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বাংলা
Dhaka Tribune

How if not mobile?

Update : 07 Jan 2016, 07:50 PM

In the last two weeks, I had two interesting meetings with BTRC seniors and the Bangladesh Bank boss. BTRC seemed to incline more towards hand-holding telcos, and I consider this quite a good gesture. We must not marginalise or kill our golden goose.

Mobile network operators (MNO) deserve to be heard and their issues need to be handled with tact.

They are not only contributing big-time to the national exchequer, they have also significantly helped in speeding up to our daily lives and paved the way for a truly digital Bangladesh.

Their endeavours have helped create a synergy at the bottom of the pyramid, and now they are thinking about building up on health and agriculture solutions, which will no doubt help make way for further inclusive growth for Bangladesh.

The Bangladesh Bank governor also mentioned how they are trying their best to help out MNOs to settle their international payments on time, and cultivate help from emerging financial products.

No matter who said what, the central bank, if I am not mistaken, is also thinking of allotting further opportunity space to MNOs for mobile financial services (MFS).

The central bank is quite possibly aware of how much MNOs have achieved thus far, and how further engaging them can build a more inclusive and diversified mobile finance industry in Bangladesh.

I’ve always felt that MFS should be led by MNOs. Unfortunately, I was drowned out by the booming voices of a few other senior bankers and technology gurus. Well and good. I accepted the banker logic, citing better regulatory control.

Though it has mostly been treated as a payment service provider, Bangladesh has seen phenomenal growth in mobile money transactions.

The number of customers on MFS has increased to 31 million, whereas the number of active account may be around 12.5 million, while the number of agents stood around 550,000. However, with most of these agents overlapping, the actual number would not be more than 150,000.

To date, 28 banks have been allowed to operate mobile money transactions, and 20 banks have reportedly launched the business.

However, other than a handful, most of them have yet to make proper arrangements and adequate investment to launch services in proper and gain momentum.

BRAC Bank-owned bKash enjoys more than 85% market share, whereas Dutch Bangla Bank controls little less than 10%. The less said about the 18 other banks enjoying less than 5% market share, the better.

The phenomenal growth of MFS has put Bangladesh next to M-Pesa in Kenya and ahead of Smart Money in Philippines. Analysts believe, because of the size of the population, mobile-phone penetration, and to some extent operator’s efficiency, Bangladesh will soon exceed Kenya.

As mentioned earlier, Bangladesh Bank kept MFS mostly bank-led, for this business to be more controllable and predictable from the point of (whisper with me) money laundering, and customer service ensuring.

However, there is growing disagreement on this, and the largest operator has been, in quite a few occasions, pointed at for failing to maintain the minimum possible compliance standards and knowingly, or maybe unknowingly, facilitating money-laundering and the financing terrorists.

Contrary to what we have been told, MNOs elsewhere are seen to be doing a good job.

Incidentally, 85% of all MFS transactions are being made over the counter, and mostly without proper tracking of sources and destination. Senders and receivers are very easily hiding under one agent or the other. Intelligence agency investigations have revealed that accounts are being opened without proper source verification or on the basis of false records, including forged NIDs.

Unfortunately, the biggest operator created most of the big problems here.

Making a case against them was out of the cards, since they very cunningly appointed former central bank and intelligence agency seniors to handle related issues.

I have seen this happening in many other emerging economies, where the senior civil-military bureaucrats are the biggest barriers to ensuring the lowest possible governance and accountability in the system.

There is no truth in saying that MFS operators’ success is somehow of greater value than mobile operators’.

In fact, the MFS success is almost completely dependent on the mobile companies succeeding. MNOs have had to face all sorts of teething problems as telecommunication start-ups.

If market concentration is a problem for M-Pesa, this should be similarly a problem for the largest operator here in Bangladesh as well.

MNOs are heavily investing in distribution network and spectrum.

I am certain that, provided more opportunities, they would do more towards expanding MFS as well -- making it more inclusive and adding actual product diversity.

What our regulators need to ponder hard is the concept of the e-wallet. Making the MFS industry lopsided, inclining towards one or two large operators, may distort the entire banking industry.

One bank or subsidiary controlling the majority e-wallet will only help this to unwisely enjoy free float or lower deposit rates and command lending rates, thereby distorting the market.

We must think beyond the box, bring in more competition, as well as investment, in this opportunity space, and all the while ensure compliance of central bank rules and regulations.

We would definitely want to keep the “vested interest groups” away from here. 

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