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5 Barriers To Mobile Financial Services in Bangladesh

Five barriers to mobile financial services adoption in Bangladesh are identified: 1) Most users are over-the-counter users rather than account holders due to a lack of understanding of mobile accounts; 2) While awareness is high, only a third of people use services due to perceived difficulty; 3) Limited mobile phone ownership and basic usage hampers access; 4) Limited competition beyond the two largest providers restricts innovation; 5) Security incidents undermine consumer confidence despite mobile generally being more secure than cash.

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Farjana Hossain Dhara
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98 views2 pages

5 Barriers To Mobile Financial Services in Bangladesh

Five barriers to mobile financial services adoption in Bangladesh are identified: 1) Most users are over-the-counter users rather than account holders due to a lack of understanding of mobile accounts; 2) While awareness is high, only a third of people use services due to perceived difficulty; 3) Limited mobile phone ownership and basic usage hampers access; 4) Limited competition beyond the two largest providers restricts innovation; 5) Security incidents undermine consumer confidence despite mobile generally being more secure than cash.

Uploaded by

Farjana Hossain Dhara
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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5 Barriers to Mobile Financial Services in Bangladesh

Since the launch of Mobile Financial Services in Bangladesh in 2011, significant growth has
been observed across
 all metrics, from account use to transaction values. At the same time, there
are a number of challenges that the MFS industry is experiencing that might be slowing down the
potential of MFS to positively impact overall financial inclusion.

During their analysis in creating, “Digitizing Worker Salary Payments: A Manual for Ready-
made Garment Factories,” FHI 360 staff Majidul Haque and Josh Woodard found five challenges
to MFS deployment in Bangladesh:

Over-the-Counter (OTC) versus Mobile Money Usage

According to the 2015 InterMedia FII Bangladesh Wave Report, about 33 percent adults have
access to MFS but only 9 percent have account ownership because customers are mostly OTC
users. This is due to the lack of understanding on the difference between having an MFS account
and making an OTC transaction.

As a result of this, there is no actual identification of those customers who are sending and
receiving funds via OTC. MFS providers have yet to come up with innovative products or
services that can make MFS a daily need for the customers.

Awareness versus Understanding

Awareness of MFS among adults is very high (92 percent), but only one-third
of those are
using MFS. “Using a MFS account is difficult” is the second most important reason of why
adults are not signing up for MFS.

Mobile Phone Ownership and Technology Limitations

It is estimated that more than 90 percent of Bangladeshi adults have access to a mobile phone,
although only around 64 percent are actually phone owners. Despite significant access, mobile
phone usage is still fairly basic among most Bangladeshis. Only around a quarter (26 percent)
have reported using a phone for advanced functions, such as using the internet or sending picture
messages.

Furthermore, only 30 percent of adults have reported being able to send an
SMS. Considering
the fact that the most- used service access channel by the MFS providers is USSD and that most
menus are in English, this represents a real barrier to increasing MFS adoption.

Limited Competition in MFS

Bangladesh Bank has issued 29 MFS licenses to banks, although only two providers (bKash and
ROCKET) have greater than double-digit market share. While some of the smaller providers are
attempting
to drive innovation, such as through the introduction of Deposit Pension Scheme
(DPS) accounts, they are impeded by lower investment and limited penetration.

The success of the main player, bKash, as a domestic remittance service, has also contributed to
the perception among some Bangladeshis that MFS can only be used for P2P transfers, and not
for other functions such as savings or bill pay.

Security

Although MFS as a channel
is generally more secure than cash, Bangladesh has recently seen a
string of high-pro le thefts perpetrated against customers, agents, and distributors.5 Increasing
security of accounts and of agent networks is likely a high priority for MFS providers, but as
long as incidents continue to occur, they may negatively impact consumer confidence in MFS.

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