Project on Bkash

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Letter of Transmittal
12th August 2014
Mohammad Hannan Miah
Faculty Member
School of Business
North South University
Baridhara, Bashundhora, Dhaka
Dear Lecturer Mohammad Hannan Miah,
We would like to present our term paper, STRATEGIC MANAGEMENT on bKash.
While preparing this term paper we had learned and acquired so many knowledge on
strategic management. We had also learned about teamwork, writing, observing, analyzing
and most importantly how to sketch a business’s strategies, which they apply on their
business to achieve their goals. It was highly exhilarating and appreciable task, assigned for
us, we were greatly inspired, though we have faced hundreds of obstacles, while working on
this term paper.
Thank you for guiding us and giving us an opportunity to demonstrate our potentials, talents
and skills on Strategic Management.
Sincerely,

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Acknowledgement
21st April 2014
Mohammad Hannan Miah, Faculty Member, NSU
Dear Sir
We would like to give the vote of appreciation to your huge pull up and motivation to us,
which made us complete such term paper in MGT489 course. As a hole we would like to
thank you from our inner core of heart. Without your inspiration and efficient knowledge
sharing we may not be able to finish our work in such manner.
Thank you again for your continuous trust on us and made us do the paper properly, all credit
is yours.
Respectfully yours,

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Contents
Executive Summary.................................................................................................................13
Introduction..............................................................................................................................14
About the Company.................................................................................................................16
Mission.....................................................................................................................................16
Vision.......................................................................................................................................17
Why we have chosen this company .........................................................................................17
Purpose.....................................................................................................................................18
Which Industry it Belongs to ...................................................................................................19
Industry Analysis .....................................................................................................................21
Stages in the Industry Life Cycle.........................................................................................21
Industry Growth Analysis (Past six months) .......................................................................21
Industry structure .................................................................................................................26
..............................................................................................................................................26
Controlling force for the profitability and industry profitability .............................................27
General Environment Analysis ................................................................................................28
PESTLE Analysis ................................................................................................................28
Political ............................................................................................................................28
Economic .........................................................................................................................29
Social................................................................................................................................29
Technology.......................................................................................................................30

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Legal.................................................................................................................................31
Competitive Environment Analysis.........................................................................................34
Porter’s 5 Forces ..................................................................................................................34
Threat of New Entrants - Low (Positive/Favorable)........................................................34
Bargaining Power of Suppliers - High (Unfavorable/Negative)......................................36
Threat of Substitute Services - Moderate.........................................................................38
Bargaining Power of Buyers – Moderate.........................................................................39
Competitive Rivalry – High.............................................................................................40
How Macro-Environment is Affecting The PORTER’S Five Forces? ...............................43
3 I Analysis: .........................................................................................................................46
Immediate Competitors:...................................................................................................46
Impending Competitors: ..................................................................................................47
Invisible Competitors:......................................................................................................47
SWOT Identification................................................................................................................48
Business canvas and the current Model of bKash ...................................................................51
A. Key Partners ..............................................................................................................51
B. Key Activities............................................................................................................52
C. Key Resources...........................................................................................................54
D. Value propositions.....................................................................................................56
E. Customer Relationships.............................................................................................59
F. Channels........................................................................................................................62

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G. Customer Segments...................................................................................................64
H. Cost Structure............................................................................................................65
I. Revenue Streams...........................................................................................................66
Current Business Model of bKash...........................................................................................68
Core competency of bKash......................................................................................................70
Corporate level strategy...........................................................................................................71
Diversification- Related linked Strategy..............................................................................72
Strategic Alliances ...............................................................................................................72
Strategic Outsourcing...........................................................................................................72
Corporate level strategies of bKash and its mission- The relationship....................................73
Corporate Risk Management ...............................................................................................73
Increased Scope of operations..............................................................................................74
bKash Activates International Remittance Facilities .......................................................74
bKash Facilitates in Brac Microfinance...........................................................................74
Increased Efficiency.............................................................................................................75
Performance Management System among Employees and Agents.................................75
Business level Strategies..........................................................................................................76
Key Issues of Business Level Strategies..............................................................................76
Who will be served?.........................................................................................................76
What needs to be satisfied?..............................................................................................77
How those needs to be satisfied? .....................................................................................77

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Five Generic Business Level Strategies...............................................................................78
Competitive Positioning and the Value Creation Frontier...................................................79
Product Life Cycle ...............................................................................................................80
ANSOFF Matrix ..................................................................................................................81
The BCG Matrix ..................................................................................................................82
Business level strategies helping to achieve Corporate level strategies ..............................82
Functional Level Strategies......................................................................................................83
Divisions and Departments of Bkash...................................................................................84
Management Division..........................................................................................................84
Corporate Strategy and Decision making Wing ..............................................................84
Corporate Affairs .............................................................................................................84
Brand................................................................................................................................84
Service development and Management ...........................................................................85
Corporate Sales ................................................................................................................85
Marketing Division..............................................................................................................85
Product development team...............................................................................................85
Media Team .....................................................................................................................85
Creative Team..................................................................................................................86
Marketing Strategies ............................................................................................................86
Marketing Mix .....................................................................................................................87
Product .............................................................................................................................87

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Price .................................................................................................................................88
Place.................................................................................................................................88
Promotion.........................................................................................................................88
People...............................................................................................................................89
Process .............................................................................................................................89
Physical Evidence ............................................................................................................91
Productivity and Quality..................................................................................................91
Finance Division..................................................................................................................92
Central Accounts..............................................................................................................92
Costing and Factoring......................................................................................................92
Revenue Assurance..........................................................................................................92
Taxation ...........................................................................................................................92
Human Resource Management ............................................................................................92
Things bKash Does to Attract Top Quality Management ...............................................93
Employment Opportunities and Facilities of bKash........................................................93
Some Terms of Employment at bKash ............................................................................93
Information Technology Division........................................................................................96
Security Strategy..............................................................................................................96
Network Coverage ...............................................................................................................97
Linking the Resources, Core Competency, Capabilities with Functional Level Strategies for
Value Creation .........................................................................................................................97
Company Structure and Control System................................................................................102

