Sub-Team Report on

Mobile Financial Services (MFS) in Bangladesh MNO Perspective

Prepared for:
Mr. Sheikh Morshed Jahan
Associate Professor, IBA, University of Dhaka
Course instructor: Business Strategy (W 650)

Prepared by:
Abdullah Al Mahmud (ZR 20, MBA 52D)
al.mahmud.mishu@gmail.com; 01912782525
Tapas Debnath (ZR40, MBA 52D)
just.tapas@gmail.com; 01612082727

IBA, University of Dhaka

May 14, 2016

Contents
EXECUTIVE SUMMARY ............................................................................................................................ 2
1 INTRODUCTION .................................................................................................................................... 3
2 OVERALL Mobile Financial Services (MFS) INDUSTRY STRUCTURE (MNO PERSPECTIVE) ................... 4
2.1 Mobile Financial Services (MFS) of Different Mobile Network Operators (MNOs) ...................... 4
2.2 Mobile Banking in Bangladesh ...................................................................................................... 9
2.2.1 Key Players in Mobile Banking ............................................................................................ 9
2.2.2 Mobile Banking Ecosystem ................................................................................................ 10
2.2.3 Critical Components for Successful M-Banking ............................................................... 11
2.2.4 Business Canvas Model ........................................................................................................ 12
2.2.5 Industry growth of mobile banking...................................................................................... 13
2.2.6 Mobile Money Opportunity in Bangladesh ...................................................................... 16
2.2.7 Industry Life Cycle .............................................................................................................. 18
2.2.8 Industry Value Chain .......................................................................................................... 18
2.2.9 Drivers of change in the industry ..................................................................................... 19
2.3 Pricing Strategy ........................................................................................................................... 19
2.4 Rivalry among major players....................................................................................................... 19
2.5 Marketing Strategies ................................................................................................................... 19
3 REGULATORY FRAMEWORK ............................................................................................................... 20
3.1 Regulatory Guidelines for MFS - 2011 ........................................................................................ 20
3.2 Pre-draft Regulatory Guidelines for MFS - July 2015 .................................................................. 20
3.3 Implication of new pre-draft ....................................................................................................... 20
4 ANALYSES ........................................................................................................................................... 21
4.1 PESTEL ......................................................................................................................................... 21
4.2 Porters 5 forces .......................................................................................................................... 21
4.3 SWOT........................................................................................................................................... 21
4.4 Strategic Group Mapping ............................................................................................................ 22
5 CONCLUSION ...................................................................................................................................... 23
5.1 Future Growth Prospect / Investment Attractiveness / Growth Trajectory ............................... 23
5.2 Recommendation........................................................................................................................ 23
REFERENCES .......................................................................................................................................... 24
APPENDIX .............................................................................................................................................. 25

Page | ii

EXECUTIVE SUMMARY
Mobile Financial Service (MFS) refers to the financial services which can be facilitated by mobile
phone technology. It includes a huge array of services like utility (gas, water, electricity) bill payment,
ticket (train, Cricket match etc.) purchase, insurance premium payment, mobile banking (money
transfer, merchant bill payment, POS transaction, mobile cash remittance, salary payment) etc.
Among mobile based all the financial products, mobile banking could manage a huge traction in last
5 years. In March, 2016, average daily transaction was BDT 608 crore and number of average daily
transaction was more than 40 lakhs. In March alone, the amount of total transaction was 18,241
crore. Actually, this mobile money transfer is so successful in Bangladesh that in terms of the
transaction number and amount, Bangladesh is in 2nd position worldwide, only after Kenya; that too
is expected to be taken in a very near future. In a word, mobile banking is a huge success in
Bangladesh and it has a huge prospects.
Mobile banking in Bangladesh is highly regulated and its a bank-led model, unlike the general world
trend where around 70% mobile banking is conducted by the mobile network operators (MNO) and
rest 30% is by the banks. Actually its a result of Bangladesh Banks 2011 guidelines regarding MFS
activities which barred MNOs from having equity/ownership in a MFS provider. Now MNOs are just
working as network operators in this thriving mobile banking.
But in July 2015, Bangladesh Bank published a pre-draft guidelines, which allowed the MNOs to get
15% stake in MFS operator / provider. This move of Bangladesh Bank can be treated as a massive
policy changing stance and it allowed MNOs the direct access toward MFS operations. But that 2015draft is still in the formulation phase and until it is being passed, the circumstances are not certain
from the perspective of the MNOs.
Though prospect of MFS in Bangladesh is very much promising, and theres a lot can be offered and
attained through this sector, MNOs current standing and moves are very much crucial and it will
determine the nature of future affiliation of MNOs with the MFS sector (including mobile banking) in
Bangladesh.

