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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