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Division & Departments: ...................................................................................................102
a. Commercial Division: ................................................................................................102
b. Finance and Accounts Division: ................................................................................102
c. Corporate Affairs & Legal: ........................................................................................102
d. Human Resources: .....................................................................................................103
e. Technology:................................................................................................................103
f. Administration:...........................................................................................................103
h. Customer Service Division: .......................................................................................103
Corporate Governance ...........................................................................................................109
Shareholders.......................................................................................................................110
Auditors..............................................................................................................................110
External Auditor.................................................................................................................111
Company Structure and Control System........................................................................112
Personal control: ................................................................................................................113
Output control: ...................................................................................................................113
Behavior Control................................................................................................................114
Value chain analysis...............................................................................................................116
Social innovation................................................................................................................116
Bringing mobile top-up service: ........................................................................................117
Affordable Services............................................................................................................117
Nationwide Coverage.........................................................................................................117

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Brand Image.......................................................................................................................118
Primary Activities ..............................................................................................................118
Support Activities ..............................................................................................................119
Strategic Analysis (4P)...........................................................................................................120
Position...............................................................................................................................120
Priorities.............................................................................................................................120
Payments ............................................................................................................................121
Performance .......................................................................................................................121
SWOT Analysis .....................................................................................................................122
Strengths.............................................................................................................................122
Weaknesses ........................................................................................................................123
Opportunities......................................................................................................................124
Threats................................................................................................................................125
Proposed Business Model......................................................................................................126
Strategic Alliance:..............................................................................................................126
II. Micro-Finance Institutes................................................................................................127
III. Developing new Products/Services: ............................................................................128
Conclusion .............................................................................................................................130
Recommendation ...................................................................................................................131
Corporate Level Strategies:- ..............................................................................................131
Business Level Strategies:- ................................................................................................132

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Functional Level Strategy:-................................................................................................133
References..............................................................................................................................135
Appendix…………………………………………………………………………………...138

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List of Figure
Figure No. Page Number
Figure 1 22
Figure 2 23
Figure 3 25
Figure 4 27
Figure 5 29
Figure 6 35
Figure 7 44
Figure 8 49
Figure 9 50
Figure 10 71
Figure 11 70
Figure 12 78
Figure 13 79
Figure 14 80
Figure 15 81
Figure 16 82
Figure 17 83
Figure 18 102
Figure 19 117
Figure 20 130

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List of Tables
Table No. Page Number
Table 1 23
Table 2 25
Table 3 34
Table 4 42
Table 5 51
Table 6 52
Table 7 89

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ExecutiveSummary
The purpose of our project is to analyze the strategic management of bKash to have a clear
understanding on how the company is affected by the external and internal environment and
the different strategies the company is pursuing right now and what should be done to
overcome the challenges the company faces. We, as a team have worked equally over the
three months to perform an in depth analysis of the various issues of the company. The
project seeks to find out how bKash is performing compared to the competitors and the main
objective is to find out the strategies the company is pursuing and what needs to be done to
improve those strategies so that they can become the market leader. Through the project, the
major findings include the different strategies the company is pursuing, their control and
structure system, corporate governance mechanisms, effect of macro-environment forces,
internal analysis of the company and through these analysis we have tried out to find out the
problems of the company and what should be done to overcome them like in the corporate
level strategy, business level strategy and functional level strategy. The project also
represents a new business model, which the company can adopt to enhance their core
competency and value proposition and thus achieving competitive advantage. Major
recommendations include company Can implement tapper integration, create more strategic
alliances, pursue product development strategy, implement cash management system, overall
system improvements, strengthening the overall security system and educating the rural
customers on bkash through mobile retailers. Throughout the project we faced many
problems such as lack of communications between the company and the group members.
Time frame was still not enough as there were plenty of other works too with added courses.
Finally by delivering this project, we seek to improve the current position of the company so
that it can help them to gain their mission, which is to become the number one mobile
banking brand in Bangladesh.

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Introduction
Banking system in Bangladesh has gone through many sweeping changes in the lapse of
time. It has been shaped by economic as well as political philosophies. The growth and
evaluation of financial system of Bangladesh since liberation can be clearly viewed. Since
then the banking sector of Bangladesh experienced different kinds of changes. With the help
of the combination of two most recent technological advancements – internet and mobile
phone, banks of Bangladesh introduced a new service which is known as “Mobile Financial
Services” and thus it gave birth to a new industry which is known as “Mobile Banking
Industry”. Mobile banking refers to a system that enables bank customers to access accounts
and general information on bank products and services through a Mobile device. Banking
through mobile phone has been common in developed countries for years. The real potential
of “m-banking” may be to make basic financial services more accessible to millions of poor
people. Therefore, this mobile banking industry is significantly in favor of the rural areas
compared to the urban areas. There are around 160 million people in Bangladesh, of which
only 13 percent have bank accounts where as more than 95 percent are mobile phone users.
Banks can now offer the banking services to rural and unbanked population through mobile
phone.
Mobile Banking is new in our economy. Only a few banks are now offering this service.
Through Internet Banking most of the banks are offering only balance information. Actual
fund transfer and fund disbursement is not possible in all the banks that are offering internet
banking services. So this product will enjoy the benefit of a first mover. It is cheap both for
the banks and the customers. The bank will be able to lower down the overhead costs and
make more profit out of it. The customers will be able to save time as well as money for their
transaction needs. Many poor people already have access to mobile phones. A positive aspect
of mobile phones is that mobile networks can reach remote areas at low cost. The poor often

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have greater familiarity and trust with mobile phone companies. Mobile banking industry
acquires a great opportunity in the future. Mobile device is becoming very common in
Bangladesh. So a service offered through the mobile phone will be widely accepted in the
near future. Mobile banking or m-banking facilitates mobile phone users to access
fundamental financial services even when they are miles away from their nearest branch or
home computer. This financial service is emerging as a vital and contemporary tool for
financial inclusion with the intent to alleviate poverty and uphold the standard of life
worldwide, particularly in the emerging and developing countries. In many parts of the globe,
such as the Philippines, Brazil, India and Africa, mobile financial services are tremendously
flourishing. In Bangladesh bKash, a concern of BRAC has stared the mobile financial
service jointly with the telecom service providers Grameenphone and Robi which will take
the financial inclusion strategy adopted by Bangladesh Bank, the central bank of Bangladesh,
to the next stage through m-banking. Moreover, other telecommunication service providers
will be integrated in the platform to enhance the m-payment services in near future. Some
other banks are delivering the m-banking or m-money services through the Banglalink and
Citycell cellular operators to bring poor people from remote areas under smart banking
service.

