Académique Documents
Professionnel Documents
Culture Documents
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
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
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
-
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
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:
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
Bus tickets
Movie ticket of BLOCKBUSTER CINEMAS
Movie tickets of STAR Cineplex
Page | 7
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 - Bus
Ticket - Train
Ticket - Movie
Insurance Payment
Page | 9
(A) Banks
(B) MNOs
(E) Regulators
Page | 10
Actually, the exact mix of these components and their relative importance is a function of the
strategy adopted.
Page | 11
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
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.
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.
MyCash
3%
Ucash
8%
bKash
DBBL Mobile Banking
Ucash
bKash
58%
Others
MyCash
Page | 15
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
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.
Urban population
Per capita Income
Annual GDP growth
Labor Force
27%
$ 580 (nominal)
At least 5- 6% since 1996
75 mn
44%
76.43 mn
99+%
PSTN Subscribers
No of mobile networks
1 mn
6
Internet Users
<1%
6- 7 mn
Remittances
Page | 17
Bank
Page | 18
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.
Page | 20
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.
4.3 SWOT
Strength:
Weakness:
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:
Page | 21
Traditional baking risk like, credit risk, market risk and liquidity risk are also present in ebanking sector
GP
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
Page | 22
5 CONCLUSION
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.
Page | 23
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
Page | 24
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.
Page | 25
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.
Page | 26