International Review of Business, Trade, and Economics
Benefits of Adopting Voluntary Insurance as a New Product in Bank-Led Digital Banking Services in Economy Country-wise
Abstract
Akim M. Rahman
Today’s Tech-driven world has facilitated digital-banking services in multi-faucets including MFS and bank-led digital banking services in economy country-wise. However, bank-led digital-banking services are characterized by evolving many factors that are often unpredictable. It faces serious pitfalls, being it riskiness when it comes to choices using bank-led digital banking services. As a result, the growth trends of number of digital transactions in bank-led digital services is not growing fast-enough in economy country-wise. Adopting Voluntary Insurance as an innovation or new product in today’s bank-led digital banking services can enhance growth-trends of digital-transactions in economy.
These changes and adjustments can create huge opportunities to address societal problems and improve human life by fostering aggregate social welfare with distributional impacts of this innovation. On this aspect, banking services in economy country-wise such as Bangladesh is no different. Customer here faces perceived risk such as psychological risk, social / privacy risk, hidden charges and account hacked risk etc. Adaptation of the VI in bank-led digital banking services can affect two groups of bank customers. They are: i) winners who benefit from accessing the VI innovation and ii) losers who supposedly worsen their relative position when the growth trends of digital-banking services will be in full swing, i.e., the cashless society in economy country-wise such as Bangladesh. Thus, it can be impetus for policy- design to meet the challenges of today’s digital-banking in economy country-wise for faster growth-trends of digital- transactions. Regarding price or cost, a fixed price for insurance can have both positive and a minor negative implication depending on the market structure, which will overall reduce transaction cost and increase access to it. Welfare analysis ratifies that it increases consumer surplus, bank’s profit, economic growth, employment opportunities and social welfare by improving quality of life.