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About the Company
bKash Limited, a subsidiary of BRAC Bank, started as a joint venture between BRAC Bank
Limited, Bangladesh and Money in Motion LLC, USA. The ultimate objective of bKash is to
ensure access to a broader range of financial services for the people of Bangladesh. It has a
special focus to serve the low income group of the country to achieve broader financial
inclusion by providing services that are convenient, affordable and reliable.More than 70% of
the population of Bangladesh lives in rural areas where access to formal financial services is
difficult. Yet these are the people who are in most need of such services, either for receiving
funds from loved ones in distant locations, or to access financial tools to improve their
economic condition. Less than 15% of Bangladeshis are connected to the formal banking
system whereas over 68% have mobile phones. These phones are not merely devices for
talking, but can be used for more useful and sophisticated processing tasks. bKash was
conceived primarily to utilize these mobile devices and the omnipresent telecom networks to
extend financial services in a secure manner to the under-served remote population of
Bangladesh.
Mission
By providing financial services that are convenient, affordable and reliable, bKash aims to
widen the net of financial inclusion. bKash wants to provide a solution for Mobile Financial
Services, built on a highly scalable Mobile Money platform, allowing the people of
Bangladesh to safely send and receive money via mobile devices.

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Vision
The ultimate objective of bKash is to ensure access to a broader range of financial services
for the people of Bangladesh and also to empower the unbanked people.
Proposed services and product of bkash:
 cash in
 cash out (from agent, from ATM)
 send money
 payment
 Buy airtime etc.
Why we have chosen this company
Earlier this century, the mobile phone became the first communications technology to have
more users in developing countries like Bangladesh. With the combination of two most recent
technological advancements – internet and mobile phone, a new service (mobile data service)
is thus enabled and the first such wireless internet commercial transaction is performed by the
banking industry. Banking through mobile phone has been common in developed countries
for years. The real potential of “m-banking” may be to make basic financial services more
accessible to millions of poor people. Bangladesh, home to 165 million people, represents a
unique opportunity for a mobile money platform: universal wireless network coverage,
widespread personal ownership of mobile phones, a cash economy, poor physical
infrastructure, and a favorable regulatory environment for a bank-led initiative. bKash
presents a compelling business plan and social uplifting agenda which capitalizes on these

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factors to dramatically expand access to formal financial services for the people of
Bangladesh, less than 10% of them so far have encountered any formal banking facility.
After the central bank advocated for mobile operators and microfinance organizations to be
its active partners and has provided 10 licenses to banks to offer the full range of mobile
financial services it allowed a way for Mobile Financial Services (MFS) which is an approach
to offering
financial services that combines banking with mobile financial wireless networks which
enables users to execute banking transactions and thus bkash emerged in by late 2011 and
into 2012. We have chosen this company because we wanted to study how bkash paved a
way for mobile banking industry as well as mobile financial services in Bangladesh.
Moreover, we wanted to find out what are the strategies that they use to sustain in the
competitive industry, what are their core competencies and do a research on the industry that
it belongs to.
Purpose
Bkash has branded itself as the world's second successful venture, having stronger customer
base in Bangladesh is now in position to exceed 'the most successful mobile financial service
provider'. After getting the license and approval from the central bank for offering mobile
banking services, Bkash (BRAC Bank) gained competition from several banks that also
started offering mobile banking services. Those banks are: Trust Bank, Mercantile Bank,
Dutch Bangla Bank, Bank Asia, making Dutch Bangla bank the biggest competitor of Bkash.
We have chosen this company because we wanted to study how bkash paved a way for
mobile banking industry as well as mobile financial services in Bangladesh. Moreover, we

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wanted to find out what are the strategies that they use to sustain in the competitive industry
and also to safeguard their business. And also what are their core competencies and do a
research on the industry that it belongs to.
Which Industry it Belongs to
Bkash belongs to the industry of mobile banking or mobile financial service also known as
“M- Banking”. It is a part of country’s financial system and the industry aims to enable
individual to enjoy some of the banking services such as payment, fund transfer etc from their
mobile phone. Bangladesh Bank is the sole regulatory body and this industry is closely linked
to the banking industry of the Bangladesh. However, innovative as well as sophisticated
process of the service has added a new dimension in financial service. Hence, it has created a
new industry in Bangladesh. From the inception of bKash, the company aimed to reach the
zenith in M- banking industry.
Mobile banking or mobile financial service is mainly dominated by the banks operating in
Bangladesh. The major players of the industry are BRAC Bank(Bkash) Limited, Dutch
Bangla Bank Limited, Marcantile Bank Limited, Islami Bank Bangladesh Limited, Bank
Asia, Mercantile Bank limited. The industry consists of twenty eight licensed banks and
twenty of them started their operation.
Mobile financial service is a Bangladesh Bank’s initiative to execute financial inclusion of
the people who do not have access to traditional banking services. The aim the industry is to
provide banking service to 115.627 million mobile phone users of Bangladesh. The targeted
customer group is rural people who can enjoy banking facility via using their mobile phone.
The key suppliers of this industry are the mobile phone network operators. Currently there
are six network operators in Bangladesh and they are Grameen phone limited, Banglalink

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Digital Communication Limited, Robi Axiata Limited, Airtel Bangladesh Limited, Pacific
Bangladesh Telecom Limited (Citycell) and Teletalk Bangladesh limited. Among them
Grameen Phone holds the top customer base and followed by Banglalink, Robi, Airtel,
Citycell and Teletalk. Another major supplier is the IT companies who support or manage the
IT systems of the companies and vendors of IT system consists of both foreign and local
entitites. Funding is one of the major concerns for any financial service provider. In mobile
banking industry of Bangladesh there are foreign investors, general public (deposits), parent
banks, and non deposit borrowing are available for funding the service.
Traditional banking service and micro finance service industries are major competitors of the
industry. Since banking industry is at mature stage in Bangladesh, mobile financial service
industry struggling to attain the financial service market of Bangladesh. Cross boarder
transaction service companies (such as Western Money Union) are also major competitor of
mobile financial service industry.
The major substitutes for mobile banking can be credit and debit cards issued by banks,
online transaction services, payment by checks, cash payment. Unofficial and non-regulatory
payment services are also potential substitutes for this service.
In Bangladesh there are 56 scheduled banks operating in banking industry and 28 of them had
been approved to operate mobile banking service. Currently 20 out 28 approved banks have
started their operation. Remaining banks are very likely to enter in the industry. Moreover,
above 30 non banking financial institutes and mobile phone operators are also potential
entrants of the industry.

