Habibur Rahman, Wahid bin Ahsan

Department of Human-Centered Design
Userhub

Abstract

This study examines barriers to mobile financial services (MFS) adoption in rural Bangladesh, focusing on usability challenges, reliance on intermediaries, fraud risks, and insufficient financial literacy. Through qualitative interviews with 18 MFS users, agents, and fintech experts, the findings reveal how low digital and financial literacy, alongside inadequate security protocols, exacerbate users’ dependency on intermediaries, increasing their fraud exposure. The study highlights the urgent need for financial literacy programs, user-centered design improvements, and robust fraud prevention strategies to build trust and accelerate MFS adoption. These findings contribute to global research on financial inclusion, providing actionable recommendations for improving MFS usability and security in underserved areas.

Keywords: mobile financial services, digital financial literacy, rural financial inclusion, intermediary dependence, Bangladesh, MFS adoption, user-centered design, fintech adoption, rural banking, digital banking fraud, fraud mitigation, MFS security, fraud risks, mobile money fraud mitigation, qualitative research

Introduction

The rapid expansion of mobile financial services (MFS) in Bangladesh has significantly reshaped efforts toward financial inclusion, particularly in rural areas where access to formal banking remains limited (Kim et al., 2018). MFS platforms, such as mobile money, offer essential financial services like payments, remittances, and savings to underbanked populations (Serbeh et al., 2022). High mobile penetration has driven adoption, yet this growth is accompanied by challenges including low digital literacy, fraud risks, and issues of trust (Rahman, 2021). Despite their potential, MFS platforms face considerable barriers, especially among rural users unfamiliar with the technology, often lacking the security awareness needed to protect themselves from fraud (Dass & Pal, 2011).

The vulnerabilities are particularly pronounced for rural users reliant on over-the-counter transactions facilitated by local agents. This dependency has led to frequent incidents of fraud, including phishing, SIM swapping, and social engineering attacks that exploit users’ limited awareness and trust (Mihretu et al., 2023). Studies on Kenya’s M-PESA demonstrate how weak interpersonal trust between users and agents can expose customers to fraud, despite strong institutional trust in the service provider (Morawczynski & Miscione, 2008). In Bangladesh, gaps in regulatory protections and the lack of comprehensive financial literacy exacerbate these vulnerabilities, threatening to impede the broader adoption of MFS and its potential to advance financial inclusion (Greenacre & Buckley, 2015).

Research Objectives

This study aims to:

1. Examine the key barriers that increase fraud vulnerability among rural MFS users, including reliance on intermediaries and limited digital literacy.
2. Investigate the impact of fraud on trust and continued usage of MFS among rural populations.
3. Explore strategies for enhancing user awareness and security to foster greater trust in MFS and promote financial inclusion in rural Bangladesh.

These objectives will guide the study’s methodology and analysis, contributing to the development of targeted solutions for improving MFS security and expanding financial inclusion efforts.

Methodology

Research Design

This qualitative study investigates the challenges rural populations in Bangladesh face when using Mobile Financial Services (MFS). It aims to understand how these challenges contribute to increased vulnerability to fraud and to identify strategies to address these issues. The central research question guiding this study is:

“What factors make rural populations more susceptible to fraud in Mobile Financial Services (MFS), and how can these challenges be addressed to enhance trust and security?“

To explore this, the research focuses on key themes such as dependence on intermediaries, the impact of fraud on trust, technological limitations, and the role of community and regulatory interventions. These themes are informed by the research objectives set out in the introduction.

Participants

The study involved 18 participants, selected through purposive and snowball sampling to ensure a wide range of perspectives, focusing on individuals who have direct experience with MFS fraud or work closely with rural populations:

• Rural Users: Twelve participants were rural MFS users who had experienced fraud firsthand. They provided insights into their reliance on intermediaries, limited technological understanding, and vulnerability to scams like phishing and SIM swapping.
• Agents: Five local agents were interviewed, as they facilitate MFS transactions and frequently deal with user errors, fraud risks, and service provision in unbanked communities.
• Fintech Expert: One fintech expert was interviewed to offer a broader industry perspective on MFS challenges, regulatory frameworks, and security solutions.

