The launch of the country’s first Interoperable Digital Transaction Platform (IDTP), Binimoy, is a great leap toward financial inclusion.
Binimoy is a digital financial solution that facilitates the interoperability between Mobile Financial Services (MFS) operators in Bangladesh. The digital transaction platform was introduced by the government of Bangladesh to overcome the barrier of sending money from one digital wallet to another. Although MFS has been extremely popular in the context of Bangladesh, inter-transactions from one MFS to another have not been possible until now.
As of July 2022, the number of MFS is more than 180 million – a 16% increase from the number of users in 2021. The Bangladeshi MFS industry took the first steps of its journey in 2010 with the introduction of bKash in the market. The app’s services were aimed at solving a critical problem prevalent among blue-collar employees living in urban areas to send money to their family members in rural areas. As other MFS operators entered the market, and as more people sought a prompt and quick money transfer service, the consumer base rapidly expanded. Retailers started accepting MFS payments, utility providers availed online bill payment services via MFS, and promotional campaigns such as cash-back offers, rapidly added value to being an MFS user.
With so many MFS operators offering their own USPs, the demand for transferring credit from one MFS account to another started growing. However, over the years, fund transfers have only been limited to bank-to-bank, bank-to-MFS and MFS-to-banks. This, too, took place over several years of iterative development. It is important to acknowledge that the Bangladesh Bank regulates the MFS market to establish order and control of fund transfers and maintain compliance and healthy competition of mobile financial services. But the time has now come to launch an MFS interoperability service and Binomoy is making this a reality.
The development of the Binomoy platform has been in progress for more than a year by the Bangladeshi government. This endeavour has been taken up by the government in order to implement an observed regulatory framework for the MFS operators and integrate more opportunities for the users of the services. The top priority in building this platform is to enhance the customer experience and satisfaction resulting in an inclusive financial service for all.
Velwire Limited, Microsoft Bangladesh, and Orion Informatics Limited have worked together on the development of Binimoy as part of the Innovation and Entrepreneurship Development Academy (IDEA) programme of the ICT Division and Bangladesh Bank. Consequently, on 13 November 2022, Sajeeb Wazed Joy, advisor to the government of Bangladesh on information and communication technology, formally launched Binimoy. The app falls under the category of interoperable digital transaction platform (IDTP). The launch of IDTP and the gradual use of the platform is to be implemented in a trial and error process, where the central bank and the MFS operators are to explore the implementations through research and development. Furthermore, with time, the platform is to be developed to become more user-friendly and to increase the feasibility of mobile financial services.
In order to use Binimoy, the users will have to open Biniyog accounts that would be connected with the digital financial service operators. Thus, whenever a user wants to send money from one MFS account to another, whether it be for themselves or to another user, it would be possible to send it instantly through Binimoy. The unique Binimoy accounts will help users to receive and send money for a fee.
Since its launch, several banks, MFS operators, and Payment System Providers (PSP) have affiliated with Binimoy in order to be early adopters of this digital revolution. Reportedly, the transactions from one bank to another, or one mobile financial service operator to another will have a fixed charge.
The successful implementation of Binimoy has implications for socioeconomic growth. The platform is a crucial step toward financial inclusion and greater accessibility to digital payment for all demographics. The platform’s mechanism alleviates redundancies in the system, removes customer pain points such as physically going to agents to withdraw and deposit funds between operators, and encourages financial institutions to explore new avenues of marketing strategies centred around interoperability. For merchants and vendors, it opens up the possibilities of cross-platform payments, increasing the potential to attract more customers for their businesses. This will be particularly beneficial for entrepreneurs and small business owners who operate remotely and rely primarily on digital payments.
The launch of the Binimoy app also opens new prospects for operators. Institutions will be able to dedicate more time and resources to customer acquisition and customer retention based on models that fit the Binimoy framework. Additionally, as Binimoy will increase compliance with the regulatory frame that the central bank has set, it will also grow the possibilities of more financial innovations in the MFS sector in near future.
The launch of the Binimoy app is the right step toward digital inclusion. However, we still have a long way to go before MFS becomes a stepping stone toward financial self-empowerment. For instance, payroll solutions offered by MFS operators have aided garment workers in sending money to their friends and relatives in remote villages. However, digital literacy in remote villages is still in need of improvement. The recipients still require agent services to cash out the transferred funds as most transactions in villages are cash-based. Binimoy is only part of the solution that will allow residents of rural areas to be self-reliant when it comes to digital transactions. The next steps forward are improving digital literacy, increasing smartphone penetration, and robust network coverage, all of which will contribute to the success of Binimoy.
