Why Bancassurance drives Bangladesh’s digital financial future

Raj Kiron Das: Bancassurance is rapidly shifting from a promising concept to a strategic necessity in Bangladesh’s economic sector, driven by the country’s accelerating transition to digital banking. As customers increasingly manage saving, payment and lending through mobile apps and online platforms, the demand for a seamless, all-in-one financial experience is rising. Bancassurance-where banks distribute insurance products through their existing network and digital channel- fits directly into this transformation. More importantly, it offers Bangladesh an opportunity to strengthen insurance penetration, improve consumers’ protection and build a more resilient economy by making risk coverage easier to access and easier to trust.

The case for bancassurance in Bangladesh begins with customers’ behaviour. Digital banking has become an everyday habit for many and the smartphone is now the primary financial touchpoint for many households and businesses. Yet insurance has not kept pace in the same way. Despite its significance, insurance is still often perceived as complex, paperwork-heavy, and uncertain- especially when it comes to claims. This confidence gap has long limited the sector’s growth. Bancassurance has the potential to address that challenge by using the credibility and familiarity of banks to present insurance in a simpler, more transparent manner. When a customer may explore products, buy coverage, pay premium, review policy details and initiate claims in the same banking app they already trust, the psychological and practical barriers to insurance adoption begin to fall.

However, the success of bancassurance will depend on whether it delivers genuine value rather than becoming another sales channel. In Bangladesh, the long-term credibility of the model will be shaped by service quality, product suitability and the integrity of the claims process. Customers typically evaluate insurance not at the point of purchase, but at the moment of need. If claims support is slow, unclear, or inconsistent, the reputational damage may affect both the insurer and the bank. For this reason, the strongest bancassurance models are expected to prioritise end-to-end customers’ experience, including digital claim tracking, clear documentation requirement and responsive customers’ support through both online and call-centre channels.

Regulation will also determine how quickly bancassurance may scale and how smoothly it can operate. Banking and insurance in Bangladesh are directed under separate regulatory structure, each with distinct compliance requirements and consumers’ protection. If these frameworks are not coordinated with effectiveness, customers may face repeated verification steps, fragmented service journeys and confusion over answerability. A robust bancassurance ecosystem needs regulatory alignment that allows compliance to be built into digital processes without making friction for users. Alongside this, data privacy and customers’ approval will become increasingly essential. Bancassurance relies on customers’ information, but trust will weaken if data is shared without clear transparency, safeguard, and customers’ control.

The nature of partnership between banks and insurers is another decisive factor. Analysts caution that collaboration driven mainly by short-term revenue targets may encourage mis-selling and weaken after-sales service, leading to customers’ dissatisfaction and loss of confidence. In contrast, partnerships built around collective strategy, integrated technology systems, aligned service standards and long-term investment in customers’ education are more likely to succeed. In an emerging market where insurance literacy remains limited, the credibility of institutions and the simplicity of communication are critical. A customer-centric approach is not simply desirable; it is necessary for sustainable growth.

One of bancassurance’s biggest advantages lies in data and analytics. Banks already possess deep insight into customers’ income flow, transaction habit, savings pattern and credit behaviour. When used responsibly, this information may assist insurers design products that are more relevant and affordable, reducing the mismatch between what customers buy and what they actually need. Personalised offerings- like coverage linked to loan, protection for small businesses, or simplified life and health products- may improve approval while making insurance feel less abstract and more practical for everyday life.

The broader impact extends beyond business expansion. Bancassurance may play a meaningful role in financial inclusion by reaching groups that traditional insurance distribution often fails to serve, including micro-entrepreneurs, rural customers and newly banked populations. By embedding risk protection into banking relationships, Bangladesh may strengthen household resilience, stabilise small businesses and reduce vulnerability to economic shock.