measuring consumers attitudes towards mo

8/17/2019 Measuring Consumers Attitudes Towards Mo

1/84


2/84

2

“Measuring Consumers’ Attitudes towards Mobile Financial Service: ACase Study on bKash”

A theses report submitted in partial fulfillment of the requirement for

the degree of Bachelor of Business Administration (BBA)

PREPARED UNDER THE SUPERVISION OF

Md. Nazmul Hossain

Assistant Professor

Department of Marketing

University Of Dhaka

PREPARED BY

Mirza Mohammad Adnan Shezan

ID: 116; Batch: 17th; Section: B


University Of Dhaka

Date of Submission: 25th March, 2015


3/84

3

25th March, 2015

Md. Nazmul Hossain

Assistant Professor


University Of Dhaka

Subject: Submission of theses report on “Measuring Consumers’ Attitudes towards Mobile

Financial Service: A Case Study on bKash”

Dear Sir,

With due respect, it is great pleasure to me to submit my theses report titled, “Measuring

Consumers’ Attitudes towards Mobile Financial Service: A Case Study on bKash” is based

on a qualitative research. This project gave me both academic and practical exposures and help

understanding the Mobile Financial Services from the core.

I am highly obliged to you for your valuable guidance and constant attention on me and when

required in accomplishing this report. I shall be highly obliged if you are kind enough to approve

this report and provide your valuable judgment.

Though I have tried my level best to make it authentic and worth reading that the report may

have some mistakes and that are unintentional. I hope that the report will meet your expectation.

I shall be pleased to answer any sort of query you think necessary as now and when required. I

would like to give you thank for giving me the authorization to prepare this report.

Sincerely Yours,

-------------------------------

Mirza Mohammad Adnan Shezan

ID: 116; Batch: 17

th

; Section: B


University Of Dhaka


4/84

4

Acknowledgement

While the writing of this report has been difficult, the preparation for writing has been even

harder. It certainly would not have been possible without the help of many people. I would like

to express my gratitude to all the people that were involved both directly and indirectly in the

preparation of this report.

First of all, thanks to merciful and almighty Allah for help me to accomplish this report. Then, I

would like to take the opportunity to thank, Md. Nazmul Hossain, Assistant Professor,

Department of Marketing, University of Dhaka. His guidance in choosing the topic of the report

helped me immensely and helped me to stay on the right track. More specifically, I would like to

thank him for imparting his time and wisdom.

Finally, I would like to thank my friends and family members who gave me mental support to

complete my report successfully.


5/84


6/84


7/84


8/84

8

4.2.4 Place Advertising 50

4.2.5 Point of Purchase Advertising 51

4.2.6 Publicity and Public Relations 51

4.3 Measuring Brand Performance of bKash 51

4.3.1 Brand Profitability 51

4.3.2 Brand Sales 52

4.3.3 Brand Market Share 52

4.3.4 Brand Distribution 52

4.3.5 Top of Mind Associations 52

4.3.6 Un-aided Brand Awareness 52

5 Consumers’ Attitudes and its Impact on Buying

Behavior

53-59

5.1 Understanding Consumer Attitudes Toward Brand 54

5.1.1 The Functional Theory of Attitudes 54

5.1.2 Multi-attribute Models 55

5.1.3 The ABC Model of Attributes 56

5.1.4 The Elaboration Likelihood Model (ELM) 57

5.2 Understanding How Brands Affect Consumer

Behavior

57

6 Findings 60-71

6.1 Demographic Characteristics of the

Respondents

61

6.2 Interest in Mobile Banking 62

6.3 Purposes for Using Mobile Banking 63

6.4 Consumer Responses about Fast and

Availability

64

6.5 Consumer Responses about Credibility, 66


9/84

9

Affordability, and Convenience

6.6 bKash Enjoys High Consumer Awareness 68

6.7 Family Members and Mass Media Influence

to Use bKash

69

6.8 Favorable Attitude towards bKash 70

6.9 Summary of Findings 71

7 Recommendations and Conclusion 72-73

7.1 Recommendations 73

7.2 Conclusion 73

8 References and Appendix 74-84

8.1 References 75

8.2 Appendix 82


10/84

10

L I S T O F T A B L E S

Table 1: Holistic view of the MFS status......................................................................................................................... 24

Table 2: MFS comparative summary statement of December, 2014 and January, 2015 ................................. 26

Table 3: Coverage profile of bKash .................................................................................................................................. 35

Table 4: Comparision between bKash and DBBL mobile banking ........................................................................ 42

Table 5: bKash Pricing structure and Limitations ....................................................................................................... 44 Table 6: Gender of respondents in the Survey ............................................................................................................... 61

Table 7: Occupation of Respondents in the Survey...................................................................................................... 62

Table 8: Income level of Respondents in the Survey ................................................................................................... 62

Table 9: Consumer opinion about MFS regarding Fastness ...................................................................................... 64

Table 10: Consumers Opinion about Convenience ...................................................................................................... 67

Table 11: Consumers Response about Family and Mass Media Influence ........................................................... 69

L I S T O F F I G U R E S

Figure 1: Major challenges for bKash .............................................................................................................................. 39

Figure 2: bKash Mental Map ............................................................................................................................................... 45

Figure 3: bKash CBBE Pyramid......................................................................................................................................... 46

Figure 4: Frequency of MFS Uses ..................................................................................................................................... 63

Figure 5: Purposes of Using MFS ...................................................................................................................................... 64

Figure 6: Consumers opinion about Average Waiting time for Receiving Money ...................... 65 Figure 7: Consumers Opinion about Average Distance to Agents .......................................................................... 65

Figure 8: Consumers Opinion about trustworthiness ................................................................................................... 66

Figure 9: Consumers Opinion about Affordability ....................................................................................................... 67

Figure 10: Un-aided Brand Awareness ............................................................................................................................ 68

Figure 11: M-Banking account ........................................................................................................................................... 69

Figure 12: Sources of Information ..................................................................................................................................... 70

Figure 13: Level of Satisfaction .......................................................................................................................................... 71


11/84

11

Chapter 1

INTRODUCTORY PART


12/84

12

1.1 Introduction:

Earlier this century, the mobile phone became the first communications technology to have more

users in developing countries like Bangladesh. The escalation and convergence of wireless

telecommunications has created a tremendous potential platform for providing business services.

It's estimated that mobile phone users are approaching the seven billion mobile subscriptions

mark globally, and business and operators alike are keenly aware of the opportunity to connect

with potential consumers through mobile phones (Mobi Forge, 2014). Technology has become

an increasingly vital element in the competitive landscape of the financial services industry.

Banking today is undergoing a radical transformation. The symptoms are obvious; new products,

new players, new channels are appearing daily. This transformation is taking place across all

sectors of the banking industry. Technology is a major force in this radical transformation that

led to breaking the geographical, legal and industrial barriers and has created new products and

services. Banking through mobile phone has been common in developed countries for years. The

real potential of “m- banking” may be to make basic financial services more accessible to

millions of poor people.

Mobile Financial Service (MFS) is a method to offer financial services which integrate banking

with mobile wireless networks that makes enable users for executing banking transactions. It

indicates the ability to make deposits, withdraw, and to send or receive money from a mobile

account and habitually such services are enables by the use of bank agents which permit mobile

account holders to transact at independent agent locations outside of bank branches (Bangladesh

Bank, 2012). Mobile phone has turned into a device for daily usage which generates an

opportunity for the development of banking services for the unbanked people who have access to

a cell phone with the help of mobile phone banking. The remarkable progression of mobile

sector all over the world has made an exclusive chance for delivering financial as well as social

services through mobile network (Kabir, 2013, pp.96 – 114).

Bangladesh Bank has introduced permissions for Mobile Financial Service on July 2011 to

promote market development. Initially five banks have responded positively to establish active

deployments where three largest of these were launched immediately at the time of launching

and others in early 2012. According to CGAP (2014), by the end of the first quarter of 2012 the

fastest early expansion has come from bKash (Brac Bank) and Dutch Bangla Bank Limited


13/84

13

(DBBL). Even though Bangladesh’s central bank has approved more than 20 licenses to offer

mobile financial services, more than 80 percent of transactions are through a single company —

bKash Limited. bKash launched in the second half of 2011, grew to 3 million accounts by the

end of 2012, and shot up to 11 million registered accounts by the end of 2013. According to

BTRC (September, 2014) the mobile phone subscribers in Bangladesh are 118.493 million and

71.9% people are living in low banking coverage are in rural (Bangladesh Bank). So, enormous

opportunities are waiting for the banking industry of Bangladesh in the platform of mobile

banking service.

