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The Current State of Mobile Financial Services in Bangladesh

By Josh Woodard on October 12, 2016


Bangladesh has a rapidly growing mobile financial services industry, with at least 10 providers already offering services on the market, that represent more than 8% of the total registered mobile money accounts globally. All this has happened in less than four years since the launch of the first mobile financial service products in 2011. Yet despite this rapid growth, uptake among development organizations in Bangladesh remains low.

A baseline study conducted by mSTAR on the status of mobile money usage by USAID implementing partners in June 2014 found that 86% of respondents (representing 24 organizations) were not using mobile money.

Since then, the mSTAR project at FHI 360 has helped several IPs make the transition to digital payments, and they are already seeing positive results. For instance, the Aquaculture for Income and Nutrition project has reduced the amount of time its staff wastes processing cash payments by 600 days per year, while Dnet has reduced processing times for payments to its health workers from 30 to 8 days.

Recently, the mSTAR project completed a survey of current services, regulations, and usage of mobile financial services in Bangladesh for USAID. Key findings from the report include:

  • Despite having a very clear mobile financial service (MFS) market leader, competition is growing quickly with at least 10 banks now offering services and third-party agent networks helping them to close the agent gap.
  • All of the USAID IP staff and 89% of beneficiaries surveyed own or have access to a mobile phone.
  • More than 80% of MFS users agreed that the services are safe, easy, and convenient.
  • Among those staff and beneficiaries who had not used MFS, more than 80% said they did not have a need to use MFS. At the beneficiary level, lack of knowledge about the existence of MFS and how to use MFS were key reasons for why they were not using them.
  • The cost of MFS is by far the most important priority for customers, with 91% of MFS users and 88% of non-users ranking ‘low transaction costs’ at the top.
  • A majority of respondents were interested in using MFS for bill payments (77%), savings (76%), airtime top-ups (70%), education fee payments (60%), and merchant payments (55%).
  • The most common borrowing was happening through family members (46% for staff and 64% for beneficiaries) and friends (48% for staff and 39% for beneficiaries). Less than 25% of USAID IP staff borrowed from a traditional bank or MFI. Among beneficiaries, 24% borrowed from a traditional bank and 32% from an MFI.
  • 71% of MFS users live within one kilometer of an agent, compared to just 41% of those who live that close to a bank branch.
  • People with both bank and MFS accounts are generally using the two accounts in similar ways.

Based on these findings, mSTAR identified ten areas for improvement in the MFS space, which should help increase uptake by development organizations, their staff and their beneficiaries. Read the report and the recommendations here.

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Written by
Josh Woodard is the co-founder of Civi, a civictech platform connecting people across the aisle, as well as a senior digital advisor at USAID. You can find more of his writings on his personal site and occasionally via his LinkedIn feed
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