In 2021’s first edition of Boardroom Talk, Modefin invited Mr.Dorji Kadin – CEO, Bank of Bhutan, to join us in conversation about the banking landscape in the kingdom of Bhutan, what is being done, and how is the country gearing up for the inevitability of change and adoption.

When a small landlocked country such as the Kingdom of Bhutan, with a population of just about 780,000 people, many living in rural areas, many semi-literate, many with small businesses, decides to adopt digital banking as a tool to leverage the economy, it definitely bears some delving into.

Bhutan is unique

Bhutan is unlike many other countries in the world. It bears a size of only 38,394 sq km, which, to give you a perspective is only 1.17% the size of India, maybe slightly larger than the state of Maryland in the US. They are the first country in the world that is not carbon neutral, but carbon negative, meaning that it absorbs more carbon dioxide than it produces. The other interesting fact is that Bhutan measures its well being and success not by GDP but by GNH, the Gross National Happiness Index, the first for any country in the world.

Being a democratic monarchy, Bhutan’s King Jigme Khesar Namgyel Wangchuck is keen to see his kingdom, the Land of the Thunder Dragon, embracing the Internet and technology and maximize its potential to transform several aspects of society, including banking. In fact, given the size of Bhutan, it should have been quite easy to convert the whole country into a digital banking hub, but every country has its own challenges and this webinar was revealing and educative at the same time.

Bhutan’s digitization journey and beyond

The foundation for a digital Bhutan was laid in early 2008 and by the time of the eleventh 5 year plan (2013-2018), the Bank of Bhutan was ready to roll out the red carpet to digital banking with the launch of its mobile banking services called mBoB in May of 2015. After the initial reluctance and resistance to this new and contemporary way of banking, the people of Bhutan embraced it willingly and today there are more than 200,000 mobile banking users, with the BoB adding about 200 customers per day, and conducting daily transactions of upto 10 million USD. From deposits to remittances to payments, mBoB has been busy transforming the lives of people, one digital transaction at a time.

But there are challenges, of course. The country’s Internet connectivity, the ready adoption of mobile banking, semi-literate citizenry, several small businesses including grocers and vegetable shop owners, all pose obstacles to the digital banking initiatives taken by the Bank of Bhutan in its efforts to encourage and incentivize the private sector. However, their efforts are not in vain. 2020 was a year of lockdowns and it compelled people to adopt alternative modes of conducting business which included digital banking and digital payments and more. These numbers below prove that people are willing and amenable to adopting the new normal even in the face of several shortcomings.

  • During the first three days of lockdown mobile payments saw a substantial surge with 783,617 transactions amounting to Nu 1.3715 billion, according to a report compiled by the central bank.
  • The number of transactions increased by 175,613 in the first three days of the ongoing lockdown in comparison with the first three days of the first lockdown. Correspondingly, the value of the transactions increased by Nu 910.55 million.
  • The use of mobile wallets also increased by 13,775 transactions amounting to Nu 4.09 million.

Questions with answers

So does this mean that digital banking has come to stay in Bhutan?

  • What do banks like the Bank of Bhutan think about, when they think of expanding their scope of services to their customers?
  • Are they ready to use AI and BI in digital banking to penetrate areas and sectors to deliver more value to their customers?
  • What are their on-ground strategies to increase adoption of mBoB?
  • Why is mobile banking more popular than mobile wallets?

Our Boardroom Talk unravelled answers to each of these questions with Mr.Dorji answering each question that was posed to him. Listening to the conversation, you realize that the Bank of Bhutan is eager to deliver the benefits that digital banking affords its customers. From convenience of banking from their homes, to using QR codes for payments across merchants, for simplified deposits to easy remittances, people have adopted digital banking after their initial hesitation.

The age of digitization and digital banking has arrived in Bhutan. This Himalayan kingdom is not only ready to make good on the digitization front and the opportunities it provides to enhance the economy, but that they are ready to build a 21st century roadmap with technology as an enabler for providing significant value to the lives of the people of Bhutan.