Mfs customer insights v14

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Mfs customer insights v14

  1. 1. pi STRATEGY CONSULTING BANGLADESH: Consumer Insights – Is a transition to mobile wallets underway? Gregory Chen & Pial Islam 6 February 2014 1
  2. 2. Agenda Subhead Background Part I: Who are MFS customers? Part II: What do MFS transactions look like? Part III: Is there a transition towards wallets? Part IV: How might regulators and businesses respond? pi STRATEGY CONSULTING 2
  3. 3. Background Md Farhad Rahman, 2013 CGAP Photo Contest 3
  4. 4. Context • Mobile banking in Bangladesh has already become quite a success story since its initiation in 2011. Currently, there are around 13 million registered users being served by about 190,000 agents transacting around BDT 6650 crore per month. • The regulatory body, Bangladesh Bank, has approved 27 banks to operate as mobile financial service providers in the country. Of which 19 banks have mCash been able to officially launch the service so far. 0.5% • In the current market, the top-3 players are: • • • Brac Bank’s bKash, DBBL Mobile Banking and Islami Bank’s mCash DBBL Mobile Banking 19.8% bKash 79.7% pi STRATEGY CONSULTING Market Share in terms of Registered Users Source: Daily Newspaper, Websites. 4
  5. 5. Context: Usage patterns evolving Bangladesh Bank introduced new guidance promoting wallets use in September 2013 Person to Person Transfer Volumes (BDT Crore)* 4,500 4,000 27% 3,500 3,000 26% 23% 24% 2,500 Wallet to Wallet 2,000 OTC 1,500 1,000 500 September October November December * Estimates based on Bangladesh Bank MFS figures. OTC is comprised of all cash-in and cash-out transactions, subtracting any P2P, utility payment, salary disbursement, international remittance. P2P is all P2P (wallet to wallet) reported transactions. pi STRATEGY CONSULTING 5
  6. 6. Methodology Subhead • The entire study comprises of three stages: - Defining Research Question - Preparing Questionnaire - Testing Questionnaire - In-depth Interview - Identifying Major Hypothesis - Identifying implications Design Field Survey Sample Size:45 Output: A List of hypothesis -Defining Research Question -Preparing Template for findings -Preparing Questionnaire -Testing Questionnaire -Selecting 3rd party surveyor - Random plus targeted sampling - National level (randomly selected 4 divisions out of 7) - Detailed questionnaire - Interviews and observations at agent points Sep/ Oct Tool: Interview Guide Stage-3 Stage-2 Stage-1 Validation Nov/ Dec Analysis -Error Checking -Phone Validation Tools: Yellow Book (a customized financial record tracker), Multiple round In-depth Interviews Dec / Jan Sample size: 400 random + 79 targeted Output: Stage-2 Report (Findings and validated hypothesis) pi STRATEGY CONSULTING - Identifying respondents from stage-2 sample (and supplementing if necessary) - Record Financial transactions - Persona Design - Generating insights Sample size: 12 Output: Personas + Insights 6
  7. 7. MFS in Bangladesh • Customers seem to have tailored their own ways of usage by leveraging the platform. Most people are transacting through mobile banking agents without using personal wallets which is actually OTC. • Recent regulatory changes (PSD Circular Letter No. – 01/2013) strongly discourage OTC transactions and encourage wallet usage. According to the regulations: • • • No Cash-out or P2P transaction can be done from user’s account before proper verification and approval of her KYC by relevant banks. Prior to doing any transaction agent has to be confirmed that the user, he is transacting with, has mobile banking accounts. Bangladesh Bank will closely observe this situation and If discrepancy found with any agent, his agent-ship will be cancelled immediately. The maximum amount a user can cash-in or cash-out is BDT 25,000 per day. pi STRATEGY CONSULTING 7
  8. 8. Definitions • Three observed uses of mobile payments: SENDER 1. Pure OTC If neither sender nor the receiver has mobile banking account (or wallet), it will be classified as a Pure OTC transaction. Pure OTC RECEIVER If either sender or the receiver has wallet it will be Partial OTC and No Account Account 2. Partial OTC No Account No Account Partial OTC No Account Account 3. Pure Wallet If both sender and receiver have wallet the transaction will be categorized as Pure Wallet. pi STRATEGY CONSULTING Pure Wallet Account Account 8
