Technology reshaping microfinance in BD

Gazi Anowar :

The microfinance sector of Bangladesh- once defined by group meetings, passbooks and paper-based lending – is now undergoing a digital revolution.

From BRAC to Grameen Bank and ASA, leading microfinance institutions (MFIs) are embracing mobile banking, agent networks and data-driven lending tools to reach millions with faster, more transparent, and more inclusive services.

According to Bangladesh Bank, as of December 2024, 31 banks operated agent banking through 16,021 agents and 21,248 outlets. These outlets opened more than 24 million accounts – nearly half belonging to women and the majority to rural customers.

BRAC alone disbursed $5.85 billion in microloans to 6.9 million clients in 2024, while ASA reached 3.5 million borrowers with USD 4.5 billion. Both NGOs credit digital platforms with reducing fraud, boosting transparency, and speeding up loan approvals.

Mobile financial services (MFS) have been the real game-changer. bKash reported its registered accounts rose from 219.2 million in January 2024 to 239.3 million in January 2025, with transactions hitting Tk 1.72 trillion – up 32.56 percent year-on-year.

Perhaps the most striking transformation has been in women’s empowerment.

Rural women, once excluded from direct financial services, are now independently managing accounts and taking financial decisions.

Ayesha, a poultry farmer from a char area, no longer wastes days traveling to repay loans. Instead, she pays installments digitally, saving time and transport costs. Small shopkeepers in semi-urban towns use apps to manage accounts and apply for larger loans without leaving their businesses.

MFIs are increasingly using predictive models and machine learning to assess risk and build client credit profiles based on transaction history, making loans available even without collateral.

“The digital shift is a double-edged sword,” warned former Executive Director of Bangladesh Bank M. Mahfuzur Rahman. “It accelerates inclusion but also exposes poor clients to fraud, phishing, and data breaches. Without strong cyber security and awareness programs, trust could be undermined.”

Digital systems have cut operating costs, freeing field staff to focus on training and client support. Less paperwork and travel mean lower carbon emissions. In addition, many digital loans are financing solar panels, improved cookstoves, and climate-smart agriculture – linking microfinance with environmental goals.

Challenges persist. Poor digital literacy among older and less-educated clients, patchy internet connectivity in rural areas, and frequent power cuts still constrain access. Meanwhile, digitisation is reshaping employment within MFIs, creating demand for data analysts, cybersecurity experts and digital trainers.

Analysts say digitisation offers Bangladesh a rare opportunity to combine poverty reduction with sustainable growth.

With continued collaboration between government, NGOs, MFIs, and fintech firms, digital microfinance could become not only a driver of inclusion but also a tool for climate resilience, women’s empowerment, and equitable development.