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5 Barriers to Mobile Financial Services in Bangladesh

By Wayan Vota on August 28, 2017

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.


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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Written by
Wayan Vota co-founded ICTworks. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of his employer, any of its entities, or any ICTWorks sponsor.
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