Consumer attitudes are both an obstacle and an advantage to a marketer. Choosing to discount or

ignore consumers’ attitudes of a particular product or service— while developing a marketing

strategy — guarantees limited success of a campaign. This research aims to investigate the

consumers’ attitude toward mobile banking especially on bKash Limited, the largest player of

the market. This study will be a practicable one for those who want to do research further about

Mobile Financial Service in Bangladesh as well as feasible one for the actual and potential

customers of Mobile Financial Service. It will also be an important one for the government when

the government will need information about Mobile Financial Service.

1.2 Rationale of the Study:

There are around 160 million people in Bangladesh, of which only 13 percent have bank

accounts where as more than 90 percent are mobile phone users. More than 70% of the

population of Bangladesh lives in rural areas where access to formal financial services is

difficult. Yet these are the people who are in most need of such services, either for receiving

funds from loved ones in distant locations, or to access financial tools to improve their economic

condition. Less than 15% of Bangladeshis are connected to the formal banking system whereas

over 90% has mobile phones (bKash Limited, 2014). These phones are not merely devices for

talking, but can be used for more useful and sophisticated processing tasks. bKash was conceived primarily to utilize these mobile devices and the omnipresent telecom networks to extend

financial services in a secure manner to the under-served remote population of Bangladesh.

The use of mobile devices for conducting banking transactions and accessing other financial

information is an emerging service that has yet to be widely adopted by mobile users. Analyzing

the consumers’ attitude toward mobile banking reveals a large and heterogeneous picture. It is


14/84

14

imperative for marketers to understand attributes leading to the adoption of or resistance to the

adoption of mobile banking services. As current market environment is going to be more

competitive, to stay and run a business in this competitive market, marketers have to take more

strategies for attracting customers to their business by creating better facilities and attractive

services. In this study I tried to measures the consumers’ attitudes towards mobile financial

service especially on bKash Limited.

1.3 Literature review:

1.3.1 Mobile Financial Service (MFS):

The latest innovations in telecommunications have capacitated the launch of new access methods

for banking services; one of these is mobile financial service; whereby a customer interacts with

a bank via mobile phone (Barnes and Corbitt, 2003, pp.273-288). MFS and M-banking is almost

synonymous. Mobile Financial Service involves conducting account balance and transaction

history inquiries, funds transfers, bill payments, stock trades, portfolio management, as well as

insurance ordering, via a mobile device (Suoranta, and Mattila, 2004, pp.354-66). MFS or

Mobile banking can also be considered as the convergence of mobile technology and financial

services (Chung & Kwon, 2009, pp.539-543). The requirements for this process are to have a

mobile device and mobile network connection. Mobile payment is a subset of mobile banking

which is defined as the use of a mobile device to conduct a payment transaction in which money

or funds are transferred from a payer to a receiver via an intermediary, or directly without an

intermediary (Mallat, 2006, pp.17-22). Mobile devices can be used in a variety of payment

scenarios, such as payment for digital content (e.g., ring tones, news, music, or games), physical

goods, tickets, parking fees and transport fares, or to access electronic payment services to pay

bills and invoices. Mobile banking banking has become a significant source of revenue to both

banks and telecom service providers. (Nysveen, Pedersen and Thornbjørnsen, 2005, pp.330-46).

Clark (2008, pp.3-27) suggested that as a Channel the mobile phone can augment the number ofchannels available to consumers, thereby giving consumers more low-cost self-service options

by which consumers can access funds, seek banking information, transfer funds and make

payments. In this process of banking customers are allowed to access into the banking system in

anytime from anywhere. Despite its many advantages, the use of mobile phones in banking


15/84

15

services is still in its evolutionary stage and Internet banking retains its position as the leading

channel in electronic banking (Laukkanen, 2007, pp.788-797).

1.3.2 Mobile Financial Services (MFS) Trend in Emerging Countries:

According to the World Bank (2014), half the people in the world fifteen years of age and older -

about 2.5bn people - do not have bank accounts. In emerging markets, formal banking reaches

about 37 percent of the population, compared with a 50 percent penetration rate for mobile

phones. For every 10,000 people, these countries have one bank branch and one ATM — but

5,100 mobile phones (Christopher, Beshouri and Jon Gravrak, 2010). In the Philippines, for

example, mobile-subscriber penetration is almost 80 percent, but banking penetration is only

around 35 percent, leaving 21 million mobile subscribers with no bank account. From a bank’s

perspective, however, bringing basic financial services to the worlds unbanked is a huge market

opportunity - and a philanthropic one, too. The opportunity isn’t new, of course. In recent years,

however, mobile technologies have matured to the point that they provide a cost-effective

delivery channel, which has put the opportunity within reach (Sanjay, 2013). Dutch Bangla-Bank

Limited (DBBL) is among the pioneers in mobile banking for the unbanked. In early 2012, the

Bangladesh-based bank launched a suite of mobile banking services targeting the unbanked and

underbanked. In only ten months, it garnered more than 1m new customers. Since then, an

average of 100,000 customers has been signing up for services each month, and these customers

have deposited more than $7.75m using the mobile banking platform. (Islam, 2010, pp.127-135)

The Mobile banking services are especially popular in emerging markets such as Mexico, Peru,

South Africa and India where bank branches are few and far between, roads are poor or non-

existent and transportation options are slow and/or unreliable. Mobile technology bridges these

gaps. In countries as diverse as China, Brazil and Kenya the number of new users of mobile

banking soared over 100% in 12 months, as banks leapfrogged traditional service models and

moved directly to mobile (Thomas, 2010). In fact, a new mobile banking report from JuniperResearch (2014, pp.2-30) predicts that more than 1bn people will use their mobile devices for

banking by the end of 2017. After the launch of mobile banking in India, mobile banking

transactions have seen some growth. What attracts customers to mobile banking is the round the

clock availability and ease of transactions. But mobile banking still has a long way to go as

majority of customers prefer banking in the traditional ways (Ashta, 2010). Laforet and Li


16/84

16

reasoned behind the barriers to mobile banking adoption were lack of awareness and

understanding of the benefits provided by mobile banking (2005, pp. 362-380). According to

Gartner (2013, pp.2-47), the proliferation of the mobile device and 3G (third generation of

wireless) and their widespread implementation will generate the development of more

sophisticated services links to m-banking. As worldwide economies move away from cash and

toward mobile payments, it is important to consider that those without bank accounts will get left

even farther behind unless mobile services are available that meet their unique needs - in both

developing and developed economies. (Akinci, Aksoy, & Atilgan, 2004, pp.212-232). The

numbers are large enough to create a real opportunity and mobile technology provides a cost-

effective delivery channel, as evidenced by DBBL’s successful mobile banking deployment.

There is still plenty of room for more. The emerging markets have created a successful model for

the unbanked that developed economies could follow (Sanjay, 2013).

1.3.3 Consumers’ Attitude and Perception towards Mobile Financial Service:

Consumers’ motives predetermine consumers’ attitudes and behaviors towards different banking

technologies (Barczak, Ellen and Pilling, 1997, pp. 131-139). According to Rogers (2003,

p.175), there are five perceived characteristics of innovation that can be used to form a favorable

or unfavorable attitude toward an innovation, namely: relative advantage, compatibility,

complexity, trialability and observability. It’s a useful framework to test the influence of several

factors on mobile bank services adoption. The framework offers an integrated view, taking into

account more predictors than other studies on the adoption of innovations. It was also observed

that the predictors’ influence over the criterion variable was different for each group of mobile

banking users and non-users (Puschel and Mazzon, 2010, pp. 389-409). It is argued that adoption

will not take place unless customers perceive the service to be useful (Ali & Bharadwaj, 2010).

