Data-driven lending solution for Bangladeshi banks

In Bangladesh, the process of securing a loan from most banks and non-bank financial institutions (NBFIs) feels like a maze.

- BY MD SHAH JALAL

A small business owner walks in with a mountain of paperwork, a salaried professional submits their home loan application with fingers crossed, and a credit officer begins the tedious task of checking documents and preparing loan appraisal reports. This cycle plays out day after day, with loan decisions made based on outdated risk management practices. Weeks, even months, pass, only for many of these hopeful applicants to face rejection, not because they lack potential, but because the system never truly understood their financial story.

This situation is the silent crisis of our banking system. In a country where the middle class is expanding and millions of small businesses drive the economy, the financial system still struggles to meet their needs. Why? Because credit risk management has not evolved with the times. But there is a solution, and it lies in reimagining the way we assess risk through the lens of data.

Bangladesh is a country of 170 million people. One in four now belongs to the middle class, and that number is growing thanks to rapid urbanisation and digital adoption. This upward shift is opening up big opportunities, especially in retail banking.

Meanwhile, around 10 million CMSMEs (cottage, micro, small, and medium enterprises) comprise 90 percent of industrial units and account for 80 percent of industrial employment. Despite their vital significance, access to finance remains limited simply because they don't have formal documentation, collateral, or traditional credit histories. This is not a capacity problem. It is a visibility problem. And that is where data-based risk management can change everything.