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Industry Analysis
Stages in the Industry Life Cycle
Figure 1: Stages in the industry life cycle
The mobile banking industry is currently in the growth stage with huge potential for
companies to increase their sales and capture market shares. With 60% of the total population
have access to cell phones; people are more and more willing to conduct their financial
transaction through mobile banking. Total 46.26% of financial transactions were conducted
through mobile banking, indicating a growth in the number of people that are aware of
mobile banking and are using it as a means of making payments for various forms of
transactions. The number of active accounts saw a peak in terms of growth in November
2013, at 41.22%. Another source of mobile banking transaction is inward remittance coming
into the country. The inward remittance increased from 29.18% to 38.43% in the time span
from 2013 to 2014 despite different turmoil situation around the country.
Industry Growth Analysis (Past six months)
In this section we will be analyzing the growth potential of the mobile banking industry. The
section is divided into two parts, and with the help of bar charts and addressing key

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components, we look to investigate and interpret the mobile banking industries growth and as
well as service activity growth in the sector from November 2013 to April 2014.
Figure 2: Industry Growth Analysis
Table 1: Industry Growth
Description
Novembe
r, 2013
Decembe
r, 2013
Janurary
, 2014
February,
2014
March,
2014
April,
2014
No. of approved Banks 0% 0% 0% 0% 0% 0%
No. of Banks started
to
convey the service 0% 0% 0% 0% 0% 5.26%
No. of agents
16.75% 9.96% 10.69% 23.35% 13.81%
11.13
%
No. of registered 15.70% 14.16% 6.05% 4.59% 2.77% 2.12%
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
Industry Growth
No. of approved Banks
No. of Banks started to
convey the service
No. of agents
No. of registered clients (lac)
No. of active accounts (lac)
No. of total transaction
Total transaction in taka (crore BDT)
No. of daily average
transaction
Average daily transaction in taka
(Crore BDT)

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clients (lac)
No. of active accounts
(lac) 41.22% 13.36% 7.56% 4.96%
-
19.73%
-
2.77%
No. of total transaction 13.71% 17.07% 6.00% -12.70% 14.95% 7.23%
Total transaction in
taka (crore BDT) 8.59% 20.04% 7.62% -8.60% 20.12% 3.14%
No. of daily average
transaction 13.72% 17.07% 6.00% -12.70% 14.95% 7.23%
Average daily
transaction in taka
(Crore BDT) 8.59% 20.04% 7.62% -8.60% 20.12% 3.14%
In the first part we assess the mobile banking industries’ growth potential by analyzing key
components; such as: Number of approved banks, Number of Banks that have started to
convey the service, Number of registered clients, Number of active accounts, Number of total
transaction, Total transaction in taka, Number of daily average transaction, Average daily
transaction in taka.
Over the period of six months, from November 2014 to April 2014, the aggregate growth of
mobile banking industries’ components were: Number of existing banks: 5.26%, Number of
Agents: 85.69%, Registered Clients: 45.39%, Number of active clients: 44.6%, Number of
Total Transactions: 46.26%, Total Transactions in taka: 50.91%, Number of daily average
transactions: 46.27%, Average daily transaction in taka: 50.91%.
The 85.69% growth in the number of agents shows that there is demand for mobile banking
which has prompted banks to expand the number of agents available to service customers.
The number of clients that registered over the six month period grew by 45.39% and number
of active clients stood at 44.6% indicating that people were actively using mobile banking
services, not just registering for one time use. The number of total transactions has seen
growth of 46.26% and total transactions in taka (crore BDT) has grown by 50.91% from
November 2013 to April 2014, highlighting the fact that mobile banking is being used as a

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means of making payments for various forms of transactions and the industry still has room
to grow.
Figure 3: Activity Growth Analysis
Table 2: Activity Growth
Description
November,
2013
December,
2013
January,
2014
February,
2014
March,
2014
April,
2014
Inward Remittance -17.51% 29.18% -5.95% -38.43% 15.60% -5.52%
Cash In transaction 7.81% 19.82% 7.55% -8.46% 23.34% 2.97%
Cash Out Transaction 10.80% 18.98% 6.62% -9.67% 18.20% 1.10%
P2P transaction 21.04% 21.79% 8.61% -8.86% 16.52% 3.68%
Salary Disbursement
(B2P) -34.08% 59.10% 3.81% -12.91% 26.71% 35.04%
-200.00%
-100.00%
0.00%
100.00%
200.00%
300.00%
400.00%
500.00%
600.00%
Activity Growth
Inward Remittance
Cash In transaction
Cash Out Transaction
P2P transaction
Salary Disbursement (B2P)
Utility Bill Payment ( P2B)
Others

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Utility Bill Payment 52.38% 156.88% 488.81% 140.29% 25.18% 56.79%
Others -82.20% 27.46% 3.63% -21.60% 2.68% 22.39%
The second part of this section looks at growth in the level of activity in the mobile financing
sector over whole of Bangladesh by analyzing the following: Inward Remittance, Cash In
Transaction, Cash Out Transaction, Person-2-Person Transaction, Salary Disbursement
(Business-2-Person), Utility Bill Payment (Person-2-Business) and Others.
Over the period of six months, from November 2014 to April 2014, the aggregate growth of
mobile banking activities were: Inward Remittance: -22.63%, Cash in Transaction: 53.03%,
Cash out Transaction: 46.03%, Person-2-Person Transaction: 62.78%, Salary Disbursement
(B2P): 77.67%, Utility Bill Payment (P2B): 920.33%.
So, apart from Inward Remittance we can see that all the other components saw substantial
growths. The decline in Inward Remittance can be attributed to the various foreign factors,
such as not as many workers are going abroad for employment, as well as several more
workers returning from Middle Eastern countries like Saudi Arabia through “diplomatic
channels”1. The 53.03% and 46.03% growth in Cash in Transactions and Cash out
Transactions, respectively, shows that mobile banking is being used as a medium to make
payment for basic transactions. The growth in Person-2-Person transaction by 62.78% shows
mobile banking is increasingly being used to make private transactions among individuals as
well as to send money across districts within the country. Businesses have also started using
mobile banking as a means to pay remunerations and salaries to their employees as Salary
Disbursements made through mobile banking over the six month period rose by 77.67%. And
finally the sector that saw the most growth was Utility Bill Payments made using mobile
1 Hussain, Z. (2014, January 12). Explaining the Recent Decline in Remittances in Bangladesh. End Poverty in
South Asia. Retrieved June 8, 2014, from http://blogs.worldbank.org/endpovertyinsouthasia/explaining-recent-
decline-remittances-bangladesh

