The rapid adoption of mobile financial services (MFS) in Bangladesh is primarily due to low transaction costs, ease of access, and the convenience they offer over traditional banking methods. Approximately 71% of MFS users live within one kilometer of an agent compared to 41% who are that close to a bank branch, highlighting the accessibility of MFS compared to banks . Furthermore, MFS addresses both supply-side barriers, such as high operating costs, and demand-side barriers like lack of IDs and geographical challenges . The availability of 18 active MFS operators with millions of active subscribers indicates the widespread acceptance of the technology, driven by its adaptability to meet the needs of the unbanked population .

Bangladesh's status in Digital Financial Inclusion (DFI) displays remarkable gender and income equality, surprising when compared to neighboring countries like India and Pakistan. This suggests that Bangladesh is advancing rapidly in making digital financial services accessible to diverse demographics . The implications for future financial services include a need for continued focus on personalized financial products for women and the poorest 40 percent, as well as strategic efforts to address remaining barriers to access. Such advancements indicate a promising environment for further innovation in the financial technology sector and potential for further reducing socio-economic disparities .

Digital financial services (DFS) in Bangladesh evolved significantly to support financial inclusion by emphasizing remote access and limiting physical interactions during the COVID-19 pandemic. DFS particularly through mobile money, provided means for remote payments, bill settlements, and money transfers, which were crucial during periods of restricted movement. This technology enabled socioeconomic distancing by allowing financial transactions from the safety of consumers' homes or accessible market locations . Beyond the pandemic, DFS had already been addressing financial inclusion by reducing costs, increasing speed, and fostering transparency, making financial services more accessible to the poor and geographically isolated communities .

Bangladesh Bank has implemented strategic measures such as supporting non-bank entities to establish White Label ATMs and point-of-sale terminals, encouraging technological disruption, and utilizing e-KYC to enhance the digital financial services (DFS) ecosystem . These measures aim to address financial accessibility and encourage private sector participation. Potential areas for further improvement include designing tailored financial products for women, boosting agent banking to reach less accessible areas, and providing incentives to encourage technological adoption. These steps could further reduce the unbanked population and promote inclusive growth .

The expansion of digital financial services (DFS) post-COVID-19 is likely to have profound long-term socioeconomic impacts in Bangladesh, primarily benefiting marginalized communities. Enhanced DFS will help bridge the financial inclusion gap, enabling economically disadvantaged groups with access to tailored financial products, improved financial planning, and increased economic participation. It will facilitate growth in digital literacy, entrepreneurial ventures, and financial stability, fostering socioeconomic upliftment. Moreover, DFS enables efficient delivery of social benefits like cash transfers with minimal fraud risk, significantly impacting poverty alleviation endeavors and enhancing overall economic resilience .

NGOs play a crucial role in Bangladesh's microfinance landscape by filling gaps left by traditional banking institutions, particularly for the unbanked and underbanked populations. They operate an extensive network of branches, with key players like ASA Bangladesh and BRAC having millions of members and borrowers . Compared to traditional banks, NGOs have a more extensive outreach due to their focus on financial inclusion and developmental missions. While banks often cater to profitable urban centers, NGOs reach rural and economically disadvantaged groups, providing essential financial services and driving significant socio-economic changes by deploying microfinancing models suited to local needs .

Mobile financial services (MFS) have significantly increased financial inclusion for the 'unbanked population' in Bangladesh by providing an accessible alternative to traditional banking systems. With around 71% of MFS users living close to an agent and lower transaction costs, MFS is more attractive and accessible, especially for rural and low-income communities . However, challenges remain, such as the need for increased financial literacy among users, regulatory concerns, and maintaining infrastructure to manage the high volume of transactions effectively, something that remains essential to achieving complete financial inclusion .

Mobile financial services (MFS) differ from traditional banking in Bangladesh primarily in terms of user behavior and transactional purposes, as they cater more to everyday convenience and accessibility. Users tend to prefer MFS for transactions requiring low transaction costs and immediate accessibility, such as bill payments, savings, airtime top-ups, and merchant payments . In contrast, traditional banking is less frequently used due to geographical constraints and higher costs associated with transaction services. MFS has adapted to the needs of users by offering a quick and easily accessible platform for routine financial operations, a shift from the more structured and costly processes of banks .

Participation in microfinance influences beneficiaries' financial behaviors by providing access to credit, enabling better financial planning and risk management while encouraging entrepreneurship. As indicated, many beneficiaries rely on borrowing from informal networks, with only 32% borrowing from Microfinance Institutions (MFIs). This implies a gap in integrating formal financial services, highlighting the potential for microfinance to foster formal financial behaviors by increasing MFI accessibility and trust. Enhanced financial literacy programs could further this integration, promoting broader financial engagement and leveraging microfinance as a steppingstone to comprehensive financial inclusion .

Bangladesh's DFS growth is projected to burgeon with the market potentially growing to USD 250 billion by 2024. Contributing factors include high mobile phone penetration, increasing demand for cashless transactions, and innovative services like attractive discounts and cashback offers from mobile wallet providers . Additionally, government and banking regulator support for infrastructure and policy initiatives bolster this growth. However, challenges such as limited digital infrastructure in rural areas, cyber-security risks, and ensuring competitive parity among service providers could hinder this trajectory. Addressing these obstacles effectively is crucial for realizing DFS's full potential .