Financial Technology is one of the most important concerns in the global economy. Almost every country in the world is somehow determined to introduce new technologies every moment to push the country’s economy even further. The banking sector is the core of every country’s economy. Thus, the digitalization of the banking sector is an utmost necessity. The discovery of the Mobile Financial Services is a result of the evolution of mobile-based banking or offering business services via mobile and that is called mobile-banking or M-Banking.
The basis of the M-banking has been the intention of delivering banking at the doorsteps of the traditional banking customer. The time to time development of the M-banking has emerged a whole new dimension called mobile financial services. MFS is focused on creating a cashless payment system where a person doesn’t require carrying cash since he can operate the whole transacting operation over the mobile device. The more specific goal of mobile financial service providers is to create E-wallet containing encrypted money.
In the economy of a developing country like Bangladesh, Mobile financial services have been growing significantly by focusing primarily in the delivery of the banking facility (Cash-In, Cash out, Bill payments etc.) to the unbanked population and this have been the key behind such rapid growth and magnificent customer acceptance. bKash and Rocket are the most influencing players of the industry among the 18 license holders.
In this report, I have analyzed the industry position regarding the Life cycle stage, Industry structure, Competitive status (Porter’s Five-factor Model), Environmental status ( PESTLE analysis), Growth Analysis and Growth Forecast and Customer Perception Analysis.
I also intend to understand the prospect of the industry in Global and Country-specific (Bangladesh) aspect. In the case of the life cycle, the industry is in the growth stage and the industry is an oligopoly industry. The threat of New Entrants is low, Bargaining Power of Suppliers is high, Threat of Substitute Services is moderate, bargaining power of customer is moderate and Competitive Rivalry is high. The political situation is positive, Economic situation is moderate, Social situation is positive, Technology situation is negative, Legal situation is positive. In case of growth analysis, the growth of Number of Transactions is 7%, Average Daily Transaction is 7%, number of agents is 4%, Salary disbursement is 18%, Peer to Peer transaction is 6%, Payment of Utility bills is 13%. From the weighted average I have calculated and forecasted the growth will be 87% in Active Account, 42% in Total transactions, 40% in Average daily transactions, 31% in Cash-in, 40% in Cash-out and 86% in Utility bill payments. While analyzing the potential reasons behind or the customer perceptions regarding the industry, which are hindering the expected growth of the industry I have found that 8% people have agreed strongly and 52% have agreed about not feeling secure,14% people strongly agreed and 42% agreed about still finding it complex,22% strongly agreed and 52% agreed about getting comparatively low return, 20% strongly agreed and 38% agreed regarding the continuous presence of rumors , 12% strongly agreed and 52% strongly agreed about not feeling as the first choice and 24% strongly agreed and 56% agreed regarding MFS not being the universal payment system. The customers think that Expansion of the Merchant Payment agreement and facility, Demonstrative advertisement increasing the Daily Transaction limit, More bank transfer agreements, Light version of apps, Reduction of cost/charge, Separate Statement for separate services, Electronic KYC, Increased return on saving and decreased saving time requirement may attract them more to consider MFS as the part and parcel of the life. While comparing between two key Industry players bKash and Rocket on various aspects, I have found that bKash is strong considering organizational structure, technological alliance, designing special offer strategies, and brand recognition and brand image, investor portfolio, subscriber and agent availability, interest on saving and so on. In the case of Rocket, it has a huge ATM network, strong banking backup because of being a banking strategic unit, the strong loyal customer base of traditional services and so on. From the study, I have understood that the industry has been growing significantly in the last five years and has a sublime potentiality to grow in the next five years. As it is still a growing industry and it is launching new services every now and then, it is difficult to forecast the exact numbers. The industry has immensely mentioned worthy prospect and future waiting. The entrance of Government-backed initiative “NAGAD” can have both a positive and negative impact on the industry and existing players. There are some concerns like – Privacy violation, Continuous presence of rumors, high charges, relatively low return (the only bKash pays though), being the unusual option and not being available at everywhere and in every possible transaction (which defines the longtime goal of MFS industry ) should get sincere attention.
Access to formal financial services is significantly low especially for those people who live in the remote corner of the country. These people are contributing to the rural economy by engaging in different financial activities. By bringing them under the formal banking network, we can strengthen our national economy. The percentage of people who are connected to the formal banking system is less than 15% whereas 68% have mobile phones as stated on the bKash website. The number of the total mobile subscriber in Bangladesh has reached 152 million at the end of July 2018 according to Bangladesh Telecommunication Regulatory Commission (BTRC). Undoubtedly, the number will increase in the upcoming days. Mobile Financial Service providers have taken the opportunity to flourish. People can send and receive money, recharge mobile balance, make payment and get other benefits by using their bKash. In our study, I intend to focus on the stage and structure of the industry. I have tried to find out the competitive status, environmental situation and the trend of the growth. I have also considered customers perception and suggestions towards the industry players. Comparative analysis of the two key players has helped us to understand the industry even broadly.
What is the Mobile financial service industry growth in Bangladesh? What is the industry stage and structure? What is the current growth status and what will be its future growth like? Does the Industry have any prospect for the future? What are the comparative differences between bKash and Rocket-the two key players of the industry?
The study has been based on publicly available data. The purpose of the study is to focus on the growth of the industry and customer perception regarding the industry. The study also considers
the comparative status between the two industry player- Rocket and bKash.
Industry performance and the growth trend
Customer perception and demand from the industry
Company-specific differences between Rocket and bKashMethodology of the study
I collected data from the various sources and those have been categorized under
In the case of industry analysis, I considered the publicly available data from the government databases and Bangladesh bank websites and publications. I analyzed the existing characteristics of the industry to consider the life cycle stage, industry structure, Porter’s five forces model and PESTLE analysis. I calculated the weighted average of the available properties and found the growth rate of the last five years. I then forecast the potential growth percentage of the 2018- 2023 interval by the formula “(Present Amount – Past Amount)/Past Amount”. I prepared a questionnaire and performed survey (sample size-50) to find out the customer perception. From the customer responses, I have found out the weight of concern regarding the existing issues of the Mobile Financial Service industry. I also considered the suggestions and demands of the customers while arriving at the conclusion.
In order to get an in-depth understanding of the industry, I have performed a comparative analysis of bKash and Rocket. It helped us to gather company-specific knowledge and their contribution to the industry in qualitative viewpoints.
Limitations of the Study
Infant Industry, less structured data
No access to the primary data sources
No company-specific data available from the competitors
Competitors don’t even have separate financial statements. So I couldn’t comparative analysis from quantitative viewpoints.