Al-Arafah Islami Bank is waiting for final regulatory approval to establish a new standalone Islamic mobile bank designed to capture new market shares and achieve greater financial inclusion in a country often touted as mobile-first.
Al-Arafah Islami Bank expects to launch its new subsidiary, an Islamic mobile bank with capital amounting to BDT2–3 billion (US$23.08-34.62 million), within two to three months, once it has received Bangladesh Bank’s greenlight.
This new Islamic mobile bank, whose name has yet to be decided, will be powered by tech company Green More which will own a 49% stake in the bank while Al-Arafah Islami Bank will hold the remaining 51%.
This new company comes as Al-Arafah Islami Bank organized the soft launch of an e-wallet called Islamic e-wallet back in December 2019.
Once up and running, the Islamic mobile bank will manage the Islamic e-wallet, which comprises cash in and cash out services; person to person, person-to-business and government-to-person payments; as well as fund transfer, utility bill payment, insurance premiums and loan installment services, among others.
Overall, two million clients have already subscribed to this new product, and Al-Arafah Islami Bank targets to attract 10 million clients by the end of the year, according to Masudul Bari, the head of mobile banking services at Al-Arafah Islami Bank.
“We want to serve individuals to achieve greater financial inclusion, but we are also going to tap companies, SMEs and the government’s social programs. Every year, the government disburses stipends and financial support to the tune of BDT650 billion (US$7.52 billion). We want to participate in the distribution of these funds,” shares Masudul.
Although 59 universal banks operate in Bangladesh, 50% of the population aged 15 and above remains unbanked according to the World Bank’s Global Findex 2017, but 87% of the 162.65 million inhabitants have a mobile connection, according to GSMA Intelligence.