Download Competition in Digital Financial Services in Bangladesh

COMPETITION IN DIGITAL
FINANCIAL SERVICES IN
BANGLADESH
Mohammad Naushad Ali Chowdhury
Executive Director
Bangladesh Bank
MOBILE USES AND MFS LANDSCAPE IN BANGLADESH
Bangladesh is one of the most populous and most
densely populated countries in the world.
 Mobile penetration levels are relatively high, even
in rural areas (something not seen in most other
emerging markets).
 Mobile operators has immense scope to develop new
revenue streams beyond core mobile connectivity –
services that support basic human needs around
agriculture,
education,
businesses
and
employment.
 The use of mobile in driving socio-economic
improvement is on the rise. MFS growth for the
last few years were phenomenal.

MOBILE USES AND MFS LANDSCAPE IN BANGLADESH





The country now has a relatively solid mobile consumer base,
much of which still have immense potential for serving core
life needs like mobile money and its ancillary and related
services.
Bangladesh Bank the mobile money regulator in the country
sees the existing bank led model suitable for the country while
being open to new investment in innovation and technology
Mobile operators are demonstrating the potential for social
VAS, while MFS provider are coming up with various VAS in
the mobile money landscape. We expect this to continue to
grow, while we also understand it will take time.
There is still an opportunity for public and private investment
in providing seed capital for the innovation that is not yet
‘market-led’, with a key role for government in facilitating this
process.
Although we have introduced simplified CDD for MFS account
but all activities are under AML/CFT regulation of Bangladesh
Bank.
BANGLADESH DEMOGRAPHIC CHARACTERISTICS
Rural Urban divide
Rural
Urban
88%
46%
43%
38%
35%
21%
Age Structure----------65% working age
population
Poverty Head
count ratio at
national poverty
incidence
Access to
Electricity
Access at
Formal
Financial
institutions
65 + years
55-64 years
25-54 years
15-24 years
0-14 years
5
5.9
38
18.8
32.3
FINANCIAL SYSTEM OF BANGLADESH
ATMs
network6035
Central
Banks
MFIs-697,
MFIs
branches18000
Schedul
ed
Banks
56
4 State owned
Commercial Banks
4 Specialized Banks
39 Private commercial
Banks
9 Foreign Banks
•9400 Branches country
wide
Non Bank
Financial
Institutions
-33
4 Non
Schedul
ed
Banks
DIGITAL FINANCIAL SERVICES
INFRASTRUCTURE
Digital Initiatives are in two fronts
 In the Banking through introduction of internet, SMS, ATMs, POS based
transaction
 Through MFS by the mobile bank account /mobile wallet
BB has built a robust technology infrastructure with various enablement's to
support digital financial services:
 Online Credit & Supervisory reporting
 Electronic Fund transfer
 Bangladesh Automated clearing house
 National Payment Switch
 Real-time Gross Settlement systems
Bangladesh Bank in association with the NID authority further wants to connect NID
with the digital banking and MFS system to introduce e-KYC. Following initiatives are
underway :
 NID linked G2P payments
 Union Digital Centers
 Agent Banking; POS, rural branches, Rural Savings Bank
MFS CURRENT STATUS
Digital Financial Services (DFS) in Bangladesh (As on October 2015)
Banking End
Number of POS
Number of ATMs
Number of bank branches
Agents (Banking)MFS providers
Licensed Providers
Active ProvidersATMsAgentsMFS transaction snapshot
Average Daily Transaction (Value million USD)Active Customers number (million)
Average Daily Transactions (million Number)
Key MFS
indicators
Number of Agents
(million)
28265
6311
9500
148
28
20
3905
547813
55.73
12.06
3.58
Number of
Registered clients
(million)
Number of
Transaction
(million)
Value of
Transaction
(million USD)
Jun 2013
0.10
6.67
17.6
539.23
Dec 2013
0.189
13.18
31.36
852.62
Dec 2014
0.541
25.2
74.47
1343.98
Jun 2015
0.538
28.65
96.16
1662.76
Sep 2015
0.542
29.21
106.43
1931.51
MFS MAGNITUDE IN BANGLADESH
ISSUES AROUND COMPETITION IN DFS SPACE
Investment
USSD price
Pricing
Innovation for mass use
Product development and value
proposition
 OTC
 Market opening for non-bank entities





Thank you