Page | 2

1 INTRODUCTION
1.1 Objectives
The objectives of this research are the following:
Broad Objective
To understand strategy related issues for the industry players and future industry prospect for the
whole sector.
Specifics Objectives
Specific objectives of this report are:
A.
B.
C.
D.
E.
F.
G.

To understand overall current environment of MFS sector from the perspective of MNOs
To understand it's value chain
To understand influencing factors/issues
To understand its growth trajectory
To understand the sectors affiliation regarding people, planet and profit
To understand the obstacles of this sector
To understand the regulatory issues of the sector

1.2 Methodology
This research involves exploratory research based upon information from both primary and
secondary information.
Primary Data
To find out the strategic aspects, industry insiders have been interviewed. Informal meet up,
contacting through mobile and e-mail, questionnaire etc. have been used regarding collecting
primary data.
Secondary Data
Different strategy research paper, journals, publications, newspaper article, previously done reports
etc. have been used for collecting secondary data.

Page | 3

2 OVERALL Mobile Financial Services (MFS) INDUSTRY STRUCTURE (MNO PERSPECTIVE)

2.1 Mobile Financial Services (MFS) of Different Mobile Network Operators (MNOs)
[A] Grameenphone MFS
The financial services can be divided in two payments of utility bills and ticketing. There are three
types in ticketing, train ticketing, lottery ticketing and cricket match ticketing.
(1) Utility Bill Pay
It is available to all GP subscribers and non-subscribers. GP subscribers can go for it through their
Mobicash wallet while non-subscribers can avail it by showing the bill to GP retailers as retailers pay
through their Mobicash. Currently focused on utility bill collection in 9 localities of the country via
GP- authorized agents and self- directed mobile wallet transactions executed by customers from
their own handsets.
This service is available for1

Gas (Titas, BGSL, KGDCL) Bill Payment

DESCO / PDB / DPDC / WZPDCL, KWASA Bill Payment
WASA / CWASA Bill Payment
Bangladesh Power Development Board Bill Payment

Currently there are nine utility partners of GP; both GP users and non-users are enabled to pay
through this system.
Partner Convenience
-

Instant Information
Automated bill posting
Operational Efficiency
Easy expansion into new territories

Customer Convenience
-

Convenient locations, open longer

Easy to use
Access to relevant information
24/7 dedicated call centers
Wider coverage (over 5000 GP- authorized agents for cash- in and bill payment)

(2) Purchasing Ticket

Only the GP subscribers can go for BCB Match Ticket and BTRB Ticket. But Ticketing for lottery is
available for non-subscribers.

Lottery Ticket
Government approved lotteries authorized for fund raising and philanthropic purposes. Any
GP prepaid subscriber can buy a lottery ticket directly from their mobile phone.
BCB Match Ticket

http://www.grameenphone.com/personal/digital-services/mobile-financial-services/bill-pay

Page | 4

GP has exclusive agreement with BCB to sell tickets for all international matches in
Bangladesh.
BTRB Ticket
Any registered GP subscriber can book and purchase a train ticket directly from their mobile
phone, up to 10 days before travel time. Physical ticket collection against purchased e- ticket
is available at selected GP centers.

(3) Mobicash
Mobicash is a special Service by Grameenphone where subscribers can avail a range of convenient
and innovative services such as:
Mobile Banking services of different partner banks such as

Dutch Bangla Mobile Banking Service

ONE Bank Ok Mobile Banking Service
MYCash service of Mercantile Bank Ltd.
mCash service of Islami Bank Bangladesh Ltd.
UCash service of United Commercial Bank
IFIC banks Mobile Banking
- Customer registration or partner banks mobile banking account opening
- Cash-in (deposit cash into mobile banking account) of any of the above partner bank
- Cash-out (withdraw cash from your mobile banking account) of any of the above
partner bank
- Bill-Pay service for utility bill payment such as Electricity, Gas and WASA (applicable in
approved locations)
- Flexiload
- Nirvoy life insurance registration and payments

(4) Nirvoy Life Insurance by GP

Grameenphone in partnership with MicroEnsure Bangladesh and Pragati Life Insurance has
introduced Nirvoy the life insurance product for its valued customers2. Nirvoy was launched in June
2013. The purpose of Nirvoy is to provide GP customers with an opportunity to manage their life risk
by simply committing to a nominal amount of spend on the GP network. Nirvoy is the free life
insurance offer from Grameenphone built on monthly Recharge of a customer.