Data Collection

In-depth, semi-structured interviews were conducted with open-ended questions tailored to the three participant groups. Most interviews took place in person, while a few were conducted virtually. Each interview was audio-recorded with participant consent and transcribed for analysis.

Data Analysis

Transcribed interviews were analyzed using ATLAS.ti software. A thematic analysis approach was applied, with data initially coded based on the research objectives. Key themes related to user experiences, security vulnerabilities, and opportunities for fraud prevention were identified and organized for deeper analysis.

Ethical Considerations

The study followed strict ethical guidelines in accordance with the American Psychological Association (2017). All participants were fully informed of the study’s purpose and consented to the use of their data. Their privacy and confidentiality were guaranteed, and participants were free to withdraw at any point without any penalty.

Findings

This study identifies key challenges in mobile financial services (MFS) adoption and use among participants, agents, and fintech experts in rural Bangladesh. The interviews reveal barriers such as reliance on intermediaries, usability issues, and vulnerability to fraud. These findings highlight gaps in financial literacy, technological design, and local support systems. The following themes provide a detailed exploration of these challenges.

1. Dependence on Others for MFS Transactions

Many participants relied on family members or agents for transactions due to unfamiliarity with technology and the complexity of the process. One participant explained, “I didn’t know the process after selecting the first step; that is why I went to my neighbors to help me pay the bill.”

Agents confirmed their role as intermediaries, often assisting people with setting up accounts, processing payments, and resolving transaction errors. However, this reliance sometimes leads to mistakes, such as entering incorrect information, and increases the risk of exposing sensitive data, such as PINs.

2. Susceptibility to Fraudulent Calls and Messages

Participants expressed vulnerability to phone- or message-based fraud. In many cases, scammers posed as representatives from the mobile financial company, requesting personal information under the guise of resolving account issues or offering lower transaction fees. One participant recounted, “I got a call with an offer of a low transaction cost if I provide them the PIN number to complete the process fast.”

A fintech expert explained that scams often involve SIM swapping, allowing fraudsters to access participants’ financial details. By exploiting their limited understanding of digital security protocols, scammers are able to manipulate individuals into sharing sensitive information.

3. User Experience (UX) Challenges

In addition to depending on others, many participants expressed frustration with the usability of MFS platforms. The design of these platforms was often described as confusing, with common complaints including small font sizes and unintuitive navigation. One participant shared, “The font size is small. You press, and then the slide moves, and then it shows the amount of your balance.”

These usability issues compounded the reliance on agents. Many agents observed that people frequently struggled with basic functions, such as initiating payments or checking balances, and often required assistance to complete tasks. As a result, participants remained dependent on intermediaries for everyday transactions.

4. Limited Knowledge of Fraud Prevention

A significant issue raised by the interviews was participants’ limited knowledge of fraud prevention measures. Several admitted that they were unaware of how to identify scams or protect their financial information. One participant recalled, “When I received a call offering a lower transaction fee, I complied without realizing it was a scam.”

The fintech expert emphasized that participants in rural areas are particularly vulnerable due to the lack of comprehensive financial literacy programs. Without basic knowledge of how to secure their accounts or recognize fraudulent activities, many remain exposed to risks.

5. Barriers to Reporting Fraud and Seeking Redress

Many participants reported difficulties when attempting to recover funds lost to fraud. Both agents and participants described the process of seeking redress as cumbersome, often involving long delays and limited support from service providers. One agent noted how a customer mistakenly transferred money to the wrong person and struggled to recover it, even after reporting the incident.

Additionally, some participants expressed hesitation in reporting fraud due to the small amounts of money involved or doubts that the issue would be resolved. This reluctance contributed to a general sense of frustration and distrust in the effectiveness of fraud prevention and resolution mechanisms.

