Assessing the Role of Internal Controls in Mitigating Risks and Enhancing Operational Efficiency A Study of Meghna Bank

Abstract

Meghna Bank Limited, a fourth-generation banking institution in Bangladesh, commenced its operations on May 9, 2013, with the vision to provide banking services to unbanked consumers through various technologies. Despite employing a cutting-edge, technology-driven strategy, the bank has encountered difficulties in addressing persistent operational inefficiencies, including those related to account opening, monetary transactions, and regulatory compliance. A significant portion of these inefficiencies can be attributed to insufficient internal controls. This research empirically investigates the influence of internal control systems on the reduction of operational and compliance risks, as well as the enhancement of performance at Meghna Bank PLC. By examining various dimensions of internal control, the research seeks to evaluate the effectiveness of the existing internal control systems in risk mitigation and efficiency enhancement. The study adopts a mixed-method approach, utilizing a structured survey involving 74 employees from the private sector, alongside qualitative data obtained from semi-structured interviews. The primary objectives include identifying deficiencies in the current internal control systems, assessing their impact on operational performance, and providing viable solutions for improvement. The research is structured around three key questions: first, how internal control mechanisms can enhance the mitigation of risk within account management processes; second, what inefficiencies exist within the current framework; and third, to what extent improved controls can enhance operational and regulatory performance. Furthermore, the report reveals that while the bank has established sound practices, there are significant gaps—particularly in regulatory compliance and the integration of digital transformation initiatives. The findings suggest that the enhancement of internal controls and investment in human capital and information technology are pivotal to improving operational efficiency and mitigating risk. These insights may hold relevance for Meghna Bank PLC and its counterparts in other developing nations facing similar challenges.