Perceived usefulness, perceived risk, cost and compatibility were found to affect consumer

acceptance of M-banking. The results also support a mediation model, whereby attitude transfers

the effects of the consumers’ perceptions to their intention to use M-banking (Wessels and

Drennan, 2010, pp. 547-568). Trust and credibility are crucial in reducing the overall perceived

risk of m-banking (Koenig-Lewis, Palmer and Moll, 2010, pp. 410-432). Comninos et al. (2008)

suggested that consumers will only transact electronically (online/mobile banking) if there is

convenience and security. Further Sharma and Singh (2009, pp.1-4) found that Indian mobile


17/84

17

banking users are specially concern with security issues like financial frauds, account misuse and

user friendliness issue - difficulty in remembering the different codes for different types of

transaction, application software installation & updating, due to lack of standardization. For

consumers in developed countries, m-banking can be a complementary service (additional

platform for managing financial transactions) offered by financial institutions in addition to

ATMs and Internet banking. Therefore, factors such as convenience and ease of use may become

an importance criteria when they consider adopting m-banking. However, consumers in the

developing countries, the appeal of m-banking may be less about convenience, but more about

accessibility and affordability due to network coverage, quality connection, and costs (Donner

and Tellez, 2008, pp.318-322). For example, Laforet and Li (2005, pp.362-380) investigated

consumer behavior, attitude, motivation, and cultural influence on online/mobile banking

adoption in China. Their findings suggest that there are large discrepancies between China and

western countries in terms of users’ demographic characteristics and attitudes towards mobile

banking. Perceived risks (hackers and fraud) and technological skills were the most important

factor influencing Chinese adoption of online and mobile banking. However, consumers in China

do not attach much importance on convenience, ease of use, and free access to a wide range of

services. However, irrespective of country there are some common factors such as: perceived

usefulness, perceived social risk, perceived performance risk and perceived benefit directly

affect attitudes towards mobile banking, and that attitude is the major determinant of mobile

banking adoption intention (Akturan and Tezcan, 2012, pp. 444-459).

1.4 Objective of the Study:

1.4.1 Broad Objective:

i. To give an overview of Mobile Financial Service (MFS) industry in

Bangladesh;

ii. To identify consumers’ attitudes towards Mobile Financial Service;

1.4.2 Specific Objective:

i. To figure out the demographic characteristics of mobile financial

service users;


18/84

18

ii. To give an overview about cost, usage and all other benefits of

Mobile Financial Service as well as to produce a scenario of MFS in

Bangladesh.

iii. To evaluate the performance of bKash;

iv. To determine the factors that help bKash fast drive in the market;

v. To determine the factors that influence consumers’ in adopting

MFS;

1.5 Organization of the Study:

There are 8 chapters in this study. The brief summary of each chapters are given below:

Chapter 01:

It contains the introduction, rational of the study, literature review, objectives of the study, scope

and limitation of the study, and research methodology.

Chapter 02:

This chapter elaborates an overview of the Mobile Financial Service (MFS) industry in

Bangladesh including background on the Bangladesh financial sector, regulation of MFS in

Bangladesh, market development of MFS, key players of the market, industry analysis by

Porter’s five forces model and findings on the MFS market structure.

Chapter 03:

This chapter presents the overview of bKash including company profile, corporate mission,

primary values offered in the market, the bKash story so far, factors influencing bKash’s fast

drive and major challenges for bKash in the upcoming days.

Chapter 04:

This chapter presents analysis of bKash from branding perspective including bKash brand audit,

IMC program executed by bKash and bKash brand performance.


19/84

19

Chapter 05:

This chapter reflects on the theoretical analysis of different model of consumer attitude and the

impact of strong brand on consumer behavior.

Chapter 06:

This chapter reflects the findings from the survey in details regarding consumers attitude towards

mobile financial service.

Chapter 07:

This chapter includes some recommendations and conclusion.

Chapter 08:

The final chapter contains references and appendix.

1.6 Scope of the Study:

Although the operational activity of bKash is huge, I develop my report based on Mirpur and

Chakaria only. I have selected 25 bKash points in Mirpur from where people get bKash service. I

discussed with many rural people in Chakaria about bKash to understand their perception and

attitude toward bKash. I provided respondents with survey questionnaires and assisted them to

understand the statements. On the basis of this, I develop my report.

1.7 Limitations of the Study:

The sample size of this study was not necessarily representative of the Bangladeshi population as

a whole as it ignored large rural population. Secondly, the generalizability of this research may

be impacted by fact that the sample’s is skewed towards males. This may be due to general

tendency of Bangladesh culture to do outside tasks by maximum males. In addition, this research

only explores the factors to influence motivators and inhibitors on behavioral intentions. In terms

of future research, a large scale study with more representative sample could be conducted to

validate the factors of this study and to enhance the generalizability of the research conclusions.


20/84

20

1.8 Information Needed and Sources:

Data has been collected from various sources; there is a combination of both primary and

secondary data that has been used in this research. Secondary data are collected from related

studies done in present timeline and primary data are collected from the survey. Different journals, books, internet and reports of the banks have been used as the important sources of

secondary data.

1.9 Methodology:

1.9.1 Research Technique: I designed this study in descriptive format. The study is developed

in qualitative point of view. I collected information by conducting a survey and related

survey data to measure consumers’ attitude towards mobile financial service.

1.9.2

Population: Users of Mobile Financial Service is the population of this study. 1.9.3 Sampling Frame: As I prepare my report on the basis of bKash point of Mirpur area, so

the sample size is limited to this area only.

1.9.4 Sampling Technique: I used convenience sampling technique with random respondents

for sampling. I accessed my nearest mobile banking service agents’ locations and

conducted survey on the customers who came to take the service.

1.9.5 Sample Size: I conducted my survey on 100 respondents.

1.9.6 Questionnaire Design: The questions in the questionnaire were based on review of

literatures and the specific characteristics of Bangladeshi people & market context. The

specific characteristics represented different services and facilities provided by the MFS

institutions and expected by the MFS consumers of Bangladesh. The questionnaire was

translated into Bengali language to make clear and simple to understand by every

respondent. The items in the questionnaire were constructed based on the consumer

attitude and acceptance of mobile financial services.

1.9.7 Fieldwork and Data Collection: The field study was carried out in March 2015 using

empirical data. The sample size decisions were primarily based on cost considerations

and in line with studies on consumer attitude and acceptance of mobile banking. A total

of 100 respondents from Mirpur, were collected randomly at the time of transaction from

M-Banking agent stores through interview. Respondents verbally replied to a structured

questionnaire and their answers were recorded accordingly by the interviewers.


21/84

21

CHAPTER 2

MOBILE FINANCIAL SERVICES IN

BANGLADESH


22/84

22

2.1 Background on The Bangladesh Financial Sector:

Bangladesh is the 8th largest populated country in the world with around 161 million

populations. In Bangladesh, almost 31.5% populations are living under poverty (CIA, 2013).

From this huge population only 13% people have bank account (Bangladesh Bank, 2014).

Agriculture generates over 17% of GDP, and has become increasingly important as policy

makers grapple with climate change and spikes in global and domestic food prices (CIA, 2013).

Simultaneously, there is a shift underway to transition from subsistence to commercial

agriculture. Bangladesh’s financial architecture started developing within public sector

institutions established at the time of Bangladesh’s independence. According to Bangladesh

Bank (2015), after the independence, banking industry in Bangladesh started its journey with 6nationalized commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In the

1980's banking industry achieved significant expansion with the entrance of private banks. Over

the last thirty years several new generations of private banks have entered and today make up

about one‐half of banking assets. Bangladesh has been a global leader in financial inclusion,

building some of the original and still largest microfinance institutions (MFIs). In addition to 4

state owned commercial bank, Bangladesh’s financial sector consists of 39 domestic commercial

banks, 9 foreign banks, 11 government‐owned specialized (development) banks, and 33 non

bank finance institutions (Bangladesh Bank, 2015). The Banking Sector has responded to the

agricultural needs, with increased products (notably cards and green financing) to support

development of agriculture (and sustainable agriculture). It creates an opportunity to examine

mobile channel applications. According to Bangladesh MICROCREDIT REGULATORY

AUTHORITY (2014), the MFI sector continues to grow, but with slower uptake amongst

women entrepreneurs and increasing uptake with SMEs – demonstrating market saturation in one

area, and market diversification in another. The combination of a large microfinance market and

a growing banking system has led to significant progress on financial inclusion. Where