  9. 9. Sampling • Sample Size: 480* Pure OTC Partial Post Office OTC Pure Wallet Courier Service 401 Purposive Sampling Randomly found at agent points, Post Office and Courier Service. Pure Wallet 79 Targeted Sampling From the list provided by bKash and DBBL Mobile Banking and Snowball approach. *Considering the tolerable error level (5%) where • • • • • N is the total mobile financial service user which is 10,000,000 all over Bangladesh n = required sample size p is a certain proportion in universe. p=0.02 and q is (1-p) z is the confidence level (for 95%, z = 1.96) e is the tolerable error of estimates (which is at around 5%, as the lower error level provides better representations) pi STRATEGY CONSULTING 9
  10. 10. Sampling (contd.) • The survey covered four randomly selected divisions of the country (out of seven) which are: – – – – Dhaka, Chittagong, Barisal and Rangpur. • Equal split of urban, semi-urban and rural was kept to the extent possible. pi STRATEGY CONSULTING 10
  11. 11. Sampling (contd.) • • • • • The survey was conducted during November and December 2013. The surveyors were undergrad students who participated in multiple briefing sessions before going to field. Interview guide comprised of 60 close-ended questions and each interview lasted for more than 30 minutes. Separate Cue Cards have been used to test numeracy and English proficiency level of the beneficiaries before recording it. Respondents in Purposive Sampling were randomly selected and interviewed at different agent points. Respondents in Targeted sampling were selected from active wallet users list provided by bKash and DBBL Mobile banking. They were communicated over phone and later, interviewed face to face at their convenience. Rest of the sample were found through snowball approach starting from the list. Before going to the analysis table, data was back-checked rigorously. For any slightest discrepancy the entire data set of the specific respondent was eliminated. Eventually, the field survey extended to a second phase to get the sizable sample size which was also followed by similar validation phase. pi STRATEGY CONSULTING 11
  12. 12. Demographic Highlight Sender-Receiver Split (Overall) Urban-Rural Split 32% Gender Split 19% 48% Urban Semi-Urban Rural Male 39% 47% 53% 81% 20% Sender-Receiver Split (Rural) People in rural areas are mostly receivers. Sender Female Age Group 61% Receiver Sender Receiver Education Split 53% 29% 20% 37% 15% 9% 4% 12% 4% 7% 11% 15 to 25 years 26 to 35 years Above 35 years pi STRATEGY CONSULTING 12
  13. 13. Demographic Highlight (contd.) Profession Split 32% 27% 11% Student Service holder Small trader 9% Housewife 6% 5% Shopkeepers Petty trader 3% 3% Laborer Driver/CNG Driver 2% Unemployed Self-employed 11% Average Income and Expenses (Reported) Amount in BDT 8007 6458 1% Farmer Food 7% 12% 5% National Average 1% 12% 11% Clothing Education Medicine Rent Poverty Line Monthly Income 42% Others Monthly Expense pi STRATEGY CONSULTING Utilities Monthly Expense 13
  14. 14. Demographic Highlight (contd.) Outstanding Loan 9% (Average amount of loan outstanding is BDT 91,768) 91% Have Outstanding Loan Don't have Outstanding Loan Do you have Bank account? Which bank? 30% 35% 65% Yes No pi STRATEGY CONSULTING 58% 12% DBBL Islami Others 14
  15. 15. Part I: Who are MFS customers? GMB Akash, 2011 CGAP Photo Contest 15
  16. 16. Who? Subhead Pure Wallet Users have higher individual income compared to others. Whereas, Pure OTC have the least. Average Monthly Income 10642 9650 8475 Amount in BDT • 8381 8007 7093 National Average Poverty Line Courier (n=20) Post Office (n=20) Pure OTC (n=208) pi STRATEGY CONSULTING Partial OTC (n=143) Pure Wallet (n=89) Sample (n=480) 16
  17. 17. Who? (contd.) • Mobile banking users are slightly younger group of people. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Courier Service (n=20) PO (n=20) Pure OTC Partial OTC Pure Wallet (n=208) (n=143) (n=89) 15 to 25 years pi STRATEGY26 to 31 years CONSULTING Total Sample (n=480) Above 35 years 17
  18. 18. Who? (Contd.) • Majority (90%) uses feature phones with color display. • Prevalence of Smart phone in this group is around 6%. • Average price: Smart phone 16421, Monochrome 1345, Feature Phone With Color Display 3770. Average Price of the handset (Reported) 16421 100% Amount in BDT 80% 60% 40% 20% 3770 0% 1345 Total Sample (n=480) Smart Phone Feature Phone with Monochrome Display pi STRATEGY CONSULTING Smart Phone Feature Phone with Feature Phone with monochrome Color display display Feature Phone with color display 18
