This document summarizes findings from a study on mobile financial services (MFS) in Bangladesh. It provides background on MFS adoption in Bangladesh and defines different types of transactions (pure OTC, partial OTC, pure wallet). Key findings include: - Pure wallet users have higher incomes than other groups. Most users have feature phones. - Average transaction size is lower for MFS than other platforms. Majority of users prefer a single transfer mode. - While 37% of users have wallets or accounts, only 18% conduct pure wallet transactions, showing limited wallet usage. Top reasons for not opening wallets include not feeling the need and complexity. - People trust pure wallets and OTC most,

1. pi STRATEGY
CONSULTING
BANGLADESH: Consumer Insights – Is a
transition to mobile wallets underway?
Gregory Chen & Pial Islam
6 February 2014
1

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. Background
Md Farhad Rahman, 2013 CGAP Photo Contest
3

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Part I: Who are MFS
customers?
GMB Akash, 2011 CGAP Photo Contest
15

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. 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. 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. 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. 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. 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. Part II: What do MFS
transactions look like?
Mohammad Moniruzzaman, 2009 CGAP Photo Contest
22

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. 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. 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. 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. 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. 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. 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. 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. 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. Part III: Is there a transition to
wallets underway?
Bir Azam, 2013 CGAP Photo Contest
32

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. 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. 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. 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. 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. 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. 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. 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. Part IV: How might regulators
and businesses respond?
Sumon Yusuf, 2013 CGAP Photo Contest
41

42. Content Slide Header
Subhead
Content
• Content
• Content
pi STRATEGY
CONSULTING
42

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. 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. 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. Table
Subhead
X
X
X
X
X
X
X
X
X
X
X
X
46

47. Review Slide
• Content
• Content
• Content
47

48. Picture Slide
Subhead
Text
Forhad Kamaly, 2013 CGAP Photo Contest
48

49. Picture Slide
Subhead
Text
Mohammad Moniruzzaman, 2009 CGAP Photo Contest
49

50. Picture Slide
Subhead
Text
KM Asad, 2013 CGAP Photo Contest
50

51. Advancing financial inclusion to improve the lives of the poor
www.cgap.org