26
banking, which saw an astronomical growth, aggregating to 920.33% over the six month
period, as people are switching to mobile financing services to pay their bills rather than
standing hours in line.
Industry structure
Oligopoly: The current industry structure of mobile banking or mobile financial service is
oligopoly. Very limited numbers of service providers, high entry barriers, and little scope of
differentiation in service have formed an oligopoly market in mobile financial services. The
players of this industry are mostly banking corporations with sound financial background and
in Bangladesh there is limited number of banks has the approval to provide this service. Entry
Barriers such as huge capital requirements, strict rules & regulations, incumbency advantage,
unequal access to distribution channel, economies of scale and retaliation from existing firms
have made it difficult for new firms to enter the industry. In a oligopoly market the product or
service may or may not be differentiated and there is little scope of differentiation for mobile
Perfect
Competetion
Monopolistic
Competetion
Oligopoly
Monopoly
Figure 4: Industry Structure

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financial service. Therefore, mobile financial service or mobile banking industry structure is
currently oligopoly.
Controlling force for the profitability and industry profitability
Controlling forces for profitability for the mobile banking industry in Bangladesh are;
 Network Quality of Telecom Companies
 Usages of services
 Efficient Banking Service
 Value added services
 Customer satisfaction
 Cost and time Efficient
 Government rules and regulation
Industry profitability includes major key points like:
 Customer base
 Growth of the country
 Customer demand and usage
 Government rules and regulations
 Role of network providers (suppliers)
 Advancement of technology in the country

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PESTLE
Political
Economic
Social
Technological
Legal
Environmental
General Environment Analysis
PESTLE Analysis
PESTLE stands for "Political, Economic,
Social, Technological, Legal and
Environmental" and is used for business
and strategic planning, marketing planning,
organizational change, business and
product development and research reports.
By understanding these external
environments, organizations can maximize
the opportunities and minimize the threats to the organization.
Political
Political factors have a positive effect on the industry.
Political stability is rare in Bangladesh. Internal disputes between political parties always
create a pressure on the economy while halting the growth rate in every sector and of Mobile
Financial Services (MFS) sector can never be an exception. Despite the unfortunate
condition, mobile banking industry has surpassed the hindrance by the political irregularities
and has been able to make its mark in the market by the running fourth year. Because of the
pro-active and forward-looking approach of the Bangladesh Bank and Government, mobile
Figure 5: Pestle Framework

29
banking industry has experienced a remarkable progress in few years. Bangladesh
government’s motive in building a “digital” nation has enforced the technological
advancement and thus encouraging mobile banking industry to prosper and exhibiting it as an
attractive one in the market.
Economic
Economic factors have a Positive effect on the industry as the current economy of
Bangladesh is being unstable.
Despite being a country with political instability, poor infrastructure, corruption, insufficient
power supplies, and slow implementation of economic reforms, the economy of Bangladesh
has grown in the past year for 2010 and 2011 but followed by a declining rate in 2012 and in
2013, according to Bangladesh Economy Profile 2013. (CIA World Factbook, 2013). The
outgoing year has been one of the most disturbing years for Bangladesh in the recent past in
terms of domestic political instability caused by hartals, blockades, and deadly violence for
months. As a result, the economy had to bear the brunt in many ways. The World Bank
International Monetary Fund, Bangladesh Bank (BB) and many experts have projected the
gross domestic product (GDP) to be lower than 6%, which is much below the target of 7.2%
for FY2014. Some even apprehend it may be lower than 5%. Poor economy implies less
employment generation and low income, which in turn has poverty implications. Even though
the disposal income reached an all time high of 31079.56 BDT THO in 2013, if the poor
economy scenario continues Mobile Financial Services (MFS) may fall into a less attractive
sector.
Social
Social factors have a positive effect on the industry.

30
Mobile financial services’ basic qualities can help the unbanked overcome barriers and reap
the benefits of financial services. MFS can be used by nearly everyone at any time of day or
night and from anywhere, eliminating the accessibility issues presented by traditional
banking. In addition, MFS provides secure services at a low cost. Through M-banking one
can avail various services i.e.; utility bill payment, fund Transfer, shopping, cash withdrawn
from selected ATM or Cash point and many more exciting facilities. The preference for MFS
is high among people as it facilitates time saving, low cost, security, and trustworthiness. It
has been elaborated that the adoption and use of MFS is embedded in social practice.
Nowadays millions of inhabitants of Bangladesh are transferring funds within a network
through mobile network coverage, thus making it an attractive industry. Peoples’ attitude
towards MFS is positive because of its usefulness and increased flexibility in operating. The
society’s health, education and mobility are heading towards positive direction and this has a
positive impact on MFS as well.
Technology
Technological factors have negative effect on the industry.
Technological factors are relevant to innovations in technology that may affect the operations
of the industry and the market constructively or unconstructively. This refers to automation,
research and progress and the quantity of technological responsiveness that a marketplace
possesses. M-banking technology, the latest generation of electronic banking transactions has
become one of the most familiar banking features, opened up new window of opportunity to
the existing banks and financial institutions. Thus in the commercial sectors like banking, m-
banking technology has brought banking facilities in hand’s grip which has made life easier,
robust and flexible. As all most every bank is up to adopting m-banking technology with the
most advanced manner, in order to beat the competition it requires innovation. The MFS
market is at an early stage of development as the newest providers are seeking to stabilize

31
their technology. For instance, bKash being one the leading players in MFS is looking
forward to improve their services through research and development towards scalability and
robustness. However compared to pace of innovation in MFS of foreign countries, MFS in
Bangladesh is still an early stage and much more to be learned about it over the coming
future.
Legal
Legal factors have positive effect on the industry.
These factors have both external and internal sides. There are certain laws that affect the
business environment in a certain country while there are certain policies that companies
maintain for themselves. Legal analysis takes into account both of these angles and then
charts out the strategies in light of these legislations. For example, consumer laws, safety
standards, labor laws etc.
Following several years of deliberations and ad hoc permissions on MFS, the Department of
Currency Management and Payment Systems of Bangladesh Bank issued “Guidelines on
Mobile Financial Services (MFS) for the Banks” on 22 September 2011 which were
subsequently amended on 20 December 2011.
These guidelines state that only a bank‐led model will be permitted. For Bangladesh B
ank this means that a customer’s account, termed "Mobile Account", will rest with the
bank and will be accessible through the customer’s mobile device.
This mobile account will be a non‐chequing account classified separately from a standard
banking account.
The guidelines permit the following services, subject to specific bank proposals to and
clearances by Bangladesh Bank:

32
1. Disbursement of inward foreign remittances
2. Cash in/out using mobile account through agents/Bank branches/ATMs/MNO’s outlets
3. Person to Business Payments (utility bill payments or merchant payments)
4. Business to Person Payments (salary disbursement, dividend and refund warrant
payments, vendor payments)
5. Government to Person Payments (elderly allowances, freedom‐fighter allowances,
subsidies)
6. Person to Government Payments (taxes, levy payments)
7.Person to Person Payments P2P (One registered mobile account to another registered mobil
e account)
8. Other Payments (microfinance, overdraft facility, insurance premiums, deposit pension
scheme deposits)
Following the initial guidelines, Bangladesh Bank also issued an update to the guidelines
with some modifications on 20 December 2011. These modifications clarified that the bank
bears responsibility for know-your-customer (KYC) practices. It restricts P2P payments
between holders of registered mobile accounts thereby restricting the use of services in which
recipient cashes out payment without opening a mobile account. With such strict guidelines,
among the seventeen permitted banks only ten were able to launch MFS where only five were
licensed to offer range of service beyond inward foreign remittances. Thus, legal rules and
regulations are impeding a positive effect on the mobile banking industry or MFS.