[B] Banglalink MFS

(1) Train ticket
Banglalink has launched mobile train ticket service in joint collaboration with CNS limited and
Bangladesh railway. Through this service, railway passengers are able to purchase their train ticket
from their own Banglalink mobile phone as well as from approximately 15003 Banglalink mobile
cash points located at Dhaka, Chittagong, Rajshahi and Sylhet. Once the ticket is purchased either
from own mobile or through the Banglalink mobile cash points, passengers will receive an e-ticket
with e-ticket number in their mobile phone as reply sms. Passengers can go to source/starting
2
3

http://www.grameenphone.com/personal/offers/nirvoy-free-life-insurance
http://www.banglalink.com.bd/en/services/mobile-financial-services/mobile-cash-ticketing/mobile-cash-train-ticket/

Page | 5

station just an hour before the journey time and take printed ticket by mentioning the e-ticket
number and his/her mobile number (which was used for mobile ticketing).
Service Details: Using Banglalink mobile ticketing service, Bangladesh rail passengers can buy
railway ticket in following ways:

Mobile ticketing from subscribers own mobile

Individual Banglalink subscriber will be able to purchase railway ticket form their own
handset using the money wallet balance.
Mobile ticketing at the Banglalink mobile cash point
Railway passengers will be able to purchase railway ticket form Banglalink mobile cash point
marked outlets and receive money receipt with unique transaction ID

Number of Mobile Cash Points:

Banglalink has approx 1500 mobile cash points rolled out in Dhaka, Chittagong, Sylhet, Rajshahi and
Khulna and Banglalink is working to increase the number of points gradually.
Payment Service:
Banglalink customers can pay following bills through their mobile financial service.

Qubee Bill Payment

DESCO Bill Payment
WASA Bill Payment
Bangladesh Power Development Board Bill Payment
Jibon Bima Corporation payment

(2) Mobile banking

Banglalink provides network to the following service providers to facilitate mobile banking:

DBBL mobile banking

bKash
UCash
IBBL (mCash)
IFIC mobile banking
MBL (MyCash)

(3) Mobile cash remittance

Available mobile financial remittance services for Banglalink subscribers are:

Mobile cash remittance with western union

Mobile cash remittance service

(4) Mobile cash electronic money order with BPO

Electronic money order with Bangladesh Post Office: Banglalink partners with the Bangladesh post
office (BPO) has launched the first ever electronic money order (EMO) service through the post
office branches all across the country.

Page | 6

This service enables to send money all across the country almost instantly which used to require 7 to
10 days. So far approx. 1,200 post offices brought under the service and more post offices are in the
process of integration

[C] Robi MFS

(1) Utility Bill Pay
Robi customers can pay following bills through their mobile financial service.

DESCO Bill Payment

CWASA Bill Payment
DWASA Bill Payment
Bangladesh Power Development Board Bill Payment

(2) Ticket Purchasing

Robi customers can buy following tickets through their mobile financial service

Bus tickets
Movie ticket of BLOCKBUSTER CINEMAS
Movie tickets of STAR Cineplex

(3) Mobile Remittance

Bangladeshi mobile operator Robi Axiata and Jamuna Bank have signed an agreement on
remittances via mobile services. Selected Robi retailers act as cash out points (accredited by the
partner banks) from where the beneficiaries can withdraw their remittance in cash. Customers of
any mobile operator can use the remittance service and remittance recipients get the service free of
cost.
(4) Mobile banking
Robi provides network to the following service providers to facilitate mobile banking:

DBBL mobile banking

bKash
UCash
IBBL (mCash)

[D] Airtel MFS

(1) Mobile banking
Airtel provides network to the following service providers to facilitate mobile banking:

DBBL mobile banking

bKash
UCash
IBBL (mCash)
SureCash

Page | 7

IFIC Mobile Banking

MyCash
Bank Asia

(2) Foreign Remittance

Airtel customers can receive foreign remittance at their mobile banking account without any hassle.
Sender chooses mobile banking account while sending inward foreign remittance through his
exchange house. Receiver will get a notification SMS that X amount of money has been sent to
his/her mobile wallet.
(3) Bill Payment
Currently Airtel only provides its customers to pay WASA bills through their mobile financial service
(4) Payment for Traffic Case
Airtel mobile banking user can make the payment of any traffic case of Dhaka Metropolitan Police
through UCash mobile banking service without any hassle.
(5) m-Donation
Now Airtel mobile banking user can use DBBL mobile bank account to donate to the great cause of
Jaago foundation.
(6) m-Salary
Now any corporate house or small and medium enterprise can disburse their employee salary
through mobile banking account. This solution is cost effective, saves time, money and production
hour.

