Analysing the Role of Mobile Financial Services (MFS) in Financial Inclusion: A Data-driven Exploration of CDIP’s Journey

Abstract

Aims: This study explores how mobile financial services (MFS) have developed and impacted the work of the Centre for Development Innovation and Practices (CDIP), a mid-sized Bangladesh NGO-MFI. CDIP has worked for financial inclusion and social development through microfinance since 1995. Study Design: Bridging traditional microfinance with digital financial ecosystems has advanced significantly with the strategic integration of MFS into CDIP's microfinance operations, piloted through collaborations with Nagad, bKash, and Upay to establish financial inclusion. Methodology: This study evaluates adoption rates and MFS usage trends among CDIP borrowers using data from 83,329 transactions collected over a 23-month period using a basic moving average model. Results: The data shows significant changes in transaction volume, ticket size distribution, and client behaviour and also apparent increase in microfinance clients managing their own transactions. Subsequently, a cost-benefit analysis using discounted cash flow techniques shows that the operational efficiency, customer financial literacy, and long-term strategic gains balance by its short-term financial expenses. The MFS project has a negative net present value (NPV). Conclusion: This paper emphasises how revolutionary MFS may be in increasing financial inclusion as well as operational efficiency in the microfinance industry, in spite of the fact that there are financial challenges to overcome in order to implement it.