  19. 19. Who? (Contd.) • About 50% respondents have multiple SIMs. However, the percentage is less than 40% for pure OTC users. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Courier Service (n=20) PO (n=20) One • Pure OTC (n=208) Two Partial OTC Pure Wallet (n=143) (n=89) Three Total Sample (n=480) More than three Pure OTC users have 2 handsets in household. Whereas, the number is 3 for Pure Wallet users. pi STRATEGY CONSULTING 19
  20. 20. Who? (Contd.) • Pure Wallet users have had more schooling comparing to other groups of mobile banking users. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Courier Service (n=20) PO (n=20) Pure OTC (n=208) Upto Grade-10 pi STRATEGY CONSULTING Partial OTC Pure Wallet (n=143) (n=89) Total Sample (n=480) More than Grade-10 20
  21. 21. Who? (Contd.) • Pure Wallet Users can read in English better than others. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Courier Service (n=20) PO (n=20) Pure OTC (n=208) pi STRATEGY CONSULTING Partial OTC Pure Wallet (n=143) (n=89) Total Sample (n=480) 21
  22. 22. Part II: What do MFS transactions look like? Mohammad Moniruzzaman, 2009 CGAP Photo Contest 22
  23. 23. Transactions • Average Ticket Size of the mobile banking transactions is BDT 3,370 which is much lower than other platforms. • Ticket size of courier service transactions are five times than mobile banking. Amount in BDT 16775 5045 3369 Courier Service (n=20) PO (n=20) pi STRATEGY CONSULTING 3089 Mobile Banking (n=440) Total Sample (n=480) 23
  24. 24. Transactions (contd.) 1% • • Majority of the users prefer using only one mode to transfer money. However, certain segments of transactions (Partial OTC, Post Office, Courier) show a higher inclination towards multiple modes. 24% 75% Use Three modes Use Two modes Use single mode 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Courier PO (n=20) Pure OTC Partial Service (n=208) OTC (n=20) (n=143) Use 3 Modes Use 2 Modes pi STRATEGY CONSULTING Pure Wallet (n=89) Total Sample (n=480) Use Single Mode 24
  25. 25. Transactions (contd.) • More than 10% Pure OTC users also use other platforms to transfer money. Of them, a large portion (53%) prefer to use courier service. Pure OTC users who prefer multiple modes of transfer(n=27) 29% 53% 0% 18% Partial OTC • More than 30% Partial OTC users also use other platforms to transfer money. Of them, a significant portion (60%) do pure OTC. Pure Wallet Courier Service Partial OTC users who prefer multiple modes of transfer (n=49) 12% 12% 17% pi STRATEGY CONSULTING PO Pure OTC Pure Wallet 59% PO Courier Service 25
  26. 26. Users of different modes have different types of transaction needs Average Amount Transferred in last three months • Total amount of transactions in the last three months done by a user was through Partial OTC . • Whereas, the number is the least for Pure Wallet transaction. 17273 9500 Pure OTC (n=208) 8807 Partial OTC (n=143) pi STRATEGY CONSULTING Pure Wallet (n=89) 26
  27. 27. Overall picture of wallet uptake • 37% users have mobile banking account or wallet. • 18% are doing pure wallet transactions. Therefore, OTC in the market is 82%. Sample Size (n=480) Have Wallets (n=179) Use Wallet (n=89) This slide is problematic! pi STRATEGY CONSULTING 27
  28. 28. Why They Don’t Open Wallets? • Around 63% respondents don’t have wallet. They said they never felt the need of having one. • A few (9%) said the process of opening a wallet is time consuming. 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% I don't require it It seems complex to Does not know how Its time consuming me to open an account pi STRATEGY CONSULTING 28
  29. 29. Trust Issues • People trust Pure Wallet most which follows by Pure OTC. 60% 50% 40% 30% 20% 10% 0% Pure Wallet Pure OTC pi STRATEGY CONSULTING Partial OTC Post Office Courier Service 29
  30. 30. Consumer Protection • • Pure OTC users said they paid extra charges. Even, pure wallet users said they sometimes have to pay extra charge. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lost Fund for Technical Lost fund for fraud trick Errors or misappropriatioin Pure OTC Partial OTC pi STRATEGY CONSULTING Pure Wallet Paid extra charges Post Office Had money sent but not delivered Courier Service 30