[E] Teletalk MFS

In February, 2016 bKash signed a network sharing agreement with Teletalk. It gave Teletalks
customers the access to bKash mobile financial services. Actually this move can be treated as
practically first significant move regarding MFS related activities. Apart from this, Teletalk has
affiliation with Trust Bank Mobile Money.

[F] Citycell MFS

Citycell has a very much limited affiliation with MFS activities, which can be treated as virtually nonexistent.

Comparison of mobile financial services provided by the mobile operators of Bangladeh

From the comparison among the operators regarding various MFS, its evident that, Grameenphone
is the most active one. Immediate next operators are Banglalink and Robi, they are very close in
terms of range of proving services. All these three operators have comparative large number of MFS
products in their portfolios. Airtel comes next and most inactive two operators are Teletalk and
citycell. As a matter of fact, Teletalk just very recently became affiliated with bKash (in April, 2016)

Page | 8

and has a MFS concern with Trust Bank. On the other hand, Citycells MFS involvement is also
insignificant.
Exhibit: A comparison of mobile financial services provided by the mobile operators of Bangladeh
Grameenphone

Banglalink

Robi

Airtel

Teletalk

Citycell

Mobile M-commerce

(Mobicash)

Ticket - Cricket Match

Ticket - Bus

Ticket - Train

Ticket - Movie

GAS Bill Payment

DESCO Bill Payment

WASA Bill Payment

BPDB Bill Payment

Insurance Payment

(Own Insurance Service)

Provide USSD Gateway For MFS

Mobile Money Order

Payment for Traffic Case

2.2 Mobile Banking in Bangladesh

Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to
undertake financial transactions linked to a clients account. M-banking is one of the newest
approaches to the provision of financial services, made possible by the widespread adoption of
mobile phones even in low income people. The roll out of mobile telephony has been rapid,
and has extended access well beyond already connected customers in rural area.

2.2.1 Key Players in Mobile Banking

Banks, MNOs, agents, payment service providers and regulators play its own part to make the
system works. Here all the above 5 participants participation revolves around the prime
element customer.
Figure: Key players in mobile banking

Page | 9

(A) Banks

Offer banking services

Hold float or accounts in customers names
Ensure compliance with financial sector regulation
Promote use of new banking channels with new clients (SME, corporate clients)
Bring customers into full banking relationships

(B) MNOs

Provide infrastructure and communications services

Acquire clients / can be super agents
Co-marketing and branding with banks

(C) Agents/Retail Networks

Perform cash-in /out functions

Can open accounts
Support marketing/sales
Customer service

(D) Payments Service Providers (PSPs)

Provide payments infrastructure

Provide IT platforms

(E) Regulators

Provide enabling environment

Protect stability of financial system
Encourage and protect behavior change

Mobile banking Ecosystem

2.2.2 Mobile Banking Ecosystem
In the whole ecosystem various parties including individuals or households, business
enterprises, financial institutions (banks & other FIs), regulators (Bangladesh Bank as the
central bank, BTRC), agents & distributors, merchant outlets became involved and make the
money transfer and payment systems active and accessible.

Page | 10

Exhibit: mobile Banking Eco-system

2.2.3 Critical Components for Successful M-Banking

Numerous parties are involved / engaged in the whole process of mobile banking. Proper
combination for the optimum outcome and for making the whole process successful is very
much important.
Exhibit: Critical components for the success of M-banking

Actually, the exact mix of these components and their relative importance is a function of the
strategy adopted.

Page | 11

2.2.4 Business Canvas Model

Key Partners
-

Mobile
Network
operators
Banks
Distributors
Agents

Key Activities
Providing USSD
gateway for the
MFSs
Partnering with
Banks

Key Resources
-

Technological
setup
Subscribers
Agents
Distributors

Value Proposition
-

Cost Structure
People recruitment
Training
Marketing
Product design & Network built-out
Technology solution purchase or in-house
development
Maintenance fees
Transmission cost

Bill Payments
Ticket Purchase
(train/bus/mov
ie/ cricket
match)
Mobile top-up
Balance
transfer
Cash-in
Cash-out
Remittance
Insurance
payments
Traffic case
payments
Mobile banking
Merchant
payments
SMS Banking

