A cold war has been going on between the telecom operators and commercial banks over the mobile financial services sector that has become a popular and profitable business.
Many commercial banks, who now have their own mobile financial services (MFS), have been trying to prevent the entry of telecom giants, who have been desperately trying to explore this new sector with a lot of revenue potential.
Bangladesh Bank’s draft Mobile Financial Services (MFS) guidelines do not allow mobile network operators (MNOs) to operate their own mobile banking service. Only a scheduled bank can do that.
Although, several mobile operators have been pushing the central bank to allow them to have their own MFS, the banks have been opposing this.
The banks say there is no reason to allow mobile operators to enter the financial sector. They say this will only end up making the sector unstable.
Subhankar Saha, executive director of Bangladesh Bank, said the mobile operators have for a long time been showing interest in doing MFS business and the central bank has allowed them in the draft guidelines to promote competition in the sector.
However, allowing telecom operators into the financial sector could be controversial, particularly because of the strong logic that the banks have presented, he added.
According to a report submitted by the central bank’s MFS technical committee, the mobile operators provide USSD gateway to the MFS-providing banks, but the price charged for that is not professional.
Unstructured Supplementary Service Data (USSD) is a mobile communication technology used in exchanging data between a user’s mobile phone and a financial service provider’s server that maintains application and data.
The central bank has been trying to prepare a USSD guideline in partnership with the Association of Mobile Telecom Operators of Bangladesh (Amtob). But Amtob has been delaying that and instead pushing the central bank to allow them to have their own MFS.
Grameenphone (GP), the leading mobile telco operator in the country, has been operating its own MFS called Mobicash for several years.
GP has permission to only sell rail and cricket match tickets and receive utility bills. But the company has also been offering cash in, cash out, and balance transfer services, for which it does not have the central bank’s approval. Only a scheduled bank with its own MFS can offer the second set of services.
Recently, GP has been offering 5% bonus talktime to its subscribers if they top up their mobile phones using the Mobicash wallet service.
Sector stakeholders and even the authorities are questioning whether GP has the permission to make such offers.
“The operator is able to offer a bundle of financial and bonus air time because it has access to both the mobile and financial sectors. But a bank cannot do that because it does not have access to the telecom sector,” said Abul Kashem Md Shirin, deputy managing director of Dutch-Bangla Bank Limited, which has its own popular MFS.
“This will create an unhealthy competition in the market and eventually lead to unrest in the sector,” he warned.
“When a mobile network operator offers a customer to use its mobile financial service outlet to convert physical money into Mobicash money and offers free airtime in exchange for using Mobicash, it creates an anti-competitive situation,” said Kamal Quadir, chief executive officer of bKash, the biggest and most popular MFS in the country.
The Dhaka Tribune sent an e-mail to Grameenphone, seeking its opinion on this.
In reply, the company said: “As a MNO, GP has the right to offer bonus on talk time for any air time recharge promotion under Telecom regulation with appropriate approval and intimation of BTRC.”
GP also said: “[For] this 5% bonus talk time promotion, the same process is followed, whereby a telecom recharge service is being provided upon receiving necessary approval and NOC from Bangladesh Bank and BTRC.”
According to the proposed guidelines, a bank-led MFS platform will have the option to operate on multi-bank basis. The existing MFS platforms operating alone will have to restructure within three years from the date the revised guidelines come into effect.
Dutch-Bangla DMD Kashem said: “We have spent millions to develop our own MFS business. Why would we share stake with anyone else or restructure our business?
“We need just to revamp the existing guidelines, but we have been recently noticing that the central bank is making new guidelines to create scope for the mobile operators,” he said.