Bangladesh is well ahead on credit with 23.3% of adults gaining access to credit, more than

double the global average for low income countries. Bangladesh’s overall access to accounts for

adults (age 15 or over) of nearly 40% compares favorably with South Asia’s average of 33% and

the low‐income country average of 27%. In terms of number of savings accounts at formal


23/84

23

institutions, Bangladesh’s progress is higher than the global and regional average. Only 1.2% in

Bangladesh receive payments over the mobile phone whereas average in low income countries is

closer to 9.1%. (World Bank, 2012)

However, the financial sector has been somewhat stressed as banks have demonstrated instability

over the last few years. Bangladesh failed to meet its 7% growth target in 2014, though it is

intended to surpass 7% in 2015. Recent bank policies are targeting financial inclusion to build

and extend wealth. This includes new Mobile Financial Service Guidelines (2011). This is

catalyzing banking innovation, and it is supported by donors to build new scalable platforms, e.g.

bKash. Given the need to continue to advance financial inclusion Bangladesh Bank believes that

fully developed MFS operations can reduce barriers of physical access and cost and over time

enable a much higher proportion of the population to use basic formal sector deposit and

payment services. Access into the formal system might eventually lead to product innovations in

insurance, credit, pensions and government payments that reach many millions of Bangladeshis.

2.2 Regulation of Mobile Financial Service:

Following several years of deliberations and ad hoc permissions on MFS, the Department of

Currency Management and Payment Systems of Bangladesh Bank issued “Guidelines on Mobile

Financial Services (MFS) for the Banks” on 22 September 2011 which were subsequently

amended on 20 December 2011. These guidelines state that only a bank ‐led model will be

permitted. For Bangladesh Bank this means that a customer’s account, termed "Mobile

Account", will rest with the bank and will be accessible through the customer’s mobile device.

This mobile account will be a non‐chequing account classified separately from a standard

banking account. The guidelines permit the following services, subject to specific bank proposals

to and clearances by Bangladesh Bank:

1) Disbursement of inward foreign remittances

2) Cash in/out using mobile account through agents/Bank branches/ATMs/MNO’s

outlets

3) Person to Business Payments (utility bill payments or merchant payments)


24/84

24

4) Business to Person Payments (salary disbursement, dividend and refund warrant

payments, vendor payments)

5) Government to Person Payments (elderly allowances, freedom‐fighter allowances,

subsidies)

6) Person to Government Payments (taxes, levy payments)

7) Person to Person Payments P2P (One registered mobile account to another

registered mobile account)

8) Other Payments (microfinance, overdraft facility, insurance premiums, deposit

pension scheme deposits)

Bangladesh Bank has established limits on P2P transactions of taka 10,000 per day and 25,000

per month. These amounts are subject to change from time to time at the discretion of

Bangladesh Bank. Following the initial guidelines, Bangladesh Bank also issued an update to the

guidelines with some modifications on 20 December 2011. These modifications clarified that the

bank bears responsibility for know‐your ‐customer (KYC) practices. It restricts P2P payments

between holders of registered mobile accounts thereby restricting the use of services in which the

recipient cashes out a payment without opening a mobile account. Twenty eight banks have been

granted permission to introduce MFS by Bangladesh Bank. Nineteen banks have launched MFS

and of these five are licensed to offer a range of service beyond inward foreign remittances.(Bangladesh Bank, 2015)

A holistic view of the MFS status as of December 2014 are given in the table below-

No. of Banks permitted : 28

Started MFS operation : 19

Registered customers : 25.18 million

Agents : 5,40,984

TABLE 1: HOLISTIC VIEW OF THE MFS STATUS

2.3 Market Development of Mobile Financial Service:

The second half of 2011 marked an important turning point in MFS for Bangladesh. Earlier ad

hoc permissions from Bangladesh Bank were replaced with a set of guidelines providing the

regulatory certainty critical to promote market development. Providers have responded positively


25/84

25

with five banks establishing active deployments. The three largest of these were launched in

2011 and early 2012 just as the Bangladesh Bank’s guidelines were being finalized and made

public. By the end of the first quarter 2012 the fastest early expansion has come from BRAC

Bank/bKash and DBBL that have the largest numbers of registered customers and agents. These

two players have also each signed up 3 and 4 MNO partners respectively. Bank Asia is notable in

that it offers an alternative mobile phone technology which does not require MNO agreements

and instead enables transactions over Smartphone using internet based applications. The

deployments that focus on establishing mobile accounts and basic P2P services have grown the

fastest so far. Earlier licenses offered to banks and their MNO partners solely for inward foreign

remittances have not grown much – a pattern consistent with international experience. The MFS

market is at an early stage of development as the newest providers are seeking to stabilize their

technology, build out agent networks and acquire new customers. This involves a complex,

sequenced set of activities that includes: (1) finding and training agents, (2) marketing to bring

attention to the service, (3) acquiring customers using know‐your ‐customer (KYC) and account

opening processes while at the same time helping new customers to begin to transact. The

deployments that are most active today are seeking to expand their customer bases during 2012.

For example, BRAC Bank/bKash and DBBL aim are aiming for multi‐fold growth during 2012

which could push their combined customer accounts to between 2 and 3 million within a year’s

time, possibly more. It is hoped that other providers entering the market might also grow and provide more alternatives and competition. It is still early and much more will be learned about

MFS in Bangladesh over the coming year. (CGAP, 2012)

Mobile Financial Services (MFS) comparative summary statement of December, 2014

and January, 2015

Serial

no.

Description Amount (in

December,

2014)

Amount (in

January,

2015)

% Change

(December, 2014

to January, 2015)

1 No. of approved Banks 28 28

2 No. of Banks started to

convey the service

19 19

3 No. of agents 540,984 535,821 -0.95%

4 No. of registered clients in 251.86 252.36 0.2%


26/84

26

Lac

5 No. of active accounts in Lac 121.54 110.53 -9.06%

6 No. of total transaction 74,473,558 82,068,551 10.2%

7 Total transaction in taka(in

crore BDT)

10,483.04 11,337.58 8.15%

8 No. of daily average

transaction

2,482,452 2,735,618 10.2%

9 Average daily transaction (in

crore BDT)

349.43 377.92 8.15%

10 Additional information Amount (in

crore BDT)

Amount (in

crore BDT)

a. Inward Remittance 3.00 2.85 -5%

b. Cash In transaction 4,376.37 4,742.44 8.36%

c. Cash Out Transaction 3,887.17 4,174.56 7.39%

d. P2P transaction 1,975.07 2,139.52 8.33%

e. Salary Disbursement (B2P) 64.70 76.93 18.9%

f. Utility Bill Payment (P2B) 50.08 59.79 19.39%

g. Others 126.64 141.49 11.73%

TABLE 2: MFS COMPARATIVE SUMMARY STATEMENT OF DECEMBER,2014 AND JANUARY, 2015


27/84

27

2.4 Key Players of the Market:

bKash: bKash is a joint venture between BRAC Bank and Money In Motion LLC, USA. bKash

is a leading MFS in Bangladesh, helping BRAC expand its reach beyond its ATM network and

branches, and serving smaller rural villages. The Bill and Melinda Gates Foundation invested

$10 million to help build a scalable MFS platform. Because Bkash has partnerships with 4

MNOs, 98% of mobile users have access to Bkash. According to CGAP (2013), it has 11 million

registered with cumulative transactions of $14.8 Million. bKash has 40,000+ agents (one in

almost every 2 rural villages in Bangaldesh). The range of services provided by bKash includes

Cash in/ Out, Payments, International Remittances, P2P payments, Bill Pay etc. (Bangladesh

Bank, 2012)

DBBL Mobile: DBBL Mobile is the mobile financial service of Dutch Bangla Bank. It is

available on every MNO. It has 172,020 registered customers and cumulative transactions of

$11.0 Million (2011). The numbers of agents are 23,974. DBBL has notably developed

partnerships with insurance providers and employers to use its platform for distributing

payments. Services offered by DBBL Mobile are: cash-in/Out, International Remittances, Salary

Disbursement, P2P payments, Mobile top-off, Bill Pay. (Bangladesh Bank, 2012)

Trust Mobile Money: Trust Bank offers “Trust Mobile Money” a service under its Alternative

Delivery Channel group in the bank. It has been partnering with Teletalk. The cumulative

Transactions is $0.02 Million with 1104 Customers and 170 Agents (Bangladesh Bank, 2012).