Customer
Relationship
Customer Care
Center
Agents

Customer
Segments
-

Mobile phone
users
Households
Merchant
Small
enterprises
Retail sectors

Channel
-

Mobile phone
Agents
ATMs
Banks

Revenue Streams
USSD gateway charge
SMS charge
charge on per transaction
accounts opening charge
Charge on buying tickets
Utility bills pay charge
Revenue share from MFS providers / Banks

Page | 12

2.2.5 Industry growth of mobile banking

Mobile banking in Bangladesh is increasing in a steady rate over the last few years. In March, 2016,
average daily transaction through mobile banking was BDT 608 crore and number of average daily
transaction was more than 40 lakhs. In March alone, the amount of total transaction was 18241
crore.
Figure: Total Value of Transactions (BDT, in Crore)
20000

18241.51

18000
16000
12969.51

14000

15928.43

11136.3

12000
10000

8323.8
6936

8000
4714

6000
4000 2415
2000

Jan-16

Mar-16

Nov-15

Sep-15

Jul-15

Mar-15

May-15

Jan-15

Nov-14

Sep-14

Jul-14

Mar-14

May-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

The client base is increasing in a steady rate and in March, 2016 number of registered clients was
34.88 million. Just from 5 million in Jan, 2013 this kind of increase is really a strong growth.
Figure: Number of Total Registered Clients (in million)
40
34.88
35
28.6

30

32.9

25

25
20

16.7
13.7

15
10

8.6
5

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Jul-14

Sep-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Page | 13

From the segment wise differentiation we get that mostly cash-in, cash-out was most significant part
of mobile banking. Besides those, P2P transactions were worth mentionable.

Figure: Transactions as of March 2016 (in crore, BDT)

Cash-in

Cash-out

P2P

B2P

Utility (P2B)

Others

9,000.00
7,733.29

8,000.00

7,050.78

7,000.00
6,000.00
5,000.00
4,000.00
2,812.88

3,000.00
2,000.00
1,000.00

299.74

182.7

157.35

0.00

Number of total agents also increased in a steady rate and now the number is 0.585 million.
Figure: Number of Total Agents (in million)
0.7
0.585

0.567

0.54

0.6

0.573

0.5

0.414

0.4
0.3
0.19
0.2

0.121

0.1 0.06

Jan-16

Mar-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Sep-13

Nov-13

Jul-13

May-13

Mar-13

Jan-13

Page | 14

In the same time number of total transaction has been increased in a steady pattern.
Figure: Number of Total Transactions (in million)
140

121.33

120
96.15

100

115

75

80
60

44.01
32

40

20.4

20 10

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

If we go through the MFS operator market position, we can find the sole market dominance of bKash
in that market, followed by DBBL mobile banking.

MARKET SHARE BY SUBSCRIBERS

Others
12%

MyCash
3%

Ucash
8%

bKash
DBBL Mobile Banking
Ucash

DBBL Mobile Banking

19%

bKash
58%

Others
MyCash

Page | 15

2.2.6 Mobile Money Opportunity in Bangladesh

The massive improvement of technologies around the world brings an opportunity to improve the
technological platform of banking sector. The goal of the extending service of banks with improve
technology is to satisfy the desire of customers. One of the extending services with modern
technological advancement is Mobile Banking. In this process of banking customer are allowed to
access into the banking system in anytime from anywhere.
The requirements for this process are to have a mobile device and mobile network connection. The
core benefit of this mobile banking is to reach to the people who do not have the access in internet
banking or in normal banking procedure. It is mostly helpful for the people of remote areas. Millions
of people across the developing nations are relying on informal economic activities for their living
and most of these people are from the bottom stage of the pyramid. These mass populations do not
have the access into the basic financial services or the regular banking system. This mobile banking
brings the opportunity for these people to get the banking facility. Now the reason why mobile
banking is getting greater emphasize because more there are than 4 billion mobile subscribers who
represent 61% population of world. So it is the best way to reach among the biggest portion of world
population. Also, mobile banking needs less processing than general banking process. It helps the
banks to reduce cost, requires less storage facility. Mobile Banking is also better process among all
the other e-banking process. In internet banking there has the higher risk then mobile banking due
to hacking system. Also to use internet banking people needs extra skills to use computer. On the
other hand, to use Mobile Bank, customers needs to have the basic idea about how to operate
mobile in daily life. So to use this mobile banking a great level of awareness is not needed to create.
It is said that mobile banking is one of the best thing ever happened in the personal finance
management. Through this process customers will keep them attached with the banking system all
the time. This mobile banking is still in growing business. In some countries mobile banking is
become very much popular while in some countries it is just in the beginning stage. Though it is in an
emerging stage but already mobile banking has created a good level of impact in world economy.
Scope
Use of mobile money for transactions and services in a developing country like Bangladesh includes