6. Community Support and Local Leadership in Fraud Prevention

A fintech expert pointed out the potential role of community leaders in raising awareness about fraud prevention. Local leaders, they suggested, could organize seminars or awareness programs to educate participants about MFS security. Such community-driven approaches could be particularly effective in rural areas, where formal education on financial matters is limited.

Several agents also mentioned that while there were informal support systems within the community, these were often slow or ineffective. Participants who fell victim to fraud were often reluctant to seek help because they lacked confidence in the available local support mechanisms.

In summary, the findings underscore significant obstacles to MFS adoption in rural Bangladesh. Participants’ reliance on agents, coupled with usability challenges, leaves them vulnerable to fraud. Limited financial literacy and ineffective fraud reporting further complicate their ability to navigate MFS. The need for stronger local leadership and targeted education programs is clear. These findings set the foundation for further analysis in the following section, which will explore their broader implications for MFS design and community-driven solutions.

Discussion

This study identifies significant challenges faced by rural users of mobile financial services (MFS) in Bangladesh, particularly regarding reliance on intermediaries, usability issues, vulnerability to fraud, and limited financial literacy. These challenges align with global MFS adoption barriers but manifest uniquely in rural Bangladesh due to socio-economic conditions.

Dependence on Intermediaries: One key finding is users’ dependence on intermediaries, such as agents and family members, to conduct MFS transactions. This dependence stems from both limited literacy and lack of digital familiarity, particularly among older populations. Research from Ghana similarly identifies this reliance, which not only exposes users to fraud risks but also creates privacy concerns due to shared PINs and personal data (Serbeh et al., 2022). This underlines the importance of improving user autonomy through user-friendly interface designs that allow rural users to perform transactions independently.

User Experience and Usability Issues: Usability challenges further compound the dependency on intermediaries. Participants were frustrated by confusing navigation, small font sizes, and unintuitive MFS platforms. Research highlights the need for user-centered design to improve MFS accessibility, particularly for low-literate users (Rayed et al., 2023). Using larger text, clear icons, and simplified navigation can enhance user independence. The EDIT UX Framework (bin Ahsan, 2024) provides a structured approach to iterating design improvements, making MFS platforms more accessible to rural users.

Vulnerability to Fraud: The issue of fraud remains critical. Participants frequently reported falling victim to phishing, SIM swapping, and fraudulent calls, a problem worsened by limited knowledge of fraud prevention techniques. Similar trends are observed in Kenya’s MFS landscape, where fraud significantly undermines user trust and deters future adoption (Mihretu et al., 2023). In Bangladesh, like in other developing economies, users’ inability to distinguish between legitimate and fraudulent communications is a pervasive issue. Strengthening fraud prevention mechanisms, including two-factor authentication and real-time transaction alerts, can enhance security.

Limited Financial Literacy: The lack of financial literacy further exacerbates these challenges. As noted by Engels et al. (2020), financially literate users are better equipped to detect and prevent fraud. In Bangladesh, however, the absence of comprehensive financial education programs leaves rural users vulnerable. Embedding financial literacy resources directly into MFS platforms, alongside community-based training, can empower users to better understand and manage their financial activities. This aligns with findings that emphasize the critical role of financial education in reducing fraud risks and improving financial autonomy.

The challenges identified—dependence on intermediaries, usability barriers, fraud vulnerability, and limited financial literacy—underscore the need for multifaceted interventions that combine design improvements, educational initiatives, and robust fraud prevention measures.

