bKash – Opportunities and challenges

bKash is the first MFS provider to attain economies of scale in Bangladesh (basically a Type I market – low income, low banking rate). bKash has been the first MFS provider in reaching out the under-banked and unbanked segment of Bangladeshi population at a very cheap, convenient and reliable way. bKash’s value proposition is simple: a safe, convenient place to store money; a safe, easy way to make payments and money transfers.

Through cutting off agent’s chores and by enhancing retail-user’s financial literacy bKash can actually divert a big chunk of agent’s commission (currently bKash agents takes away 76% of MFS commission) into its pocket. Due to lack of financial literacy, a big number of P2P transactions are currently operated via OTC (over-the-counter) mediums. By introducing smartphone driven mobile apps, bKash can actually cut off MNO’s (Mobile network operator) profit share (which is currently 7% of MFS commission) It can exert its superior bargaining power over its partners (in bilateral and multilateral agreements) while establishing interoperability. Interoperability refers to the ability for customers to undertake money transfers between two accounts at different mobile money schemes, or to transfer money between accounts at mobile money schemes and accounts at banks. Subject to regulatory changes, bKash can emerge as a standalone payment facilitator company. Subject to regulatory changes, bKash can start providing mobile insurance and mobile credit services as well.

bKash is the market leader in P2P category. The biggest chunk (93% of industry revenue) comes from P2P, cash-in and cash-out transaction. But bKash has little presence in the B2P and P2B segment of the mobile financial service market. Surecash is the market leader in B2P segment and a2i (Access to information – a government initiative) dominates P2G and G2P segment of the market.  P2G, G2P, B2P and P2B these market niches are exceedingly growing. So, it is high time bKash leverage its dominance in P2P segment into these market niches. Financial literacy of the unbanked and under banked can be improving through introducing mobile apps whereby the navigation language would be Bangla. OTC transactions contribute to bulk of bKash transaction volume; OTC is not legal (as agents are not allowed to deal with e-money) and regulators cannot track e-money movements in OTCs.