Fraudulent activities remain one of the key deterrents to expansion of mobile financial services despite an encouraging rise in MFS users, according to a survey that stresses scam shooting.
The survey, conducted by Policy Research Institute (PRI), found approximately 55 per cent of the respondents using MFS, while 32 per cent of non-users do not use MFS in "fear of fraudulent acts".
However, across non-users, nearly 66 per cent of the respondents identified "not needed" as the primary reason for not using MFS, according to the survey findings, released Wednesday.
The survey finds registered MFS accounts in Bangladesh having witnessed a hike of 12 per cent in September 2021 compared to the preceding year.
Moreover, the total financial flow through MFS increased to Tk 733.93 billion in January 2022, marking an annualised growth of 28.1 per cent.
The total number of transactions stood at 345.4 million in January 2022 - which is 15.4-per cent higher than previous year's. The number of transactions in the e-commerce sector has almost doubled within the same period.
The survey covered a sample of 9,279 individual respondent data points, drawn from over 300 upazilas, using two stratification points - urban/rural & male/female in 45 districts of the country, during August 2021 -September 2021 period. It also includes randomly collected information from 2000 MFS agents from 13 districts
The lead author of the survey report is Dr Ashikur Rahman, Senior Economist at PRI, while co-author is Azmina Rede. This research has received financial support from the Friedrich Naumann Foundation for Freedom.
As transferring money through mobile wallets is an easy banking solution, the survey finds that it has been reported as the primary use of MFS by 98 per cent of the users.
A strong link was observed between the time required to address victims' complaints and their choice of continuing the use of mobile wallets.
"The more time required to resolve complaints, the more likely it is for victims to discontinue using MFS accounts," says the survey report.
Nearly 13 per cent of the agents surveyed reported to have experienced fraud with their MFS accounts while nearly one in ten MFS users (9.3 per cent) report that they have been victims of fraudulent experience of some form.
Findings show that users with higher financial losses had their problems resolved within the first week of complaining.
"Complaints that took more than a month to resolve consist of an average financial loss of less than Tk 2000 and additional time required to resolve such complaints may indicate the reluctance or lack of urgency from the users' end for redress due to the smaller size of financial loss," it says.
The survey found the average size of financial loss suffered by agents from operating MFS accounts having amounted to over Tk 18,000.
The maximum loss recorded by users was Tk 70,000, which is significantly higher compared to the loss reported by MFS users," it found.
Nearly 45-per cent MFS agent-respondents claimed that their complaints were never resolved while only 38 per cent of the agents had their complaints resolved on the first day of complaining.
The survey recommendations include establishing a single dedicated regulatory authority that will ensure effective safety for the users of MFS across different regions and social groups.
It suggests introducing a comprehensive Digital Financial Literacy Strategy by conducting training on financial literacy for the vulnerable communities and regions throughout the country.
Speaking as chief guest, Post and Telecommunications Minister Mustafa Jabbar said MFS has been able to reach out to unbanked people with offers better than banks.
"MFS providers shouldn't be blamed for all fraudulent activities, there are other stakeholders too," he says.
Mr Jabbar emphasizes deployment of hi-tech equipment to stop the fraudulent acts in MFS.
He says unscrupulous mobile SIM sellers are using loopholes for fraudulent acts.
In opening remarks, Dr Zaidi Sattar, Chairman of PRI, said: "A digital revolution is sweeping the globe propelling the speed with which we do financial transactions."
He said Digital Financial Services (DFS) in Bangladesh are a technical innovation and a social revolution all rolled into one.
"But DFS is built on another platform, mobile telephony, which constitutes another technical innovation and social revolution for the Bangladesh economy and society."
He notes that the Covid-19 pandemic has given a boost to the digital economy and e-commerce.
With this good news comes the bad news - scams, theft, consumer insecurity and privacy breaches-which have also become endemic around the world, with considerable investment being warranted to ensure that e-commerce is a boon to society as living standards rise rather than becoming a digital quagmire for national governments.
PRI executive director Ahsan H Mansur says there is social revolution going on through digital finance services.
"Fraudulent acts must be addressed if the number of MFS use is to be increased from 55 per cent 90 per cent."
Bkash CEO Kamal Quadir said cost of MFS use is not a concern of customers as per the study.
He said greed of customers is one key reason that they fall prey of the frauds.
He stresses the need for awareness and literacy training of customers.
Emeritus Fellow of Unnayan Shamannay Khandaker Shakhawat Ai said central banks should focus more on MFS as it has potential to include people unbanked what banks never could do.
He stresses coordination among regulators such as Bangladesh Bank and Bangladesh Telecom Regulatory Commission.
Founder and Managing Partner of SBK Tech Venture and SBK Foundation Sonia Bashir Kabir said it is not only operators' problem when a customer becomes victim of fraudulent acts. Banks or mobile operators are equally responsible for the frauds.
Vice President of E-cab Shahabuddin Shipon says if payment gateways or MFS can detect fraudulent acts beforehand, it can be stopped.
"It is possible to stop fraudulent activities by using artificial intelligence, proper technologies."
Country Director Sri Lanka and Bangladesh of FNF Wolfgang Heinze and Country Representative of FNF Dr Najmul Hossain also spoke at the event.