Recommendations

To address the identified challenges in mobile financial services (MFS) in rural Bangladesh, the following strategies focus on improving usability, enhancing financial literacy, and strengthening fraud prevention mechanisms:

1. Improving Usability and User-Centered Design: Simplifying MFS interfaces is critical to reducing users’ reliance on intermediaries. Platforms should adopt user-centered design principles, incorporating features such as larger text, clear icons, and audio guides to improve accessibility for low-literate populations. The EDIT UX Framework (bin Ahsan, 2024)  recommends iterative design improvements based on user feedback to ensure that MFS platforms remain responsive to rural users’ needs. These improvements will foster user autonomy and reduce transaction errors.
2. Enhancing Financial Literacy Programs: The gap in financial literacy among rural users increases their susceptibility to fraud. Integrating financial education directly into MFS platforms—through in-app tutorials, transaction prompts, and fraud alerts—can guide users toward safer transaction practices. Expanding community-based financial literacy programs, led by local agents, will provide hands-on training and reinforce digital education. These combined efforts is crucial for promoting financial autonomy and building user confidence (Engels et al., 2020).
3. Strengthening Fraud Prevention Mechanisms: Implementing robust security measures is essential for protecting rural users from phishing, SIM swaps, and other scams. Two-factor authentication (2FA), real-time transaction alerts, and intuitive fraud reporting systems will prevent unauthorized access. Additionally, targeted fraud awareness campaigns, tailored to the local context, will equip users with the knowledge to recognize and avoid common scams (Mihretu et al., 2023).
4. Enhancing Regulatory Frameworks and KYC Protocols: Strengthening Know Your Customer (KYC) protocols is necessary to curb fraudulent account creation. Regulatory bodies, banks, and MFS providers must collaborate to enforce stricter identity verification processes, particularly for rural users relying on relatives’ identification documents. Ensuring stronger data privacy laws will bolster trust in MFS platforms and promote broader financial inclusion (Huda & Sony, 2024).
5. Building Local Support Systems: Local support systems must be strengthened to assist fraud victims. Collaborative fraud response units between service providers can provide timely aid, while community-led awareness programs will equip users with security practices, increasing resilience in rural communities.

Conclusion

This study highlights the multifaceted challenges faced by rural populations in Bangladesh when using mobile financial services (MFS). Key barriers include usability issues, limited financial literacy, fraud risks, and a heavy reliance on intermediaries, all of which contribute to a lack of trust in MFS platforms and hinder widespread adoption.

Addressing these challenges requires a holistic approach. Enhancing user-centered design, integrating financial literacy programs into MFS platforms, and strengthening fraud prevention mechanisms are essential steps toward empowering rural users and promoting their financial autonomy. Additionally, improving regulatory frameworks and local support systems is vital for ensuring these interventions are sustainable and scalable.

By reducing dependence on intermediaries, safeguarding users against fraud, and fostering a secure MFS environment, these efforts can significantly advance financial inclusion in rural Bangladesh. This study contributes to laying the groundwork for greater economic empowerment and financial participation in underserved communities. Future research and policy development must build on these insights to further refine and adapt solutions to meet evolving challenges.

Limitations and Future Research

This study’s qualitative design and small sample size limit the generalizability of its findings to broader populations beyond rural Bangladesh. Additionally, reliance on self-reported data introduces potential biases, such as recall errors and social desirability bias. Future research should employ larger, more diverse samples, incorporating quantitative methods to validate and extend these findings. Comparative studies across regions, urban and rural settings, and socio-demographic groups (e.g., gender, income) would further enrich the understanding of MFS adoption. Furthermore, exploring longitudinal studies could offer insights into the long-term effects of enhanced financial literacy programs and improved security protocols on MFS usage and trust. Future studies should also examine the impact of emerging technologies and updated regulatory frameworks on MFS usage and fraud prevention in rural contexts.

Acknowledgments

We extend our sincere thanks to the participants who shared their valuable experiences and insights. We are also grateful to Userhub for providing logistical and technical support throughout this project. Lastly, we appreciate the feedback and encouragement from our colleagues, which significantly enriched the research process.

Declaration of Interest

The authors declare no conflicts of interest related to this study. The research was conducted independently, and all conclusions were reached impartially, without influence from external parties.

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