This post is written by Muhymin Chowdhury, the Deputy Project Manager for the bKash Mobile Money project in Bangladesh.
Photo credit: Raisa Chowdhury
On a recent work trip I had the opportunity to visit Chars Livelihood Programme (CLP) beneficiaries in the northern part of Bangladesh. ‘Chars’ are riverine islands created and destroyed by floods and erosion. These islands are located in very remote areas, requiring a minimum of twelve hours (via bus, car, motorbikes, boat and motorbikes again) to get to the nearest island from the capital city, Dhaka. The project beneficiaries receive a monthly stipend of Tk 350 (equivalent to $ 4.38), which is delivered to them in cash. In order to reduce the hassle of travel and carrying cash, CLP has started using bKash (a mobile financial services company) to transfer the stipend directly to their project beneficiaries. Our main motivation for the trip was to:
- Observe how the service is rolling out
- Understand whether people start using bKash for other purposes (e.g. savings, money, domestic money transfer)
- Identify spillover effects of the service to non-project beneficiaries. Continue reading
This post is written by Debbie Watkins, SBI’s Resident Advisor in Dhaka, Bangladesh.
Photo credit: Cengage Learning
We talked in the previous article about how pricing can encourage customer behavior to develop in a certain way – and that most people are able to spot a good deal (or a dummy) when they see one.
When we’re talking about mobile money, there are generally 3 price “events” – at cash-in, when one person transfers to another, and at cash-out. If you’re aiming to offer a true mobile wallet (a virtual “current account” as opposed to purely a money transfer service), I would argue for making person-to-person fees a very, very low, flat fee (something in the order of one US cent or its equivalent). Here’s a small scenario that explains this:
Nazmal is a security guard in Dhaka. He sends money home to his parents every month – a lump sum when he gets his salary. His parents spend the money on rent (a monthly payment); food (daily); school fees for their youngest child (weekly) and try to save a small amount in case of emergencies.
Nazmal deposits the amount he’s sending into his mobile wallet, and transfers it to his parents’ mobile wallet. They have a choice now of what to do with it, which will be driven by how the pricing you have established works best for them:
- They can withdraw the whole amount and keep it under the bed. They are more likely to do this if cash-out fees are structured on a flat or slab basis, as it works out cheaper for them to withdraw one larger amount than a number of smaller amounts.
- They can withdraw some now and some later, when they need it – this would be more expensive for them than option 1 with flat or slab pricing. If you have percentage pricing there’s no difference for them either way, except for the additional costs/time involved in visiting the cash-out agent more often.
- They can pay their expenses directly to the landlord/grocery store/school using the person-to-person feature on an ad-hoc basis, “save” the rest, and only withdraw cash when it’s necessary. Continue reading
Picture credit: SodaHead
This post is written by Shital Shah, SBI Associate Consultant.
The advent of M-PESA, a successful mobile money deployment in Kenya, raises the question of why such efforts have difficulty replicating in countries that are seemingly ripe for the use of mobile phones to increase access to financial services. If a large chunk of the population has a mobile phone in their hands, but they don’t have access to bank accounts, then they should be able to link the two together and solve the problem. This sounds reasonable in theory, but financial services are not offered in silo – they are primarily informed by regulations and a legal framework, which varies from country to country.
One reason why M-PESA may be a one hit wonder is due to Kenya’s regulatory environment with regard to mobile money, which was non-existent when Safaricom, the largest telecom operator in the country, first started M-PESA. As a result, regulations in Kenya were created as a reaction to a telecommunications company offering banking services, rather than a proactive central bank guiding the development of a banking innovation. By the time regulations came out of Kenya, M-PESA had reached scale. The likelihood of a similar trajectory happening in other countries, where banking industries may be more active in influencing policy or where regulators are proactively putting in place measures to control financial services beyond bank branches, is slim. Continue reading
Posted in Ecosystem, SBI Posts
Tagged Bangladesh, business models, ecosystem, India, M-PESA, mobile banking, Pakistan, regulation, SBI, South Asia
Photo credit: Faisal Shaheed, bKash
Low income people, like these day laborers in Bangladesh, are typically working away from home and will be paid cash-in-hand at the end of the day. They may be based in a location far from a bank branch – and yet need a safe place to keep their money and an effective way of sending money home to their families.
Photo credit: Muhymin Chowdhury, bKash Deputy Resident Advisor, SBI
Small but trusted local stores, like this one in Rangpur, Bangladesh, are ideally placed to be branchless banking agents. The store is centrally located, and due to its popularity will typically have the level of cashflow necessary to ensure it is able to meet the needs of customers.