33
Summary
Table 3: PESTLE summary
Political Positive
Economic Moderate
Social Positive
Technology Negative
Legal Positive
With the help of the PESTLE analysis it is evident that the MFS or mobile banking industry
of Bangladesh is an attractive sector. Environmental factors need not to be considered in this
industry.

34
CompetitiveEnvironment Analysis
Porter’s 5 Forces
Threat of New Entrants - Low (Positive/Favorable)
Mobile Financial Service or Mobile Banking Industry is comparatively new concept in the
financial system and it at growing stage. However, the threat of new entrants is low due to
following reasons.
Barriers to Entry (High)
There are several factors that restrict or discourage others to enter the market. Since, the
industry is a part of financial system there are legal and regulatory barriers as well as
pressures from the existing market players.
Competitive
Rivalry
(High)
Threat of
New
Entrants
(Low)
Bargaining
Power of
Buyers
(Moderate)
Threat of
Substitute
Services
(Moderate)
Bargaining
Power of
Suppliers
(high)
Figure 6: 5 Forces Model

35
I. Huge Capital Requirement: Before providing mobile financing service an
organization must be well capitalized and must maintain required capital adequacy
and cash adequacy ratio. To start the service sponsors must provide tk. 4,000,000,000
(Four hundred Crore) as paid up capital and maintain a risk weighted Capital
Adequacy Ratio.
II. Strict Conditions, Regulation and Policies: Since mobile financial service is part of
financial system of the country there are strict licensing requirements and conditions
on the new service providers. Bangladesh Bank is the sole authority to provide
license to a new company. There are specific conditions of Bangladesh Bank such as
maintaining specific capital adequacy; cash reserve ratio, sound financial background
and solvency, well managed corporate governance, safe IT system, clear rules to
solve disputes associated with the service etc.
III. Incumbency Advantage: Existing companies in this industry enjoys incumbency
advantage because of their experience, technology, management, agent pool, wide
networks, favorable geographic locations, Know Your Customer (KYC) practice,
customer base and financing. It is difficult for a new company to negotiate with
mobile network operators (MNO), IT vendors and most importantly building an agent
pool.
IV. Unequal Access to Distribution Channel: Mobile financial service requires a
different and sophisticated distribution channel. Currently the service provided
through the agents. A successful venture in this industry requires a sophisticated and
trained agent network to reach every corner of the country.
V. Economies of Scale: Research shows thatin financial service industry economies of
scale exists among resourceful large organizations and they can operate more
efficiently than the smaller banks.

36
Expected Retaliation (High): Expected retaliation from the competitors is high because
strong and powerful banks are involved in this industry and as a result they are continuously
trying to hinder new entrant to enter the industry by influencing the government or regulatory
bodies.
Bargaining Power of Suppliers - High (Unfavorable/Negative)
In mobile financial service industry key suppliers are Mobile Network Operators (MNO) and
IT vendors.
Bargaining Power of Mobile Network Operator (Very High): Mobile financial service is
very much dependent on mobile network operators and without their partnership operating
the service is not possible. However, there are only six mobile network operators in
Bangladesh hence they have substantial bargaining power over the industry. Mobile financial
service operators must make a partnership which is known as MNO Partnership with all of
them to reach all of the target customers. Currently Grameen Phone has the largest market
share (42%), followed by Banglalink (26%), Robi (22%), Airtel (7%), Teletalk (2%) and
Citycell (1%). So the mobile communication market is mainly dominated by 3 major
companies with strong network over the country and they hold significant bargaining power
with mobile financial service providers. Very few companies of mobile financial industries
have MNO partnership with all of the mobile network operators. Moreover, MNO partnership
with banks is not the primary business of mobile network operators.
So, bargaining power of mobile network operators are very high because
 MNO market is dominated by only three large companies

37
 There is no substitute service for mobile financial service industry
 MNO partnership with banks are not main business of mobile network operators
Bargaining Power of IT vendors (Moderate): A safe, efficient and effective IT system is a
primary requirement for mobile financial service. In the industry there are both foreign and
local IT vendors providing services to the mobile financial service providers. Since, there are
large numbers of vendors available, bargaining power is comparatively lower. However,
mobile financial service is very sophisticated system hence the quality of the system and
security are very important factors, Moreover, IT system should be designed according to
MFS providers’ operation method and structure. Therefore well-known and experienced IT
vendors have higher bargaining power over the industry.
So, the bargaining power of the IT vendors are moderate because
 IT system is a primary requirement and there is no substitute
 Quality and security are important factors.
 Continuous support from the vendors is required.
Bargaining Power of the Investor (High): Fund is one of the major factors in the industry
and investors’ interest in this industry plays an important role. Bargaining power of the
investors are high because there are more investment alternatives exist and higher return
drives investment decision. Therefore, if the industry fails to deliver desired return to the
investor the industry will face lack of funds to provide the service. Moreover, regulatory body
requires sound financial condition to allow MFS provider to continue operation in
Bangladesh.
So bargaining power of investors is high because
 Alternative investments are available