Bank Asia: Bank Asia launched its MFS in the first quarter of 2012. What differentiates Bank

Asia is that its technology base is a platform called iPay that is accessible via SmartPhones. This

allows use of internet based applications for transactions. Thus, this service can be used without

relying on a channel negotiated with an MNO. Any client with a SmartPhone could potentially

use the Bank Asia service. Bank Asia’s mobile service is comprised of four parts: Reimittance,

Ektee Bari Ektee Khamar (for the ultra poor), mobile banking based on smart phones, and


28/84

28

mobile banking based on smart POS (using a smart card). It has cumulative transactions of $0.01

Million. (Bangladesh Bank, 2012)

Mercantile Bank: Mercantile Bank’s MFS service has been tested and allows the agent to

transact using a Java based program over an internet enabled Smartphone. Clients are however

free to use any phone and transact over an IVR driven menu based service. Mercantile has

established 148 agent locations mostly from the UISCs. Thus far Mercantile has opened 1,392

mobile accounts, though this is mostly from within a closed group of bank staff. Its’ cumulative

transactions are $12.5 Million. The service has not been marketed heavily to outside consumers

yet. (Bangladesh Bank, 2012)

2.5 Industry Analysis by Porter’s Five Forces Model:

In recent years, the competitive environment in the mobile financing industry has become

intensely competitive, with not only constant special offers and new value added services, but

also with new and bigger entrants.

The following sections describe the competitive environment in the industry using Michael

Porter’s five forces model.

2.5.1 Threat of Intense Segment Rivalry

This mobile financing industry is growing very fast. Now bkash and DBBL Mobile Banking

dominated the market. This two are covering the market very fast. Besides this they are try to

maximize their market share. But in recent days Ialami Bank Bangladesh introduce M-Cash. It

poses a real threat to the existing ones. If M-Cash can gain some momentum, it is likely that the

monopoly soon come to an end in this industry. In mobile financing industry there are some

banks who are offering mobile banking services; such as: Prime Bank, Bank Asia, Trust Bank,

Dhaka Bank, Mercantile Bank, Premier Bank, Jamuna Bank etc. They all are very much

potential competitors in this industry. But they are not concentrating in this sector as much as

bKash and DBBL, so it’s easy to bkash and DBBL for capturing the market. So, the rivalry

among existing competitors is moderate.

2.5.2 Threat of New Entrants

Bangladesh Bank introduces a new rule that every Bank should have mobile banking service.

So it is not that much hard to new entry in this industry. But beside this Bangladesh bank has

some regulation for new entrees. Existing companies have created brand positioning and


29/84

29

economies of scale in coverage- that also act as entry barrier. In addition the price battle between

the competitors in service charge. So potential direct entry to the industry is relatively restricted

at the moment, due to control over licenses. However, companies are finding other ways to enter

the industry, i.e. through merging with existing operators. So, entry barriers in mobile financing

industry are moderate.

2.5.3 Threat of Substitute Products

Mobile Banking is a high-tech industry and the substitutes that would replace the services of

today are strongly related to the factor of innovation. In case of Bangladesh mobile banking

industry, substitutes exist in the form of government post office and some. However, there is no

strong competitive substitute for mobile banking industry as the existing alternatives are either

nearly obsolete or in embryonic stage. But the courier service; such as: SA Paribahan, Sundorban

Courier etc. poses little threat to the industry. So, the threat from substitutes is weak in

Bangladesh.

2.5.4 Threat of Buyers Growing Bargaining Power

There are mainly 3 mobile banking service providers in Bangladesh and they offer almost

homogenous services which have low switching costs between operators and thus has provided

buyers with extremely high bargaining power. The bargaining power of buyers in this industry is

moderate. With the exception of remote-area customers who have no alternative service

available in their vicinity.

2.5.5 Bargaining Power of Suppliers

The bargaining power of suppliers in the mobile industry varies depending on the brand name

and strategic importance of the network as well as the size of the Company, such as Grameen

phone, Banglalink, Robi, Citycell, Teletalk; enjoy strong bargaining power in this industry. On

the other hand there are many potential suppliers and vendors in mobile banking industry e.g.

various agents, merchants such as aarong, agora, bata and major suppliers of telecom equipment

in Bangladesh. So the bargaining power of suppliers in the industry is moderate to weak.

2.6 Findings on the Mobile Financial services Market Structure:

Nabi et al. (2012) outlined the following findings in a policy paper for Bangladesh Bank:

I. The MFS guidelines and the ‘honest broker’ role taken on by Bangladesh Bank have been

instrumental in the recent growth of this sector. After several years of uncertainty, the


30/84

30

firm move by Bangladesh Bank to establish MFS guidelines provided a positive signal

that is enabling market growth. Bangladesh Bank has also been proactive in bridging

differences between commercial banks and MNOs, and this ‘honest broker’ role has been

instrumental to the recent rapid growth of BRAC Bank and Dutch‐Bangla Bank in this

sector.

II. Banks and MNOs share the view that the potential for MFS lies initially with P2P, small

merchant payments and mobile top ups.

III. BRAC Bank/bKash and Dutch Bangla Bank are the early leaders in the market. Both

Dutch Bangla and BRAC Bank/bKash launched in 2011 and have moved to activate

agent networks in nearly all districts.

IV. The more recent launch of Bank Asia’s program is notable. Bank Asia is a more recent

entrant and has a different approach. It offers an MNO independent technology, but is

limited to those with Smartphones which have higher computing capability and can use

existing data services provided by MNOs with no need for a special contract with any

MNO.

V. The most significant efforts are currently on identifying, quantifying and negotiating

mutually beneficial partnerships between banks and MNOs. MNOs have opened up their

USSD channels to banks and more such agreements are being actively negotiated.


31/84

31

CHAPTER 3

OVERVIEW OF BKASH


32/84

32

3.1 Company Profile:

bKash Limited, a subsidiary of BRAC Bank, started as a joint venture between BRAC Bank

Limited, Bangladesh and Money in Motion LLC, USA. In April 2013, International Finance

Corporation (IFC), a member of the World Bank Group, became an equity partner and in April

2014, Bill & Melinda Gates Foundation became the investor of the company. The ultimate

objective of bKash is to ensure access to a broader range of financial services for the people of

Bangladesh. It has a special focus to serve the low income masses of the country to achieve

broader financial inclusion by providing services that are convenient, affordable and reliable.

(bKash, 2014)

3.2 Mission of bKash:

By providing financial services that are convenient, affordable and reliable, bKash aims to widen

the net of financial inclusion. bKash wants to provide a solution for Mobile Financial Services,

built on a highly scalable Mobile Money platform, allowing the people of Bangladesh to safely

send and receive money via mobile devices. (bKash, 2014)

3.3

Primary Values Offered in Market:i. Fast: bKash is dedicated to widening the net of financial inclusion among the people of

Bangladesh by facilitating money transfer through mobile phones. bKash provides

Mobile Financial Services allowing customers to send, receive, and pay money from their

mobile phones in the fastest way.

ii. Affordable: bKash helps to send and receive money with minimal effort and cost. bKash

provides the highest benefits to its customers at an affordable cost, enabling everyone to

access the formal financial system of the economy. In addition to eliminating initial

monetary costs involved in entering the banking system, bKash greatly minimizes

opportunity costs such as time and effort required to access such services. The service

charges are minimal and there are no hidden costs involved.


33/84

33

iii. Secure: bKash places a high priority on protecting customer information to assure that

their transactions and data are secure with bKash. bKash’s security and compliance

practices are regularly audited to ensure that they meet the highest standards.

iv. Convenient: bKash users enjoy increased convenience of accessing their finances from

their own mobile phones anytime, anywhere. bKash gives you the flexibility to perform

transactions 24 hours a day, 7 days a week, regardless of time and place. "No queues no

waiting"; the most convenient way of transferring money.

v. Nationwide: bKash’s extensive distribution network with more than 100,000 Agents

covering each district and Thana along with around 300 BRAC Bank ATMs provides

customers with the nationwide reach and capacity that customers need to avail bKash

services at a close proximity. The service is supported by mobile networks of all the

leading MNOs which enable customers to access bKash Wallet even from the remotest

areas of Bangladesh.

