Mobile Commerce Mobile Commerce

opportunity in opportunity in

BangladeshBangladesh

Naveed Ahmed Choudhury

Head of Mobile-Commerce, Citycell

(a JV of SingTel & Pacific Telecom Bangladesh)March 19,2014

Bangladesh: market overviewBangladesh: market overview

o Population>160 million.

o GDP : US $ 282 billion (PPP)

o Growth rate: 6%(approx.)

o GDP/capita: US$1970 (PPP)

o Bank access: only 13%.

o Less than 7 branches or ATMs per 100,000 people

o But mobile subscribers>100 million*

o 99% of land area covered by MNOs.

So there is a huge opportunity to increase financial inclusion through Mobile phones.

So there is a huge opportunity to increase financial inclusion through Mobile phones.

RemittanceRemittance

• Remittance increased to US$ 14 million in 2013 (approx.).

• International remittance accounts for 10% of national GDP (approx.).

• Channels:o Formal: Banks, Money transfer

organizations, Postal services etc.

o Informal: Hundi or hawala, hand delivery, travel agencies etc.

• Existing channels are o Costly

o Time consuming

o Bureaucratic etc.

Source: WorldBank

M-Commerce can simplify remittance receiving.M-Commerce can simplify remittance receiving.

Mobile Commerce LandscapeMobile Commerce Landscape

• As per Bangladesh Bank directiveo Banks are owners of products & pricing for M-

Commerce/M-Banking/Mobile Financial services.

• MNOs’ roleo Providing network connectivity for USSD/SMS/IVR.

o Providing POS(retail points) for service delivery.

• Approval & service launch statuso A total of 28 Banks given approval.

o M-Banking was launched in March 2011 by DBBL partnering with MNOs Citycell & Banglalink.

o Bkash followed by launching in June 2011.

o 19 have launched some kind of M-Banking service.

How is started

Citycell was among the first MNOs to embrace M-Commerce.Citycell was among the first MNOs to embrace M-Commerce.

MM--Banking: a growing marketBanking: a growing market

o Total number of M-Banking accounts increasing rapidly:• Total number of accounts was 4.42 million in March 2012.

• This figure reached 5 million in April 2013.

• This figure touched 10 million mark in November 2013.

• Compared to 2012, growth was 262%.

Number of M-Banking accounts in BangladeshNumber of M-Banking accounts in Bangladesh

Source: Bangladesh Bank

MM--Banking indicators growingBanking indicators growing

o Volume of transactions using M-Banking is increasing fast.

• Transaction amount was 23 billion BDT in January 2013

• This figure grew to 66.4 billion BDT in December 2013.

o Transaction growth was 186% compared to 2012.

o Number of agents also increased:• Number of agents was 59K in January2013.

• Number of agents was 188K in end of 2013.

Competitive landscapeCompetitive landscape

• Key playerso Bkash:

• 8 million+ accounts

o Dutch Bangla Bank Ltd(DBBL):• 2 million+ accounts

o Other players:• My cash by Mercantile Bank

• Ucash by United Commercial Bank

• Islami Bank

• OK by One Bank

• Trust Mobile Money by Trust Bank

Popular servicesPopular services

o Cash-in(cash deposit)• Price ceiling: 1% or tk 5 whichever is

higher

o Cash-out(cash withdrawl)• Price ceiling: 1% or tk 5 whichever is

higher

o Pricing by key players• DBBL charges 1% or tk 5 whichever

is higher for both cash-in and cash out services.

• Bkash has no charge for cash-in. It charges 1.85% for cash out fees.

o Innovative services• Mobile Topup

• Payment of school fees

• Payment of passport fees etc.

Insights & observationsInsights & observationso Subscriber acquisition & transaction

• Acquisition proportion is higher in rural areas.

• Rural areas are mostly cash-out areas.

• Urban areas are mostly cash-in areas.

o Services• Services addressing ‘compelling needs’ shall become

popular e.g. Person to Person Money transfer(P2P).

• Those coming up with Innovative services will have an edge over rivals e.g. UCB started offering 4% interest on minimum deposit in their M-Banking accounts.

• Those with Innovative service shall carve out their own position in market e.g. Trust Bank offers payment of school fees using M-Banking.

• Inter-Bank transaction expected to drive growth further.

MM--Banking in coming daysBanking in coming daysM-Banking account number projection till 2020M-Banking account number projection till 2020

Number of M-Banking accounts is expected to reach 55 million by 2020.M-Banking growth shall be fuelled by following:•Entrance of new players•Meaningful services e.g. Mobile Remittance•Inter-bank transactions•Increased customer awareness & education

Number of M-Banking accounts is expected to reach 55 million by 2020.M-Banking growth shall be fuelled by following:•Entrance of new players•Meaningful services e.g. Mobile Remittance•Inter-bank transactions•Increased customer awareness & education

As per BCG study(2012), •The number of people with formal savings account shall increase by 30 million by 2020.•In addition, another 22 million can be added to current number of people using bill payment products by 2020.•The number of formal credit service users is expected to increase by 12 million by 2020.

As per BCG study(2012), •The number of people with formal savings account shall increase by 30 million by 2020.•In addition, another 22 million can be added to current number of people using bill payment products by 2020.•The number of formal credit service users is expected to increase by 12 million by 2020.