38
 Well financial condition is required by the regulatory body
 There is no substitute.
Threat of Substitute Services - Moderate
Substitute services of mobile financial service are traditional payment and money transfer
service offered by banks, microfinance services, inward remittance service offered by both
banks and other unofficial payment services.
Threat of Traditional Banking Service (High): Threat from traditional banking service is
high because there are 56 schedule banks and hundreds of branches all over the country.
People also trust and prefer banks as a medium of transaction. Transaction services such as
debit/credit card, checks, bank draft, money transfer, remittance service and services offered
by banks are strong substitute of mobile financial service industry.
Threat from Microfinance (Moderate): Microfinance aims at providing financial service at
small scale to financially challenged people of rural areas. So, this industry is a potential
substitute for mobile banking financial service.
Cross Boarder inward/outward Remittance Service (Moderate): Some organizations
specialize in cross-border transfer such as (Western Money Union). Since, mobile financial
service also include remittance service, these organizations are potential substitute for
remittance service.
Unofficial and Unregulated Money Transfer Service (Moderate): There are many
unofficial and unregulated (illegal in some cases) money transfer service exist in Bangladesh
(such as individuals who delivers money from one place to another place for commission or

39
Hundi). These services are popular to ignorant mass people and potential substitute for the
industry.
Bargaining Power of Buyers – Moderate
In mobile financing sector, the primary buyers of the service are the general public as well as
business who use mobile financing as a means of making payments to both customers and
other businesses.
General Public [Low]
There are mainly 3 mobile banking operators in Bangladesh; Brac’sBkash, DBBL’s
Mobile money and M-Cash of IBBL, and they offer almost homogenous services which
have low switching costs between operators. But customers living in rural regions only
have access to Bkash, as the other mobile banking operators are yet to reach the coverage
levels of Bkash. Furthermore banks located in rural areas do not have the ability to facilitate
cross border remittance flow, or online banking services. As a result the bargaining power of
the general populous in using mobile banking is not very high, especially in remote areas who
do not have access to alternative services in their vicinity.
Businesses [Moderate]:
The Bangladesh Telecommunication Regulatory Commission (BTRC) has set the charge at
2.0 per cent for each transaction for ‘cash-in’ and ‘cash-out’ purposes and Tk. 5.0 for the
lowest amount of transactions in mobile banking. So, not only are the services rendered
standardized, the transaction costs are fixed, giving mobile financing operators no leeway to

40
make profit, this gives business great power over which operator to choose to do their
transactions, which will be of a greater quantity of cash, then that made by general customers.
But, according to the guidelines of BB, the transaction limit for the account holders of mobile
financial services has been fixed at a maximum amount of Tk. 10,000 on a daily basis and a
total of Tk. 25,000 on a monthly basis. The limit is applicable to any number of transactions.
So, any business that has monthly revenue/ costs they pay through mobile banking exceeding
Tk. 25,000 will be required to hold multiple accounts, preferably with one of the 3 afore
mentioned operators, which will increase their switching costs.
Competitive Rivalry – High
The intensity of rivalry is influenced by the following industry characteristics:
I. Number of firms (fair): In the mobile banking sector there are large number of firms
are involved so as a result it is very much possible in the future that the customer base
can be divided. At present most of the firms have pretty much same market share and
which is very low compare to BKASH. BKASH is the market leader with a large
market share. Though there is lot of firms in this industry but competition is not so
high in terms of market share.
II. Market growth (High): The market growth indicators are very high which are
around a double digit growth rate. As a result firms are able to improve revenues
simply because of the expanding market. So there is less fight among the competitors
for capturing the market share.
III. Fixed cost (High): Fixed cost in this industry is very high because the firms invest
huge amount of money in technology for giving better services to the customers. On
the other hand the firms had to trained good number of employees to giving services
to the customers at a best level. So overall the sunk cost is high.

41
IV. Switching cost (Low): Switching cost in this industry is low because customer can
easily switch from one company to another company. As a result all the firms are
struggling to capture customers.
V. Product differentiation (Low): In this kind of industry the product differentiation
scope is very low which leads to higher rivalry. In this industry Brand Identification is
very important by which BKASH actually constrain the rivalry.
VI. Strategic Stakes (High): In this industry strategic stakes are high because there is a
high possibility of losing the market as well as high possibility for great gains. So this
intensifies the rivalry.
VII. Exit Barriers (High): In this industry exit barriers is really very high. As everybody
is dealing with huge investment as well as dealing with public’s money, the firms
have to bear huge cost if they want to make the company abandoned.
VIII. Industry Shakeout (Low): Everyday new company is coming and at times it is very
much possible that market becomes overcrowded and saturated. But as the growth
rate is very high in this industry there is less chance that the market becomes
overcrowded. So this shakeout reduces competition, price wars, and company
failures.Summary of Porter’s 5 forces:
Table 4: 5 Forces Summary
Market Forces Degree of Threats Condition
Threat of New Entrants Low Favorable
Bargaining Power of Suppliers High Unfavorable
Threat of Substitute Services Moderate Favorable
Bargaining Power of Buyers Moderate Favorable
Competitive Rivalry High Unfavorable

42
In Porter’s five market forces analysis it is observed that possibility of new players in the
industry is low due to high barriers and retaliation from existing companies. Therefore, the
industry is at favorable condition for existing companies. However, threats of suppliers and
existing competitors are high because suppliers hold strong bargaining power and
experienced as well as well capitalized banks are competing in the industry. So, the industry
is at unfavorable situation due to those two market forces. On other hand, bargaining power
of buyers and threat of substitute service are moderate. Five market forces analysis indicate
both opportunities available and threats involved in the mobile financial service. Most of the
factors of the market forces are favorable for businesses. So, the industry is more likely to be
profitable and attractive for business.
0
0.5
1
1.5
2
2.5
3
Threat of New
Entrants
Bargaining
Power of
Suppliers
Threat of
Substitute
Services
Bargaining
Power of
Buyers
Competitive
Rivarly
Porter's5 Forces
Degree of Threats (1=
weak, 2 = Moderate, 3 =
High)

43
How Macro-Environment is Affecting The PORTER’S Five Forces?
There are six components which represents the Macro Environment. Those are:
1) Political and legal forces
2) Demographic forces
3) Global forces
4) Technological forces
5) Social forces
6) Macroeconomic forces
These forces have some sort of impact on the industry. These are the forces which indirectly
creates both opportunities and threats for the companies. Each of the components will be
discussed below, how these forces are affecting in the Bangladesh M-Banking or mobile
financial service Industry (affecting the five forces).
Figure 7: Macro Environment 5 Forces Model