3.4 The bKash Story So Far:

bKash is a private limited company created specifically to provide mobile financial services in

Bangladesh. It is part of the BRAC group, a nongovernment organization (NGO) that provides

social services and includes 18 related social enterprises. Within this group is BRAC Bank, a

commercial bank that owns 51 percent of bKash. Bangladesh regulations issued in 2011 require

mobile financial services to be provided by a bank or a company that is classified as a bank

subsidiary by the central bank. While bKash manages nearly all facets of the mobile financial

service operations, BRAC Bank is responsible for regulatory compliance, and bKash must

deposit the full value of its mobile account balances with a prudentially regulated commercial

bank. A U.S. based company called Money in Motion LLC invested the initial minority 49

percent shares in bKash. The International Finance Corporation (IFC) and the Bill & Melinda

Gates Foundation joined as minority investors in 2013 and 2014, respectively, with BRAC Bank

retaining 51 percent ownership.

For users, bKash works like mobile money in many markets. Users can open an account linked

to a mobile phone number. Account owners can deposit or withdraw at appointed agents using

most handset models. In its first year bKash acquired 5,000 agents under a contract with BRAC

whereby BRAC recruited and managed agents. This temporary arrangement enabled bKash to


34/84

34

get started without an existing distribution network. After one year bKash shifted and directly

linked to more than a 100 regional distribution companies that could each manage hundreds of

agents at a time. These distributors and their retailers were already organized in distributing

airtime, fast-moving consumer goods, medicine, and groceries. Timing worked to bKash’s

advantage because margins for reselling airtime had fallen to historic lows by 2012 leaving

airtime resellers hungry for new sources of revenue. With this change the growth of bKash’s

agent network surged, growing to nearly 80,000 in the subsequent two years.

To promote a new service bKash invested significantly in above-the-line marketing through

television spots, radio, and billboards. “bKash” is a play on words— when said quickly in the

local language the word sounds like the term for progress. The term bKash has become so

commonplace that it is synonymous to mobile money payments.

Most transactions so far are made by people sending money to family members. These include

migrant laborers, garment factory workers, and rickshaw pullers sending money home as well as

students receiving money for living expenses. A majority of transactions are over-the-counter

where senders or receivers do not use their own accounts and instead enlist the help of an agent

to send and receive. One of the early challenges for bKash is to change this behavior and get

clients to transact using their own accounts.

Type Number nationwide Additional details

Subscribers (Active)

• 6,000,000+ • Country wide coverage

Agents

• 85,000+ • Country wide coverage

• Own agent of bKash (3rd

Party Agent)

ATMs

• 300+ • Only BRAC Bank ATM

booths are applicable for cash


35/84

35

out of bKash. Major Cities of

Bangladesh is the geographic

coverage.

Full service branches

• 150+ • BRAC Bank branches

Partial service offices

• N/A • N/A

Merchants

• 1,000+ • Dhaka & CTG Based

TABLE 3: COVERAGE PROFILE OF BKASH

Source: mSTAR Bangladesh Mobile Money Infosheet-bKash (Last updated: February 21, 2014)

3.5 Factors influencing bKash’s Fast Drive:

bKash is neither a MNO nor a bank. It is a separate company that built its business on its own

and scaled up quickly. According to CGAP (2014), three factors have combined to help drive

this fast start. Such as:

I. A specialized organization built to deliver Mobile financial services:

bKash is purpose built for what it does. BRAC expects bKash to have its own identity and build

its own business. One important distinction from other companies in which BRAC invests is that

the minority investors have significant influence. The minority investors bring specialized skills

and experience that have helped create the business, including providing the CEO, Kamal

Quadir. The role of the minority investors is balanced with BRAC Bank appointing the chair of

the bKash board and other directors. Although other banks in Bangladesh offer mobile financial

services, BRAC Bank is the only one so far to establish a special-purpose company for mobile

financial services, and beyond Bangladesh this is rare for banks or MNOs.


36/84

36

The special-purpose organization establishes a high level of focus on mobile financial services

alone, in contrast with banks that often rotate staff in and out of their mobile financial service

departments. bKash staff do not come in large numbers out of banking but from other industries

and commercial backgrounds. bKash is a standalone business that is expected to drive its own

financial performance whereas in many bank environments mobile financial services are treated

as an alternate delivery channel to serve the needs of other parts of the bank, for instance, to

collect deposits for the retail business. Bank units focused on mobile delivery channels must

often respond to the needs of other parts of the bank rather than focus on building their core

business.

BRAC has a track record of creating special purpose businesses, with some 18 in its portfolio,

that are expected to be accountable for their own performance. This approach has made bKash’s

existence more difficult since it cannot assume or expect to gain business from other parts of

BRAC. For instance, there have been minimal links (so far) to making salary payments,

collecting loans, or linking to any related companies, including BRAC Bank. These links could

increase in the future, but so far a “sink or swim” imperative has required bKash to push hard to

succeed on its own. This has been further reinforced by the minority investors who have injected

risk capital and stand to lose or gain on bKash’s mobile financial services performance.

bKash has developed its own culture designed to fit the kind of business it operates. This

different mindset begins with the CEO who has a background in technology-driven start-ups.

bKash’s business model is also fundamentally different from conventional banking. Instead of

focusing on credit or savings and building a balance sheet, bKash drives transactions and earns

revenue through fees. Many banks begin in one urban region or focus on a particular customer

segment, often more affluent segments. bKash has had national reach in all districts of the

country almost from the beginning and aims to serve everyone.

II. A shared vision for scale among a diverse investor group

Fazle Hasan Abed, the founder of BRAC, is fond of saying, “Small may be beautiful, but scale is

necessary.” Going to scale has been at the core of BRAC’s work since the 1980s when BRAC

pursued, against many experts’ advice, a national program to fight child deaths from diarrhea

with a homemade oral rehydration solution. BRAC was able to take this to every household

across Bangladesh. (Chowdhury and Cash, 1996)


37/84

37

bKash did not pilot test, rather it aimed to scale from launch and took a “learn as you do”

approach. The push for scaling an agent network and a large customer base has been difficult,

and bKash has had to make many adjustments to its business along the way. For instance, the

shift from the BRAC-acquired agents to direct recruitment required a new distribution team and

a re-design of the distribution incentives. Even while it made this fundamental correction bKash

continued to grow, changing on the fly.

The scale mentality has been reinforced by bKash’s funding and investors. Money in Motion

initially invested $5 million. And even before bKash had much of a track record the Gates

Foundation provided a $10 million grant that included funds to expand as well as source

technical assistance — for example, linking bKash to expertise on agent network management

from Kenya. More recently, IFC and the Gates Foundation have come in as minority investors.

Each investor has reinforced the drive for national scale. (Intermedia, 2014).

III. An enabling and flexible regulatory environment

The launch of bKash in July 2011 came on the heels of Bangladesh’s central bank (Bangladesh

Bank) issuing guidelines on mobile financial services that provided the certainty and clarity

needed for bKash and others to invest and build a business. Bangladesh Bank was comfortable

issuing a license to BRAC Bank to launch bKash, since the bank was a well-managed

commercial bank the regulator knew well.

The idea of regulation that would allow nonbanks and particularly MNOs to launch their own

services had first been debated in 2008, but Bangladesh Bank did not feel comfortable at that

time to allow MNOs to lead. However, in addition to allowing banks to offer mobile financial

services, the 2011 regulations included a clause that allowed banks to set up subsidiaries

specifically for this purpose. This allowed conventional banks to establish separate companies in

partnership with funders with relevant experience and, importantly, the risk appetite and

entrepreneurial bent needed to make the business succeed. This nuanced light-touch regulation

provided the environment that allowed bKash to be an operationally new and different kind of

business while still being regulated under the umbrella of banking norms. As of yet, no other

bank subsidiaries have been established for mobile financial services in Bangladesh, but the

possibility remains.