Domestic and international remittances

Bill payment
Payroll deposit
Loan receipt and repayment
Purchases of goods and services ranging from prepaid airtime to groceries to bus ticket to
micro- insurance

Motivation for the poor people

Financial services can help poor people who are the majority in Bangladesh forge their own paths
out of poverty in 2 ways
Page | 16

 They enable one to obtain through savings or credit sums of money large enough to invest in
income generation and asset creation (through enterprise, housing, education or training which
involves ones job market prospects).
They help reduce vulnerability to unexpected events such as accident, illness, thefts, or
droughts. In addition in many countries, poor people are forced to rely on informal financial
services, which may be unsafe or fringe formal financial products which may be expensive as
well as unsafe.
Financial inclusion bolsters both the access to resources and he ability to transform resources into
opportunities. Thus inclusion in financial sector is a critical prerequisite for effective market
participation in its broadest sense from being able to integrate send a utility bill payment by
mobile phone instead of losing half days work in the line of the bank, to being able to integrate ones
small business into the value chains of the larger market players.

Socio economic Agents

Population
Population living below $ 2 per day

164.4 mn (UN estimated)

82.8%

Urban population
Per capita Income
Annual GDP growth
Labor Force

27%
$ 580 (nominal)
At least 5- 6% since 1996
75 mn

Communication & Connectivity

Mobile Phone Penetration

44%

Mobile Phone Subscribers

76.43 mn

Mobile Network Coverage

99+%

PSTN Subscribers
No of mobile networks

1 mn
6

Internet Users

<1%

Inward Foreign Remittance

Number of Workers abroad

6- 7 mn

Remittances

>$10 bn (9- 13% of GDP)

Page | 17

2.2.7 Industry Life Cycle

The inception of mobile banking in Bangladesh is around 5 years back and in this time period it could
attain massive growth rate, both in terms of number of transaction and the amount of money being
transacted. Still there is a huge segment of the market is untapped and still large portion of the
population of Bangladesh is out of the monetary inclusion. So, mobile banking of Bangladesh is in
the early growth stage of the overall industry life cycle.
Figure: Position of Mobile banking in Industry Life Cycle in Bangladesh

2.2.8 Industry Value Chain

In the value chain of mobile banking, banks, mobile network operators (MNOs) and independent
MNO agents are involved. Different portion of the process is being conducted by different entity.
Exhibit: Mobile Banking Value Chain of Bangladesh

Bank

Mobile Network Operator (MNO)

Independent MNO Agents

Page | 18

2.2.9 Drivers of change in the industry

Most important drivers keep very much important role in determining the future growth trajectory
as well as the current standing of the industry.
Figure: Drivers of changes in the industry

2.3 Pricing Strategy

Pricing is very much competitive here and hardly theres scope for attaining unconventional profit
without a real breakthrough move; that too for very much limited time.

2.4 Rivalry among major players

The competition is intense among the engaged companies of the telecom sector of Bangladesh. This
trend is almost same in this MFS operations too. Grameenphone, Banglalink, Robi and Airtel are the
major players of this sector and everyone is working overnight to get an edge over its competitors
all the time.

2.5 Marketing Strategies

MNOs offer various promotional offers and thereby promote their MFS operations. Offering bonus
for recharging (mobile top-up), offering discounts and / or cash back for using their mobile financial
services is a common practice in this sector.

Page | 19

3 REGULATORY FRAMEWORK
3.1 Regulatory Guidelines for MFS - 2011
The prime features of this guideline are:
1. MFS sector will be bank led, access of MNO as equity holder has been barred
2. MNO will remain as network operators only.
3. Banks can exercise both the subsidiary-based model as well as different business wing-type
pattern.
3.2 Pre-draft Regulatory Guidelines for MFS - July 2015
Prime features of this proposed guideline are:
1. At least 51% ownership of MFS operators will remain in the hand of banking entity.
2. Any single entity wont be able to hold more than 15% equity in any MFS operator
ownership.
3. The guidelines were against any kind of monopoly in the market.
4. Ownership of any MFS operator has to be segregated among at least 7 different entities.
5. It instructed for subsidiary based model instead of operating MFS activities as banks
different wing.
3.3 Implication of new pre-draft
Proposed in July 2015, the pre-draft has been criticized from different parties, from different angle.
Main issues of criticism are:
1. Already many banks have invested money and effort in their MFS operations. Now why
should they divest specially after taking so many hassles for these years?
2. MNOs are allowed only 15% access in a MFS operation. Its been treated as too small.
3. It may initiate conflict of interest
4. It will segregate the ownership among at least 7 different parties. So who will take the lead
and for why he will be interested to take the lead?
5. It will initiate anomaly in financial sector.
6. BB has proposed business model instead of policy guideline.

