Adoption of Digital Payment Systems in Microcredit Operations: Challenges & Opportunities in the Context of Bangladesh

Abstract

This study explores the integration of digital payment systems into microcredit operations within the context of Bangladesh. The primary objective was to find the transformative potential of mobile banking technology and digital payment systems in reshaping microcredit distribution, disbursement, and repayment processes. Employing a qualitative research approach, the study examined the impact of mobile banking technologies and digital payment systems on microcredit operations. For the analysis, data was collected through indepth interviews with seven participants working in various roles in various organizations within the microcredit sector, including Branch Manager, Branch Manager, Regional Manager, Regional Manager, Assistant Director, Area Manager, and Senior Manager. The selection of participants was based on their expertise and experience in microcredit operations and their involvement in the adoption and implementation of digital payment systems. All the participants agreed to the fact that the integration digital payment systems indeed can be a game changer for microcredit operation in the context of Bangladesh. Content analysis methods were employed to analyze the interview data, identifying recurring themes and patterns. The findings reveal that the adoption of digital payment systems has a significant impact on microcredit operations, streamlining the distribution of microcredits, eliminating administrative bottlenecks, and ensuring timely disbursements. Additionally, digital payment systems had led to substantial improvements in operational efficiency, particularly in recordkeeping and reconciliation, which has enhanced internal operational processes. These findings align with existing scholarly literature, confirming the transformative potential of digital payment systems in revolutionizing microcredit operations as well as provide valuable insights for practitioners and their managers, highlighting the critical role of digital payment systems in enhancing operational efficiency and elevating customer service. While the study's findings about the impactful possibilities of digital payment systems in microcredit operations within the context of Bangladesh, it is essential to recognize and address the potential limitations regarding their applicability to other contexts. The findings may be restricted to the current timeframe, as technological advancements and evolving microcredit practices may render them less applicable in the future. Additionally, cultural factors such as general behavior, norms and values may have greater influence in the adoption and utilization of digital payment systems in microcredit operations across different cultures. Furthermore, industryspecific characteristics, including the regulatory environment, competitive landscape, and target clientele, may impact the success of digital payment system adoption in industries beyond microcredit. Notwithstanding these contextual limitations, the overall outcome of that particular study offer useful insights into the transformative potential of digital payment systems in microcredit operations, paving the way for further research to explore the broader applicability.