bKash Mobile Money in Bangladesh – Promoting Financial Inclusion for the Masses
| Case Code: LDEN173 Case Length: 10 Pages Period: - Pub Date: 2021 Teaching Note: Available |
Price: Rs.250 Organization : bKash Industry : Financial Services Countries : Bangladesh Themes: FinTech, Banks and Banking, Digital Disruption, Technology in Banking |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Entrepreneurial Musings of Kamal Quadir
Bangladesh was a country with over 165 million people. One-third of the population lived below the poverty line and 60 percent of the population did not have access to banks or any form of financial services. There was thus a huge market for the provision of financial services to the masses.
In August 2005, Quadir came back to his home country Bangladesh from the US after a stint in business with his own venture, an animation company named Globekids, which failed after a period of three years. Quadir said, “We trained 70 animators all of whom are established now but we could not meet our expectation. I tried for three years and lost my all my hairs to make the business viable, and failed.” After the failed foray into business, Quadir went on to do his MBA at Massachusetts Institute of Technology (MIT), US. With the idea of using the mobile phone as a business tool, Quadir launched an online classifieds ad platform ‘CellBazaar’ in Bangladesh which was a success and was eventually acquired by Telenor in 2010. CellBazaar received the ‘Best Use of Mobile for Social and Economic Development Award 2008’ from GSM Congress . Quadir was given the Young Global Leader award by the World Economic forum in 2009 and was also the recipient of the MIT Ideas Award.
The Business Model
bKash had entered into partnerships with Mobile Network Operators (MNOs) to reach the large base of mobile customers. With a revenue sharing agreement with the big MNOs, namely, Grameenphone , Robi , and Banglalink , bKash was able to access 98 percent of the 100 million mobile phone subscribers in Bangladesh in its first year of operations..
Use of Digital Technology For Financial Inclusion
AliPay, which became an investor in bKash in 2018, provided the latest technology to improve the quality of service. The new technology, biometric facial recognition technology, developed by AliPay, enabled bKash customers to self-register while opening a new account. The biometric facial recognition technology matched the photograph uploaded by the customer with information available on the government’s central database within nanoseconds and helped in the account opening process..
Coping With Frauds and Hackers
Several customers of bKash had lost money to scammers and become victims of fraud. The masked SMS was one of the ways fraudsters used to send anonymous messages to a customer’s mobile phone. With a masked SMS, the recipient of the messages was able to see only the mobile number selected by the fraudster and not the original mobile number. He/she was thus tricked into transactions that ended up with money being sent to accounts other than the intended one..
Factors Behind Bkash’s Success
Various factors such as the use of basic mobile phones for financial services, agreements and partnerships with multiple mobile network operators, a low cost and high-volume revenue model, and building a large pool of agents and distributors contributed to bKash’s success and to its rapid growth..
Customer and Analysts Comments
A customer of bKash, Rehana Akhter (Akhter), expressed her gratitude toward the company and said she was happy to be part of the digital technology that enabled her to send money quickly and cheaply to her parents and son in her village. She had previously been employed in a garment factory and had lost a limb in a factory accident. The interest earned on the compensation received was the amount which she regularly sent to her parents and her son. Akhter said, “Life is tough for anyone who’s lost a limb. Nobody gives you a job or cares about your pain. But the pain is partly relieved when you know that there are technologies to help you.” ..
Road Ahead
bKash planned to develop an inter-operability system with all the banks to achieve deep linking with the banking system. With this new technology, customers would be able to transfer money from their bank accounts to their bKash accounts from the comfort of their homes. Quadir said, “bKash is now working on to develop inter-operability system with all banks so that clients can transfer their money to bKash account from their bank account sitting at home. We are also working with central bank to expand the inter-operability system.”..
Exhibits
Exhibit I: bKash Key Indicators
Exhibit II: Distribution Network of bKash
Exhibit III: Comparison of bKash and its Competitors in Bangladesh
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