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4 ANALYSES
4.1 PESTEL
Political factors: Political factors are not that much significant regarding this sector.
Economic factors: Stable and thriving economy will obviously increase the economic
activities and thereby an important factor for this sector.
Social factors: Not that significant.
Technological factors: Its hugely important factor and it can even change the total trajectory
(positively or negatively) of the whole sector.
Environmental factors: Not that significant.
Legal factors: It is the single most important factor for the involvement of MNOs in MFS in
more active pattern.

4.2 Porters 5 forces

Bargaining power of customers: Very high.
Bargaining power of suppliers: Not that significant.
Threat of substitutes: Very high
Threat of new entrants: Very Low
Intra-industry rivalry: High

4.3 SWOT
Strength:

Expert human resources

Reach of distribution channel is in every point of the country

Weakness:

Depended on cooperation of banks

Low access upon identification process (including NID)

Opportunity:

Change in the standing of central bank (regarding allowing MNOs equity involvement in
MFS operator)
Availability of the mobile technology even in rural areas makes a bigger market available for
mobile banking to expand.
Acceptance of new technology by the user

Threat:

Revenue stream mainly comes from money transfer

Who is withdrawing money it cant be traced

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Traditional baking risk like, credit risk, market risk and liquidity risk are also present in ebanking sector

4.4 Strategic Group Mapping

This strategic group mapping is based on MF services provided by mobile network operators in
Bangladesh vs number of subscriber they have. Y-axis shows MF services and X-axis shows number
of subscribers. Currently in Bangladesh there are almost 13 types of mobile financial services that
are provided by mobile network operators under m-commerce term. Here GP has the highest
number of subscribers and also providing maximum number of mobile financial services.

Strategic Group Mapping

80.00%

GP

Mobile Financial Service

70.00%
Banglalink

60.00%

Robi

50.00%
40.00%

Airtel

30.00%
20.00%
C.Cell T.Talk
10.00%
0.00%
0

10

20

30

40

50

60

Number of Subscriber in million

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5 CONCLUSION

5.1 Future Growth Prospect / Investment Attractiveness / Growth Trajectory

Future prospect of MFS (including mobile banking) in Bangladesh is pretty bright. Because of Mbankings great success, its very much crucial in the context of MFS of Bangladesh. Due to the
volatile, indecisive, incomplete and un-conclusive stance from the regulatory authorities, MNOs
straight & closer involvement in MFS operations is somewhat bleak, for now. If regulators of this
sector allow the access of MNOs in the equity / ownership of the MFS operators, it would be an
exclusively positive move from MNOs perspective. Otherwise, in terms of innovation and new
product development, MFS still has good prospect for the MNOs of Bangladesh.

5.2 Recommendation
After going through the whole industry related aspects, we are proposing the following
recommendation:
1. Balanced policy formulation by Bangladesh Bank: Preparing a well formulated policy
regarding MFS, which will create no anomaly and conflict of interest among the involved
entities.
2. Taking the issue of great distribution channel of MNOs in to consideration in a more active
manner for achieving financial inclusion in a greater scale.
3. Greater, more active and more innovative role of MNOs in accessing more beneficial impacts
of MFS beyond just money-transfer.

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REFERENCES
1. http://www.thedailystar.net/round-tables/regulatory-guidelines-mobile-financial-servicesmfs-bangladesh-133390
2. http://www.thedailystar.net/business/banglalink-keen-expand-mobile-financial-service784465
3. http://www.dhakatribune.com/business/2015/oct/04/bringing-mfs-providers-underplatform-remains-challenge
4. http://www.thedailystar.net/business/mobile-cash-transfer-hits-14b-month-101008
5. https://www.bb.org.bd/fnansys/paymentsys/mfsdata.php
6. http://www.cashlearning.org/downloads/mfsinbangladeshapril2015.pdf
7. https://www.bb.org.bd/fnansys/paymentsys/mobilefin.php
8. http://futurestartup.com/2016/04/18/inside-bkashs-big-remittance-move/
9. http://futurestartup.com/2015/06/24/mobile-banking-bkash-and-future-of-mobile-financialservices/
10. http://www.grameenphone.com/personal/digital-services/mobile-financial-services
11. http://www.banglalink.com.bd/en/services/mobile-financial-services/
12. http://www.bd.airtel.com/personal/products-services/mcommerce
13. http://www.robi.com.bd/bill-pay-service-from-robicash-point?lang=eng
14. http://www.robi.com.bd/digital-service/?lang=eng
15. http://www.citycell.com/index.php/services/mobile_banking
16. http://www.teletalk.com.bd/dynamicLayout.jsp?page=40003&menuItem=44004

