financial sector too. The use of technology in financial sector is not new which started through the invention of the first automated teller machine (ATM) in June, 1967 (Reuters, 2017) and has long history of innovation ((Bátiz-Lazo & Wood, 2002). FinTech is one of the essential parts of these financial innovations to explore information technology (IT), the Internet, gadgets and devices to facilitate cutting edge financial services to all. Technology companies marked FinTech to disseminate formal financial services through online and mobile channels (Arner et al., 2015) and thereby increasing financial inclusion and financial stability in developing countries. This is an umbrella term to explain innovative technology-enabled financial services business models to deliver potential financial benefits to interacting parties (Schueffel, 2016; Zavolokina et al., 2016). FinTech is a technology enabled financial innovation that generates new products and services and ultimate material effect on financial markets and institutions and to the provision of financial services (FSB, 2020). The interaction between finance and technology which explores novel business models (Maier, 2016), or the digitalization of traditional transaction channels (Ferrari, 2016) and customization of financial services through the use of technology (Sia et al., 2016) are evolved as FinTech. It has enabled customers to execute quick payments, investments or to pay insurance premium. The after-hour transactions, or the evolution of peer to peer (P2P) lending through lending club or virtual lending platform are all these functionalities are possible with this.

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