The regulators made another important decision early on. When bKash launched it had an

agreement to link only into the subscribers of one of the four large MNOs. bKash as well as


38/84

38

other bank-based mobile financial service providers sought access to unstructured supplementary

service data (USSD) channels of all the major MNOs, and Bangladesh Bank actively encouraged

mobile operators to open up to mobile financial service providers. Eventually the

telecommunications regulator also pressured mobile operators to provide access. With this

obligation and with Bangladesh Bank’s suppor t, bKash was able to enter revenue-sharing

agreements to access a USSD gateway with all four big MNOs, providing access to over 98

percent of Bangladesh’s 100 million mobile phone subscriptions. bKash could reach the

customers of nearly all MNOs within its first year of operations. While this has been unpopular

with MNOs who wanted to offer mobile financial services themselves, it has been a crucial

factor in bKash’s fast start. bKash had the communications limitations on who it could reach

with its service removed and established an industry norm for revenue sharing with MNOs. This

stands in contrast to many early-stage MNO deployments that often reach only their own voice

subscribers early on.

3.6 Major Challenges for bKash:

bKash’s initial growth to large scale has been among the fastest globally. At the same time, it is

still early. The bKash board and management are the first to say that there is a long way to go

and much still to do to build the business. It needs to stabilize its technology platform to support

a much higher volume of transactions. It needs to shift users from doing their transactions via

agents to using their own accounts. It needs to move beyond payments to provide other financial

services. Major challenges for bKash in coming days are shown in the below chart:


39/84

39

FIGURE 1: MAJOR CHALLENGES FOR BKASH

CHAPTER 4

BKASH ANALYSIS FROM BRANDI NG

PERSPECTIVE

Local RegulatoryGuideline (dos’ and

donts’)

Approval forEconomy model

(who grabssteering)

strategic alignmentwith MNO

(aspiration andobjective)

Business scope

definition(technology/agent/customer service)

Effective practiceof SLA (clear

definition,expectation,

rigidity)

Service and Productsynchronization(airtime/existingservice adoption)

TechnologyIntegration

(capacity, tuningand development)

Adapt multi-MNOstandard (who ishaving what to

integrate)

Capacity benchmarking and

scalability(projection,

proactive measures)

interoperability…internal and

external (forget

prefix)

Balance in marketwith competition

(exclusivity/open/balanced treatment)

And Manymore……..


40/84

40

4.1 bKash Brand Audit: Identifying Brand Positioning and Values

4.1.1 History:

bKash Limited, a subsidiary of BRAC Bank, started as a joint venture between BRAC Bank

Limited, Bangladesh and Money in Motion LLC, USA. In April 2013, International Finance

Corporation (IFC), a member of the World Bank Group, became an equity partner and in April

2014, Bill & Melinda Gates Foundation became the investor of the company. The ultimate

objective of bKash is to ensure access to a broader range of financial services for the people of

Bangladesh. It has a special focus to serve the low income masses of the country to achieve

broader financial inclusion by providing services that are convenient, affordable and reliable.

More than 70% of the population of Bangladesh lives in rural areas where access to formalfinancial services is difficult. Yet these are the people who are in most need of such services,

either for receiving funds from loved ones in distant locations, or to access financial tools to

improve their economic condition. Less than 15% of Bangladeshis are connected to the formal

banking system whereas over 68% have mobile phones. These phones are not merely devices for

talking, but can be used for more useful and sophisticated processing tasks. bKash was conceived


41/84

41

primarily to utilize these mobile devices and the omnipresent telecom networks to extend

financial services in a secure manner to the under-served remote population of Bangladesh.

bKash launched in the second half of 2011, grew to 2 million accounts by the end of 2012, and

shot up to 11 million registered accounts by the end of 2013. Now bKash is the market leader in

mobile banking service industry with 70% market share.

4.1.2 Brand Inventory:

4.1.2.1 Product-Related Attributes:

From the inception, bKash mobile banking services have maintained the highest quality,

affordable, credibility, and convenience on which they originally were founded. Following are

the attributes of bKash which make bKash number one mobile banking service provider in

Bangladesh.

i. Fast

ii. Secure

iii. Convenient

iv. Affordable

v. Nationwide

vi. Reliable

vii. Easy

viii. Multipurpose

4.1.2.2 bKash Brand Portfolio:

bKash provides different types of services in the market.

i. Cash in

ii. Send money

iii. Cash out

iv. Mobile recharge

v. Foreign remittance

vi. Salary disbursement

vii. Merchant payment

viii. Loan repayments


42/84

42

ix. ATM withdrawal

x. Interest against savings

4.1.2.3 Competitor Analysis:

The main competitor of bKash is DBBL Mobile. They are also providing almost same facilities

of mobile banking for their customers. DBBL Mobile has been giving the toughest competition

to bKash. DBBL Mobile has 172,020 registered customers and cumulative transactions of $11.0

Million (2011). The numbers of agents are 23,974. DBBL has notably developed partnerships

with insurance providers and employers to use its platform for distributing payments. Services

offered by DBBL Mobile are: cash-in/Out, International Remittances, Salary Disbursement, P2P

payments, Mobile top-off, Bill Pay. Other competitiors are: Trust Mobile Money, iPay (Bank

Asia), M-Cash (Islamic Bank Bangladesh Ltd.), My-Cash (Mercantile Bank) etc.

Company Agents Customers Cumulative

Transactions

Market

Share

bKash 40,000+ 2.2 million $14.8 Million 71%

DBBL Mobile 23,974+ 172,020 $11.0 Million 24%

TABLE 4: COMPARISION BETWEEN BKASH AND DBBL MOBILE BANKING

4.1.2.4 Communications, Pricing, and Distribution of bKash:

To promote a new service bKash invested significantly in above-the-line marketing through

television spots, radio, and billboards. “bKash” is a play on words— when said quickly in the

local language the word sounds like the term for progress. bKash’s image is also enhanced by its

extensive distribution and affordable pricing. bKash slogan is “The easiest and safest way to

send or receive money instantly on your mobile, nationwide”. The term bKash has become so

commonplace that it is synonymous to mobile money payments. bKash communications is

simple, clear and clever. bkash have in total 8 TV Commercial including a 3D advertisement. In

those commercial they are providing massage about their services. bKash extensively use

billboard to reach more people. Now bkash have 200 billboards all over the country. bKash also


43/84

43

use wall paint to attract rural people. bkash have 2,00,000 SF of wall paint in all over the

country. Besides these, bKash successfully execute agent point promotion.

bKash has a high market coverage with 85,000 agents, 300+ ATM and 1000+ merchants in all

over the country. The most important fact is the number is not stagnant; it is growing in every

coming day. bKash makes it an integral part of business development to reach more people.

The pricing structure of bKash is affordable and simple. They charge from customers based on

types of transactions. The competitive pricing structure gives bKash an edge in the market. The

pricing structure of bKash is given below:

Pricing Structure and Limitations

Action type Corporate accounts Limitations End-user (P2P) Limitations

Opening an account FREE FREE None

Cash in N/A FREE

150,000/month

Collection 1.50%*CorporateCollection SettlementCharge

No limits N/A N/A

Cash out from

agent**

N/A 1.85% charge will beautomaticallydeducted from bKashAccount.

150,000/month

Cash out from

ATM**

2% charge will beautomaticallydeducted from bKashAccount

Between BDT 2,000to 20,000

2% charge will beautomaticallydeducted from bKashAccount

2,000 to 20,000

150,000/month

Cash out from Bank

Branch**

N/A N/A N/A

Transfer money CorporateDisbursementCharge: 0.50%*

Through bank ordervia email/hardcopy

BDT 5/transfer


44/84

44

25,000/month

Merchant payment N/A FREE

Mobile Top up N/A FREE

100,000/month

TABLE 5: BKASH PRICING STRUCTURE AND LIMITATIONS

** Maximum cash out in any mode in total is BDT 150,000/month.

4.1.3 Brand Exploratory:

4.1.3.1 Customer Knowledge:

BRAC has successfully leveraged its history and tradition of excellence along with innovation to

become the most respected development organization in the world. BRAC has a track record of

creating special purpose businesses, with some 18 in its portfolio, that are expected to be

accountable for their own performance. bKash is not an exception of these.