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APPENDIX
QUESTIONNAIRE
Research topic: "MFS in Bangladesh - MNO perspective"
Q1 : Around what percent of revenue of Banglalink comes from the operations of MFS? [We
dont need any exact revenue figure, just a rough estimation of range like around 2% to 7%
will suffice]
A: We cannot make a comment on it, but we can say that a small portion of revenue is being
earned from MFS Operators since it is mostly based on revenue sharing arrangement where
the maximum portion goes to the Distribution Channel while the rest is being split between
the MNOs and MFS Operators.

Q2 : How many Banglalink sim is registered for mobile banking (with DBBL mobile banking,
bKash, UCash, mCash, IFIC mobile banking, MyCash)? [If bank-wise specific number is not
possible then just a rough estimation of range about the total like around 2 to 4 million will
suffice]
A: Confidential Data, for better understanding you can visit the following website
https://www.bb.org.bd/fnansys/paymentsys/mfsdata.php and get the proportion according
to the subscriber data available in BTRC website.

Q3 : What is the mechanism of Banglalinks mobile banking partnership with bKash, UCash,
mCash etc? How it works? Whats the cost structure? Whats the fee structure for providing
service as MNO? [A rough sketch or framework would do]
A: It is a revenue sharing model. MFS operators usually take service charge from customers on
specific transactions. As defined earlier that a maximum portion of ranging 80% to 90% goes
to the distribution channel and the rest is being split between MNOs, MFS Operator and
Technical Platform providers (where applicable). The cost components for MNOs would be
the network utilization cost, distribution channel cost (as applicable) and overhead cost.

Q4 : So far mobile banking in Bangladesh is a pure bank-led model. It actually is a result of

Bangladesh Banks regulatory guidelines for Mobile Financial Services (MFS) in 2011. BBs
this stance is going to be shifted and now a new draft is going to be formulated, where
MNOs might get access in the equity (around 15%). Whats your observation regarding these
policy related issues?
A: It is a good sign that now the Central Bank has provided some focus to the MNOs to become
stakeholder and we are happy with it, but the 15% stake does not bring a justified business
case for anyone since as per the draft any stakeholder can have maximum 15% equity share.
We believe that it should be bank-led, but for maximizing the benefit of the ecosystem the
sharing of stake should have been 51% (banks) and 49% (MNOs or any other entity).
Q5: How you see Banglalinks MFS operations in upcoming 5 to 10 years? How you want to
spread?

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A : From our Management perspective, MFS has a huge focus and for the betterment of the
society we want to be a part of the financial inclusion, while ensuring business. We are yet to
receive the finalized new MFS guideline which may guide us to new course of action down
the time.

Q6 : How you see the prospect of overall MFS sector of Bangladesh in upcoming days?
A : Very promising, since maximum population is not entitled to banking and financial inclusion
through MFS is a bright idea towards digitization of the economy.

Q7 : Do you think more involvement of MNOs will be a positive move for the well-being of MFS
sector and financial inclusion?
A : Yes, since prior to the launch of mobile banking or MFS guideline MNOs has been providing
MFS in form of bill payments, railway ticketing and as an industry we have made a stand that
certain things can be done correctly and conveniently by the MNOs.

Q8 : What kind of problems you are facing (if any) for more involvement in MFS?
A : Since MNOs are regulated by BTRC and MFS Operators are regulated by Central Bank, but in
the total value chain the chemistry of banks and MNOs to work together is a must for a
successful MFS and these two regulators need to align them first for the growth of the
industry.

Q9: Is there any recommendation regarding MFS sector?

A : Till date we see MFS as a mode of sending and receiving money. There are huge avenues of
payments, collections, credits which are absent in this industry and a hybrid model between
Banks and MNOs can always work for developing the untapped service portfolios.

* The collection of information is for academic research purpose only.

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