MFS Transactions Drop 20 Percent in Islamic Banks

According to latest Bangladesh Bank data, a notable stagnation has emerged in the digital finance and mobile financial services (MFS) sector. In August, transaction volumes in Islamic banks' MFS channels dropped by nearly 20 percent compared to the previous month, alongside a substantial decline in active accounts. Correspondent sources reported that despite rapid technological modernization in the country's financial landscape, this downturn in Shariah-based mobile platforms has raised concerns among industry insiders. Relevant authorities stated that gaps in technological capacity and customer trust are driving this contraction in service outreach.

Central bank statistics indicate that total MFS transactions by Islamic banks stood at 16.78 billion BDT in July, which fell to 13.48 billion BDT in August, marking a sharp decline of 3.30 billion BDT within a month. Furthermore, transactions decreased by 2.71 billion BDT or 16.7 percent compared to August of the previous year. Concurrently, MFS accounts dropped from 2,880,374 in July to 2,660,008 in August, recording a reduction of 220,286 accounts in a single month, though annual figures still reflect a marginal rise from the previous year.

A closer look reveals that both cash-in and cash-out transactions declined in August. Cash-ins dropped from 3.44 billion BDT in July to 2.12 billion BDT in August, while cash-outs decreased from 5.05 billion BDT to 4.00 billion BDT. Peer-to-peer (P2P) transfers fell from 250 million BDT to 210 million BDT, and salary disbursements plunged from 3.18 billion BDT to 1.94 billion BDT. Conversely, merchant payments rose from 4.17 billion BDT to 4.45 billion BDT, and government-to-person (G2P) transactions surged significantly from 130 million BDT to 1.01 billion BDT.

The performance gap between Islamic banks and conventional banks remains vast. In August, Islamic banks accounted for only 1.80 percent of total scheduled banks' MFS accounts, while conventional banks dominated with 98.20 percent. The gap is even wider in transaction volume, where Islamic banks captured a negligible 0.08 percent compared to 99.92 percent by conventional counterparts. Analysts note that mere growth in account numbers does not reflect true utilization; enhancing technological infrastructure, expanding agent networks, and strengthening consumer confidence are vital for long-term sustainability.

//DBTech/JNR/SME/FOED//