  31. 31. Transfer between Economic Household Members is Significant • Nearly 85% transactions are made between the members of same economic household. Percentage of Transaction between the same Economic Household 120% 100% 100% 86% 75% 80% 81% 90% 84% 60% 40% 20% 0% Courier (n=20) PO (n=20) Pure OTC Partial OTC Pure Wallet (n=208) (n=143) (n=89) pi STRATEGY CONSULTING Sample (n=480) 31
  32. 32. Part III: Is there a transition to wallets underway? Bir Azam, 2013 CGAP Photo Contest 32
  33. 33. Transition to Pure Wallet Not fully done yet. Courier More than 3 months before 12 Current 7 2 3 PO 0 to 3 Months before 2 7 5 Pure OTC 11 2 1 8 Partial OTC 11 14 Pure Wallet 48 89 60 pi STRATEGY CONSULTING 33
  34. 34. Wallet vs. Non Wallet • ?? (Still a good portion who have wallets are not doing pure wallet transaction) 2% 16% 62% Don’t have wallet Have wallet 37% 19% 1% Pure OTC Partial OTC pi STRATEGY CONSULTING Pure Wallet Courier 34
  35. 35. Wallet vs. Non Wallet • Average individual income per month of wallet owners seems to be higher than those who don’t have wallets. • Higher income groups are more inclined to open wallets. Average Monthly Income 9077 8007 Amount in BDT 7371 Average National Income (BDT) Poverty Line Have Wallets Don't habe wallets pi STRATEGY CONSULTING Total Sample 35
  36. 36. Wallet vs. Non Wallet (contd.) • • 35% of the sample have formal bank accounts. This percentage is much higher (45%) for wallet owners and lower (29%) for the rest . People who already have formal bank accounts are more inclined to have a mobile banking wallet. Have Bank Accounts 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Have Wallet pi STRATEGY CONSULTING Don't have wallet Have Bank Accounts 36
  37. 37. Wallet vs. Non Wallet (contd.) • Whereas, a large portion (70%) of wallet owners have completed formal schooling at least up to HSC (Grade 12) or more. • Wallet uptake comes with higher education and related awareness. Education Level at least Grade-12 80% 70% 60% 50% 40% 30% 20% 10% 0% Have Wallet pi STRATEGY CONSULTING Don't have Wallet 37
  38. 38. Wallet vs. Non Wallet (contd.) • A slightly better percentage (56%) of the youngest age group has been observed in wallet owners. • Are the young people more inclined to have wallets? 8% 36% 56% 15 to 25 years 26 to 35 years pi STRATEGY CONSULTING More than 35 years 38
  39. 39. Doing Pure OTC is instant, cost effective and easy • More than 90% respondents prefer pure OTC because it is instant. More than 60% said it is easy and cost effective. • Pure Wallet users also believe their transaction happens instantly. However, a good portion thinks it is trustworthy. pi STRATEGY CONSULTING Reasons of current Pure OTC transfer (n = 208) High availiblility of agents Instant transfer 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Easy procedure Trustworthy Cost effective It is instant 100% 80% 60% Saving facility 40% 20% It is cost effective 0% Easy procedure It’s trustworthy 39
  40. 40. Agents influence wallet uptake Agents influenced me in opening in Mobile banking account • Agents have significant impact on opening new wallets. • 40% of the respondents agreed that the agent influenced them to open an mobile banking account • 48% of the respondents disagreed that agents discouraged them to open a mobile banking account. 6% Strongly Agree 11% 15% Agree 29% Neither Agree nor Disagree 39% Disagree Strongly Disagree Agents discouraged me to open a mobile banking account 8% 25% Strongly Agree 7% Agree Neither Agree nor Disagree 23% 37% Disagree pi STRATEGY CONSULTING Strongly Disagree 40
  41. 41. Part IV: How might regulators and businesses respond? Sumon Yusuf, 2013 CGAP Photo Contest 41
  42. 42. Content Slide Header Subhead Content • Content • Content pi STRATEGY CONSULTING 42
  43. 43. Bar Chart Subhead 6 Text 5 4 3 2 1 0 Category 1 Category 2 Series 1 Category 3 Series 2 Category 4 Series 3 43
  44. 44. Bar Chart Subhead Text Category 4 Category 3 Category 2 Category 1 0 1 Series 3 2 3 Series 2 4 5 6 Series 1 44
  45. 45. Line Chart Subhead 6 Text 5 4 3 2 1 0 Category 1 Category 2 Series 1 Category 3 Series 2 Category 4 Series 3 45
  46. 46. Table Subhead X X X X X X X X X X X X 46
  47. 47. Review Slide • Content • Content • Content 47
  48. 48. Picture Slide Subhead Text Forhad Kamaly, 2013 CGAP Photo Contest 48
  49. 49. Picture Slide Subhead Text Mohammad Moniruzzaman, 2009 CGAP Photo Contest 49
  50. 50. Picture Slide Subhead Text KM Asad, 2013 CGAP Photo Contest 50
  51. 51. Advancing financial inclusion to improve the lives of the poor www.cgap.org

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