bKash has recently been named on Fortune’s “Change the World” list of top 50 companies that are contributing to bringing a qualitative change in the world. How do you feel about this recognition?
The recognition is a big, powerful endorsement for us. However, the real justification needs to come from the common people, users and beneficiaries of bKash services. The list recognises companies across the world for their role in changing the world through solving a variety of societal problems.
Fortune prioritises companies for three main factors: measurable social impact considering the reach, nature, and durability of the company’s impact on one or more specific societal problems; business results considering the benefits the socially impactful work brings to the company; and degree of innovation considering how innovative the company’s effort is relative to that of other companies in the same sector, and whether the companies have followed it. We are glad that our sincere efforts have been recognised.
We would like to cherish this accolade as Bangladesh’s footprint in the global arena.
What are the key factors that brought you the success?
Bangladesh Bank effectively oversees the services we render to people. The central bank developed an effective guideline that defines different stakeholders and their role. Their active engagement contributed to bringing order and discipline in MFS initiatives.
Secondly, bKash is a specialised organisation focused on MFSs. Its aim is to provide low-cost, quality services to its clients. We have developed a system that allows users to access the bKash platform by dialing *247#. For person-to-person transfers, customers pay a flat fee of Tk5, and for cashing out, there is a flat fee of 1.85% on the amount withdrawn.
What is the driving force behind the growth of mobile financial services in Bangladesh?
Because of lack of an electronic payment platform, common people in Bangladesh follow offline transaction methods that expose them to various risks. As I mentioned earlier, MFSs recognised the pain point and started looking at how to develop a solution to addressing it by inventing a payment system, which is accessible to all. Our focus on mitigating their pain was one of the key driving forces for the growth of MFSs.
It has widely been discussed that the introduction of mobile financial services would bring financial inclusion through ensuring financial access for the poor and unbanked. Do you think bKash and other MFS operators are successful in this regard?
MFS operators are striving to take the services to the doorstep of poor, unbanked people in remote areas. I believe we have to some extent overcome some hurdles by building a foundation of a reliable, convenient and affordable means of financial inclusion in the country.
If you take a look at the central bank’s monthly data on MFS use, you will see both the number of users and transactions are on the rise. There are around 50 million registered MFS accounts, making millions of financial transactions every day. People are using the MFS platform for several purposes, such as in-store payment, disbursement of salaries among employees of a given organisation, payment of utility bills, etc.
What impact do the MFSs have on society, economy and business?
The benefits of MFSs are not just limited to ensuring lower transaction costs and greater convenience. A joint study by researchers of the US International Trade Commission, New York University, Bangladesh Bank and World Bank on the use of bKash revealed that urban migrants who sent money to their households in rural areas using MFSs have a positive impact on health outcomes and investment in children’s education.
Another study on salary disbursement through the MFSs found that salary disbursement into mobile wallets has enabled workers in Bangladesh to better cope with emergency situations and income shocks. bKash has played a vital role in easing the salary disbursement process by actively pursuing agreements with numerous employers and also with the government.
Also, bKash runs a nationwide network of over 176,000 agents, which has directly resulted in thousands of jobs and income opportunities for small businesses.
What are major challenges facing the MFS industry? What kind of support do you expect from the regulators?
Users’ low literacy and a fear of technological manipulation among a section of MFS users are impeding the industry’s growth. Some MFS users depend on agents to get their transaction done. However, when our sales teams and agents interact with individuals and explain the importance of self-service, users gradually adapt to technology. Another concern is that some people with ill intent are abusing the platform for unauthorised transactions. With assistance from the regulators, we are constantly monitoring financial transactions that are taking place at our platform.
Most MFS users are still making use of MFSs for basic money transferring services. Who are they?
Initially, MFS providers including bKash have built a foundation by providing a basic money transferring service. Most of the areas from where money is sent are commercial and industrial hubs. On the other side, cashing-out regions are the ones which are far from the bustling commercial hubs, specifically the districts that are historically least developed in the country.
Earlier, these people used to send money from one place to another through informal systems such as through friends and families. But, mobile money services like bKash have brought these transactions under a regulated system prescribed and monitored by the central bank.
Through MFSs, people are making transactions with remote businesses, parents sending fees to children studying in distant cities and ultra-poor people receiving financial assistance from donors on time. Predominant users are those who are out of the purview of the conventional banking system.
The MFS potential is yet to be fully tapped. How can we harness the services?
The initial focus was on ensuring financial access for the poor and unbaked through providing basic money transferring services to them. The industry is still a nascent one. However, a lot of progress has been made in the last some years to develop new products and services.
In bKash, we are single-minded in bringing innovation and promoting our services to cater to the growing needs of our customers. We have introduced several products and services in the past years, including merchant payment system, airtime balance recharge, and inward international remittance services in collaboration with the Western Union.
We are also working on some exciting products to be launched very soon.
bKash is the most successful among 18 MFS providers in the country. How is bKash different from others?
bKash has built its foundation by capitalising the unique resource base of its four stakeholders:
BRAC Bank, Money in Motion, International Finance Corporation (IFC), and Bill and Melinda Gates Foundation. BRAC Bank works closely with its parent organisation, BRAC, which has grassroots presence in every corner of the country, while Money in Motion brings together investors and initiators of successful mobile networks, money and commerce operators. On the other hand, the Gates Foundation and IFC bring in global governance practices and knowledge of financial inclusion.
Also, we have built a vast network of agents across the country, which gives it a competitive advantage over other companies. These agents act like a “human ATM”, serving the clients from dawn to dusk. Consequently, the clients found bKash more convenient, reliable and cost effective for making transactions.
Concerns mount that some unscrupulous remittance traders are abusing the MFS platform. How can the misuse be checked?
I think that a technological intervention may contribute to addressing the challenges. Regulatory and compliance measures, customers’ awareness, introduction of cost effective MFS-based remittance solutions may reduce the use of informal fund transferring channels.
Some of the local banks have footholds in key overseas locations. bKash can play a vital role by being the last mile solution provider for those banks in Bangladesh. It may not eliminate all the hundi challenges, but it will give migrants an option with values (such as instant delivery) that make hundi attractive.