Bangladesh is one of the most vulnerable countries in the world when it comes to the impacts of climate change. The country has been experiencing increasing frequency and intensity of natural disasters such as floods, cyclones, and droughts, which have devastating effects on people's livelihoods, particularly those who are living below the poverty line. 

The financial sector in Bangladesh has a significant role to play in building climate resilience and supporting people to cope with the impacts of climate change. In recent years, digital financial products have emerged as a promising tool to enhance financial inclusion, promote resilience, and support climate adaptation efforts.

Digital financial products are financial services that are delivered through digital channels such as mobile phones, the internet, or other electronic means. These products can help people to access financial services in a more convenient, affordable, and efficient way. They can also provide people with financial tools that enable them to manage risks, cope with shocks, and build resilience against climate change impacts.

One of the key challenges facing farmers in Bangladesh is the unpredictability of weather patterns due to climate change. Digital financial products such as weather-indexed insurance and mobile banking can help farmers to manage risks and cope with shocks caused by extreme weather events. Weather-indexed insurance is a type of insurance that pays out based on weather data. For example, if there is a drought or flood, the insurance policy will pay out to the farmer based on the severity of the weather event. This type of insurance can provide farmers with a safety net in case of crop failure or livestock loss due to extreme weather conditions.

Mobile banking is another digital financial product that can help farmers to cope with the impacts of climate change. Mobile banking allows farmers to access financial services through their mobile phones, which can be particularly useful for those living in remote areas. Farmers can use mobile banking to transfer money, pay bills, or access loans, which can be critical in times of crisis when access to financial services is limited.

Will help women

In addition to supporting farmers, digital financial products can also help vulnerable populations such as women, who are disproportionately affected by climate change impacts. Women in Bangladesh often have limited access to financial services, which can make it difficult for them to cope with climate change impacts such as floods, droughts, or cyclones. Digital financial products such as mobile banking and digital savings accounts can help to overcome these barriers and increase financial inclusion among women.

Mobile banking can be particularly useful for women who face mobility constraints due to cultural or social norms that restrict their movement. By using mobile banking, women can access financial services from the comfort of their homes, which can help to overcome these barriers. Digital savings accounts can also be useful for women as they provide a safe and secure place to save money, which can be critical in times of crisis.

Digital financial products can also play a significant role in promoting climate adaptation efforts in Bangladesh. Climate adaptation involves making changes to infrastructure, policies, and practices to reduce the vulnerability of people and ecosystems to climate change impacts. Digital financial products can help to finance these adaptation efforts by providing people with access to loans or other forms of credit.

For example, digital microfinance platforms can provide loans to small and medium-sized enterprises (SMEs) that are working on climate adaptation projects. These loans can be used to finance projects such as building climate-resilient infrastructure or investing in renewable energy. In addition to supporting climate adaptation efforts, these loans can also create new business opportunities and stimulate economic growth in the country.

Digital financial products have significant potential to enhance financial inclusion, promote resilience, and support climate adaptation efforts in Bangladesh. By providing people with access to financial services through digital channels, these products can help to overcome the barriers that prevent people from accessing financial services, particularly those who are most vulnerable to climate change impacts. They can also provide people with financial tools that enable them to manage risks.

(The writer is a Ph.D. Scholar in Public Administration, Incheon National University, South Korea, Views are personal)