Consumers have a positive perception towards bKash and that is reflected in their performance

so far. Moreover, bKash has successful created some positive and strong brand associations, that

help bKash to maintain high rate of growth in the market. Typical consumer brand associations

for bKash are shown in the following bKash mental map:


45/84

45

FIGURE 2: BKASH MENTAL MAP

4.1.3.2 Sources of Brand Equity:

The bKash name, one of the largest mobile banking service providers in the world, is inarguably

the company’s most important source of brand equity. The name bKash itself is the synonymous

to mobile banking in the country. The bKash logo, an important source of brand equity, is

widely recognized in the country. The most important contributors to bKash brand equity are its

functional benefit, namely the credibility, convenience, and availability. Its extensive distribution

makes it a brand for mass people in the country. TV commercial is successfully executed to

makes it a brand for everyone. For example, in a recent TVC, bKash shows that Sokhina a

garments worker who uses bKash regularly to send money home to her family. She narrates how

bKash has made her life so much easier, and how it is transforming the lives of everyone around

her too. bKash corporate social responsibility is also a source of brand equity. For example,

recently bKash gives computer to Alumni Association of History Depratment of Dhaka

University. Besides these, bKash continuously developing its business by making partnerships

bKash

Fast

Affordable

Reliable

Available

Easy

Secure

Trust

Highquality

Impoliteagents

Helpful


46/84

46

with different organizations by which consumers of these organizations can use bKash to make

payments. This allows bKash to increase brand awareness among the consumers through co-

branding.

4.1.3.3 The Customer-Based Brand Equity Pyramid (CBBE):

The bKash customer-based brand equity pyramid is equally strong on both sides and it is also

strong from bottom to top. bKash is enjoying the highest brand awareness of any mobile banking

service provider as well as high repeat purchase rates and high customer loyalty. It is also

successful in building a strong, unique and favorable brand image. The following figure

highlights the key aspects of the bKash CBBE pyramid:

FIGURE 3: BKASH CBBE PYRAMID


47/84

47

4.1.3.4 Criminals target bKash dealers: Threat to Equity

Over the last couple of years there happened many incidents where bKash dealers or agents were

mugged. Even in some cases, muggers killed bKash dealers and rob the money. It is an alarmingtrend for the business. Because, it creates fear among the mass people and rises tensions among

the consumer. The law enforcing agency alone can’t make the situation better. Thus bKash must

come with some innovative ideas to face this unwanted challenge.

4.1.3.5 Impolite Agents: Threat to Equity

The impolite behavior of bKash agents is another threat to bKash brand equity. It greatly affects

consumer experiences while receiving service. bKash must develop some general guideline for

agents to provide mobile banking service courteously. In addition to this, bKash can arrange

training facilities for agents.

4.1.4 Recommendations:

The bKash brand audit reveals a very strong brand with significant equity. However there areseveral areas of opportunity. Such as:

i. bKash need to improve their server on a regular basis because some time the server down

for one or two hour.

ii. bkash need to promote their service by doing one to one marketing because of the

complexity of the service.

iii. bKash international remittance service is yet to gain the momentum. So it need more

focus.

iv. bKash need to introduce a 24 hour open toll free helpline.

v. bKash need to spend more on philanthropic activities to

4.2 IMC (Integrated Marketing Communication) program of bKash:


48/84

48

4.2.1 Media Advertising: bKash extensively use media advertising in the form of TV

commercials, Print media (Newspaper), and Radio.

4.2.1.1 TV Commercials:

bkash have many TV Commercial including a 3D advertisement. In those commercial they are

providing massage about their services. In bellow I am providing some ideas about theose TV

Commercial:

Open a bKash Account on your own mobile Rahmat, an elderly village dweller needs to send

money urgently to his son Shafiq, who forgot to take money while leaving for the city. Rahmat

goes to Iqbal, a nearby bKash Agent in his village. Iqbal explains to Rahmat that bKash gives the

ease of sending money from home, at his convenience.

International Remittance TVC (UK) Remitters from UK can now send money to bKash

Account in Bangladesh from BRAC Saajan and its partner outlets. The remitter needs to mention

bKash as the termination mode and the recipient needs to have a bKash account to receive the

money directly in his/her bKash Account.

Something for everyone Sokhina is a garments worker and uses bKash regularly to send money

home to her family. She narrates how bKash has made her life so much easier, and how it is

transforming the lives of everyone around her too.

No need to carry cash, pay with bKash Housewife Nina, needs to buy some urgent groceries

but does not have enough cash on her and is also in a hurry. On her walk to a nearby superstore,

she calls her husband and asks to send the money to her bKash Account. She shops and happily

pays with bKash at the store. Nina likes playing with bKash as it is simple, convenient and she

no longer needs to carry cash.

bKash brings safety to your hard earned money Milon is a driver who used to receive his

salary in cash. Now his employer pays through bKash. Milon is happy because bKash is a better

means to keep his money safe as he does not have a bank account.

Sending money home has never been this easy Sokhina is a garments worker who sends

money home regularly to her parents in the village. Hand-to-hand transfer was the only option

for her, which was neither convenient nor cost effective.

Bikoshito Bangladesh in 3D Keeping with the spirit of innovation and empowerment, bKash

proudly presents a world class 3D animation made entirely in Bangladesh. This explanatory


49/84

49

video illustrates common problems related to money matters, outlining how bKash helps make

everyday transactions easier and how it is relevant and necessary in the lives of rural and city

dwellers.

Recharge your mobile airtime balance anytime, anywhere In this TVC we see a sweet

relationship of a mother and her son.The story starts at 1:00 AM, the night before Shumon‟s

final exam. Shumon wakes up his mom to borrow her phone to talk to his elder brother for some

last minute mathematics problems. Before Shumon could get the solution of his mathematics

problem, the phone runs out of mobile balance and the line gets disconnected. His world turns

upside down and has no clue how he will get mobile balance this late at night. To his surprise,

Shumon‟s progressive mother asks for the mobile phone and instantly recharges the mobile

balance for her son from her bKash Wallet. After that, the smile of happiness between the mother

and son brightens the night.

4.2.1.2 Print Media:

bKash provide advertisement in daily newspaper. Newspaper ad has high coverage with timely

value. bKash is trying to exploit this advantage. Here is a glimpse of a recent ad in a daily

newspaper:

Cash back offer bKash is offering 15% cash back to its customers at designated points of sales,

the company said in a statement yesterday. The offer is available at the outlets of Aarong,

Yellow, Cats Eye, O2, Kay Kraft, Anjan's and Monsoon Rain. Payment through bKash is free,

and the customers will receive the eligible cash back.

4.2.1.3 Radio:

bKash also use radio ad as it is relatively inexpensive medium and it provides local coverage.

bKash make some radio ad campaign with persuasive story of how bKash make life easy. The

main disadvantage is lack of visual image.

4.2.2 Direct Response Advertising:


50/84

50

bKash execute some form of direct response marketing; such as: Telemarketing and SMS

marketing.

4.2.2.1 Telemarketing:

This is one of the regular direct marketing tools. bKahas has a strong call center department.

They give services to the Channel partner and customer. Channel partners are their agent and

distributors. They take help of call center If they face network problem and they take help to

know whether the transaction properly held or not. They also give service to the customer. They

give information a bout bKash‟s products and give solutions about service problems. The call

center department of bKash does this telemarketing.

4.2.2.2 SMS Service:

Today SMS service is one of the sufficient ways for direct marketing. bKash send bulk sms

through the help of telecom company to convince consumers for opening a bKash account.

4.2.3 Online Advertising:

bKash use online advertising or E-Marketing to build relations with customers and prospects

through regular, lowcost personalized communication. bKash is doing E- marketing in the form

of website and Social media (Facebook).

4.2.3.1 Website:

Through their website bKash is promoting their services & providing the feedback information

regarding their brand. They have launched their first bKash 3D animation (Bikoshito

Bangladesh) through their website. Keeping with the spirit of innovation and empowerment,

bKash proudly presents a world class 3D animation made entirely in Bangladesh. This

explanatory video illustrates common problems related to money matters, outlining how bKash

helps to make everyday transaction easier and how it is relevant and necessary in the lives ofrural and city dwellers. bKash also publishes stories through their website. Those stories are

about successful people in which bKash has contributed behind their success.

4.2.3.2 Facebook :

Now-a-days facebook is the most used social network site. bKash also has a very active

Facebook page. In Facebook bKash upload all their promotions and their advertising. With the


51/84

51

help of Facebook bKash is connected 24 hours with

measuring consumers attitudes towards mo

Documents