No other phenomenon in our lifetime has changed the world as momentously as covid-19. Beyond affecting the health of populations, it has impacted the economic health of nations and people alike. For some, this meant a sudden drop in their household income and being pushed below the poverty line. For others, it has forced a rapid rethink of coping mechanisms, and even opened up opportunities.

In Bangladesh, covid-19 has exposed the inadequacies of an appropriate response and organisational inefficiencies. Nonetheless, in the most basic of measures, Bangladesh has managed to withstand the assault through a wide number of mechanisms, albeit in a haphazard way at the beginning of the pandemic.

Nearly three million mobile money accounts were opened within six weeks in Bangladesh – many in the Ready-Made Garment sector.

One of the areas where the country did well is in its usage of digital payments to reach vulnerable populations quickly with government subsidies. Nearly three million mobile money accounts were opened within six weeks – many in the Ready-Made Garment sector. Covid-19 has also propelled the expansion of use cases in digital financial services (DFS) in Bangladesh.

In keeping with its decade-long tradition of studying and analysing aspects of the DFS ecosystem, pi STRATEGY, a management consulting firm, launched a Bangladesh-wide research project to obtain some early insights into how covid-19 and DFS impacted one another. The firm interviewed over 1,000 respondents across Bangladesh for this study, including a number of C-suite industry leaders.

The findings are stark: covid-19 impacted everyone one way or another. For an overwhelming majority of the respondents (77.3%), it created a negative impact on household income and livelihoods. Nearly 20% of the respondents reported completely losing their income. Among them 75% were from lower socio-economic parts of the country. Conversely, over 20% of the respondents reported no change in their household income. Among them nearly 60% were from middle-income segment of the population.

Interestingly enough, there were some people who reported an increase in income as a result of covid-19. This was too small a segment to break down the numbers into socio-economic segments. However, they seemed to be involved with selling products related to covid-19 (e.g., PPE, masks and equipment) and providing delivery services such as groceries.

The findings on gender disaggregated data indicate that, while there were modest differences in the impact of covid-19 on income across the genders, the differences were negligible. For example, among those that reported loss of income, 49.1% were men and 50.9% were women – only a 1.8% gender gap.

Cross-tabulating covid-19’s impact on income with financial inclusion through bank accounts did show some correlation. However, this may be because people with greater income are more likely to have bank accounts. But a correlation was also observed for those with mobile financial service (MFS) wallets. Indeed, the findings show a lower impact on income for those with MFS wallets.

The gender gap in financial inclusion is a complex issue. Beyond the systemic social norms and employment hurdles women face, there are other factors such as literacy, numeracy, access to phones, and tech familiarity. Furthermore, when new services are offered (e.g. MFS, agent banking and wallet apps), men tend to embrace those at a faster rate, which further exacerbates the gap. However, among those that signed up for MFS accounts in the first six months of covid-19 (March 2020 – August 2020), 31% were male and 69% were female – a significant 38% gap in favour of women. This is possibly because of a drive by the Government of Bangladesh to require RMG sector wages and social safety net payments to be made through MFS during the pandemic.

The study also found that the gender gap moved in the right direction compared to the previous two similar measurements done by the World Bank. Notably, the gender gap in financial inclusion has decreased to 24% in 2020, down from 29% in 2017.

There is still a lot to be done in relation to the gender gap in Bangladesh. Most of the women-targeted financial products that exist in the market today can be characterised as the pinkwashing of existing products. Only a a few of the product features are altered like slightly reduced interest rates on loans. There are, however, few examples of the holistic reframing of women-targeted products that incorporate elements of safety and community. Nonetheless, the user experience is rarely differentiated. A new breed of innovative products could be designed to address these issues. For example, mapping financial services to life cycle events, removing long-lasting barriers to access and usage and tailored user experiences that specifically address women’s issues.

At a macro level, good progress has been made in digital financial services in Bangladesh. The number of users has increased significantly, as have the volume and value of transactions through DFS. The market is largely controlled by three key players (bKash, Rocket, Nagad). Other players are yet to prove their worth.

There are some areas within the DFS ecosystem that can be considered work-in-progress. Interoperability is one important dimension here. Covid-19 has seemingly delayed the adoption of interoperability in DFS. We will need to wait and see if this takes off soon.

Merchant payments is another area with strong promise, and it is a use case that has been propelled by covid-19. The central bank, Bangladesh Bank, is introducing policy changes to remove barriers in order for small merchants to participate in DFS more easily. Again, time will tell if this leads to an increase in merchant payments.

Human beings are uncannily adaptive. Whatever you throw at them, they first find a coping mechanism and then explore opportunities to thrive. DFS in Bangladesh has shrewdly managed to find a way to harness the ills of covid-19 towards a fortuitous end.



    • Digital Financial Services in the Time of Covid-19 report, 2020, pi STRATEGY.


Photo ©️ Mahmud Hossain Opu

Pial Islam
Pial Islam is the managing partner of pi STRATEGY. He is a management consultant. He worked as a management consultant on strategy, policy, innovation and international development with Capgemini, Ernst & Young and Pricewaterhouse Coopers. He was the assistant country manager for MCI and a manager at Grameen Bank in Bangladesh. He was an advisor to the World Bank, the Asian Development Bank, the UN, the CGAP, Robi Axiata and BRAC. He pursued his graduate studies in public administration at Harvard University