Bangladesh in the Era of Digital Banking: Prospects and Challenges on the Way to a Cashless Society
Traditionally banking meant a branch, long queues, cash counters, paperwork and hours of waiting. Depositing or withdrawing money, opening an account or making a transfer often requires a physical visit to a bank. This familiar picture is changing rapidly. The smartphone is increasingly becoming the new branch, allowing customers to complete in seconds what once required a banker’s desk.
Bangladesh is no exception. Following the rapid expansion of mobile financial services, agent banking, internet banking, cards, QR payments and other digital transactions, the country’s banking sector is entering a new chapter—the era of digital banking.
On September 24, 2026, Bangladesh Bank decided to issue Letters of Intent (LOIs) to five proposed digital banks—DK Digital Bank, bKash Digital Bank, Nova Digital Bank, Boost Digital Bank and Kori Digital Bank. The move signals a significant shift in Bangladesh’s banking landscape. However, an LOI is not a final banking licence. The proposed institutions must establish the required technological infrastructure, meet regulatory conditions and complete the prescribed assessment process before receiving final approval.
From Branches to Smartphones
Bangladesh already has a strong foundation for digital financial services. Bangladesh Bank’s Guidelines to Establish Digital Bank—Version 2, issued in August 2025, provides a regulatory framework for branchless banking. Digital banks are expected to deliver services primarily through mobile applications and other digital channels, while technologies such as artificial intelligence, machine learning and blockchain may support their operations.
The minimum paid-up capital for a digital bank is Tk 300 crore. Digital banks cannot establish conventional branches, sub-branches or windows, nor maintain their own ATM, CDM or CRM networks. For them, technology is not simply a support mechanism—it is the core infrastructure of banking.
A New Door to Financial Inclusion
Digital banking could significantly expand financial inclusion. Distance, cost, documentation, limited financial literacy and inadequate branch access still prevent many people from fully participating in formal banking.
Branchless services can reduce these barriers. Small entrepreneurs, farmers, freelancers, gig-economy workers, young professionals and people in remote areas could gain easier access to accounts, savings, payments and financing.
But financial inclusion should not be measured merely by the number of accounts opened. The real test is whether customers actively use these accounts and whether digital services improve their financial security and economic opportunities.
Convenience Creates Higher Expectations
Speed and convenience are major attractions of digital banking. Account opening, fund transfers, bill payments, savings, financing applications and customer service can increasingly be handled from home, at any time.
But convenience also raises expectations. A failed transaction, inaccessible application, blocked account or delay in recovering funds can quickly damage customer confidence. The challenge, therefore, is not simply to become “digital” but to provide services that are continuous, reliable, secure and responsive.
Cybersecurity: The Ultimate Test of Trust
Technology is both the greatest strength and one of the greatest risks of digital banking. Core banking systems, APIs, cloud infrastructure, data analytics and artificial intelligence can improve efficiency, but they also create new vulnerabilities.
Phishing, identity theft, malware, social engineering, data breaches and cyberattacks can cause financial losses and seriously undermine public confidence.
Cybersecurity must therefore be treated as a core business priority rather than a technical add-on. Data protection, disaster recovery, business continuity, risk management and independent IT audits will require sustained attention.
Security is also a shared responsibility. Banks must provide secure systems and strong controls, employees must follow security protocols, and customers must protect OTPs, PINs, passwords and other confidential information.
Technology Should Not Replace Humanity
Digital banking may reduce the need for branch visits, but it cannot eliminate the need for human support. When a transaction fails, an account is blocked or money is wrongly deducted, customers need effective solutions—not merely automated messages.
Artificial intelligence and chatbots can handle routine queries, but complex and sensitive problems will still require human intervention. Technology should therefore reduce unnecessary interaction, not necessary human support.
Digital Lending: Opportunity with New Risks
Digital lending could bring underserved customers into the formal financing system by analysing transaction patterns, income, expenditure and, where permitted, alternative data.
However, algorithms cannot replace responsible lending. Poor-quality, incomplete or biased data may produce flawed decisions. Digital lending must therefore balance innovation with transparency, data quality, customer rights and sound risk management.
Skills, Governance and Digital Literacy
Digital banks will require boards and management with expertise not only in banking and economics but also in technology, cybersecurity, data management and digital products.
Their limited physical infrastructure may mask highly complex technological and operational risks. Governance must ensure that innovation does not move faster than risk-management capabilities.
At the same time, customers need stronger digital financial literacy. Knowing how to use an app is not enough. People must understand password security, OTP and PIN confidentiality, personal-data protection, online fraud and the risks of digital borrowing.
Towards a Cashless Future
Digital banking could introduce a new dimension of competition and innovation in Bangladesh. Traditional banks, digital banks, fintech companies and mobile financial service providers will increasingly compete to deliver faster, simpler, more affordable and customer-centric services.
Yet innovation must remain balanced with financial stability, customer protection and responsible risk management. Reliable digital infrastructure, interoperable payment systems, secure digital identity, robust cybersecurity, skilled professionals, effective data governance and responsive regulation will be essential.
The future is unlikely to be a simple choice between traditional and digital banking. Instead, both may evolve into an integrated financial ecosystem in which technology reduces the barriers of time and distance while human support remains essential.
Ultimately, the success of digital banking cannot be measured simply by the number of licences issued, applications downloaded or accounts opened. The real measure will be whether customers receive banking services that are secure, accessible, affordable, reliable and responsible.
Because banking is not merely a system for transferring money; it is an institution built on trust.
The real digital banking revolution will occur when banking moves beyond the walls of branches and into the palm of people’s hands—without sacrificing trust, security and responsibility to the speed of technology.
Md. Khairul Hasan is Assistant Vice President, Brand Communication Division, Sammilito Islami Bank PLC, and a financial-sector analyst. Email: hasan.khairul@gmail.com