44
Political and legal forces: In terms of legal issues, Bangladesh regulations are not that much
strict but on the other hand Bangladesh has a serious political instability. As a result these
forces are mainly affecting threat of new entrants. Although threat of new entrants is low but
for these forces to some extent it is creating barriers for the new entrants.
Demographic forces: These forces are the outcome of changes in the characteristics of a
population. These forces are not that much affecting the industry. But to some extent rivalry
amongst existing firms and threat of substitute are being affecting since they need to offer
variety of services classes to variety characteristics of the population
Global forces: These are the forces which are affecting more or less to all the Porter’s five
forces in Bangladesh Mobile Financial Service or mBanking Industry. Due to these forces
rivalry amongst existing firms force is getting higher because more and more firms are
operating. For these forces, bargaining power of suppliers is getting higher since more firms
are in the industry but very fewer suppliers. These forces are also affecting to the bargaining
power of buyers, due to these forces buyers having more options to choose among many other
financial services as a result their bargaining power have increased. Threat of substitutes also
being affected because there are other ways like international fund transfer, remittance
service, and payment, credit cards to fulfill the basic need for the people domestically and to
some extent internationally. In addition at last threat of new entrants is getting affected but
not that much because it requires huge capital to invest to start a mobile financial service
Technological forces: Due to these forces rivalry amongst existing firms force is getting high
because companies are getting more technologically advance as a result others also trying to

45
adopt it and keep up with the pace and satisfy the customers. And also due to these forces
both bargaining power of buyers and threat of substitute are getting high since they are
getting aware of the technologies and also adopting the technologies.
Social forces: Due to these forces bargaining power of buyers is getting low because people
are getting more quality and time conscious. People are becoming busy and they want a
reliable and quicker financial service. As a result numbers of the buyers are increasing, so the
bargaining power in decreasing. Also for these forces threat of substitute is getting low
because mobile financial service provide more time saving and reliable financial service to
majority of the working class people who are living in remote places where traditional
banking services are not available.
Macroeconomic forces: These forces include economic growth, interest rate, currency
exchange rate and inflation rate. These forces are very influential to the Porter’s five forces.
Bangladesh is an emerging market which means it is having rapid economic growth as a
result foreign investors want to invest in Bangladesh. Bangladesh interest rate and currency
exchange rate are quite stable compare to other countries. So it is encouraging toward foreign
investors to invest and as a result, these factors putting some effect on the Porter’s forces. In
M-Banking industry if the interest rates are stable, that is, not fluctuating, investors can raise
capital at a lower cost, making the industry a favorable one to invest and grow. The inflation
rate is another factor to be considered. The inflation rate has risen in Bangladesh than it was
last year. This implies that it is a threat for the companies to invest in this industry. Therefore,
economic growth, interest rate, currency exchange rate and inflation rate directly or indirectly
affect all the forces of porter 5 forces.

46
3 I Analysis:
Competitor analysis in marketing and strategic management is an assessment of the strength
and weakness of current and potential competitors. This analysis provides both an offensive
and defensive strategic context to identify opportunity and threats. Competitor analysis is an
essential component of corporate strategy.
According to Bangladesh Bank there are 28 banks which are approved to give mobile
banking services in Bangladesh. Out of the 28 there are 20 banks which have started to give
mobile banking services to consumers. Bkash of Brac Bank is so far the market leader. But
other banks are catching up to Bkash at a fast pace. The competitors of Bkash are divided into
three groups in the following points.
Immediate Competitors:
DBBL Mobile Money and M-Cash of IBBL are the immediate competitors of Bkash of Brac
Bank. They are the main players along with Bkash in the mobile banking market. The core
competencies of these competitors are given below.
DBBL Mobile Money (Core Competencies) –
 DBBL has partnership with every mobile network operator in Bangladesh.
 Notable partnerships with insurance providers and employers to use its platform for
distributing payments.
IBBL M-Cash (Core Competencies) –
 Very low service charges.
 Mobile banking services are based on the Mudaraba Principles of Islamic Shari'ah.

47
Impending Competitors:
The other banks who are low on market share in mobile banking sector but can become one
of the main players in the future are impending competitors for Bkash. Mercantile MCL
Wallet, Trust Mobile Money, Bank Asia, First Security Islami Bank mCash, Eastern Bank,
IFIC Bank, U cash of UCB, Jamuna Bank Sure Cash, One Bank OK mobile banking all are in
the market. They are all impending competitors for Bkash.
Dhaka bank, AB bank, South East bank, Premier bank, NCCBL bank and Standard bank have
not fully entered the mobile banking industry of Bangladesh. They provide very limited
remittance only services. But they can also expand their services and start fully functional
mobile financial services.
Invisible Competitors:
Sonali Bank, Janata Bank, Prime Bank, Citi N.A., Bangladesh Commerce Bank all have
license to start mobile banking. But they are not yet in the market. Other commercial banks of
Bangladesh may also be judged as invisible competitors as they are capable to get a license
and start mobile banking.

48
SWOT Identification
PESTLE
Political- Positive
Economical- Positive
Social- Positive
Technological- Negative
Legal- Positive
Porter’s 5 Forces
Threat of new entrants- Low
Bargaining power of buyers-
Moderate
Bargaining power of suppliers-
High
Threat of substitutes- Moderate
Rivalry among firms- High
Opportunities
 Wide mobile network coverage
and large number of active
mobile phone subscribers, over
114 million, provides a large
target market.
 Flexible rules and regulations
 Traditional banking services do
not reach to rural and remote
areas.
 Traditional banking hours are
inconvenient and it is difficult
to open as well as to maintain a
bank account.
 High growth of SME and online
businesses
 Hassles in traditional bill
payments
 Lack of safety and security in
the street
 Increasing no. of population
 Technological advancement in
adding value to the services.
 Acquaintance with the new
services is increasing in day to
day life.
 Massive market of low income
people.
Threats
 Sudden change of rules, regulations, conditions and taxation
policies.
 Corruption of the government and the authority
 Hacking, fraud, and abuse of the service
 Legal allegation concerning money laundering, financing criminal
activities.
 Yellow journalism and rumors
 Few mobile network operators.
 High competitive rivalry
Figure 8: Matching External Analysis
with Opportunities and Threats
Identification

49
Core Competencies
1. Brand Recognition
2. Agent Network
n
Core Competencies of Competitors
DBBL Mobile Money
 DBBL has partnership with
every mobile network operator
in Bangladesh.
 Notable partnerships with
insurance providers and
employers to use its platform for
distributing payments.
IBBL M-Cash
 Very low service charges.
 Mobile banking services are
based on the Mudaraba
Principles of Islamic Shari'ah.
Strengths
 High Technology and simple
banking
 Unique advertisement and
marketing strategies
 Continuous partnership
development with bill payment
and merchant payment
 Wider range of services &
innovation (Service
differentiation)
 Service availability in major
mobile network operators
 Capability to attract foreign
investors (e.g. Money in
Motion, IBM)
 Stronger customer care (24
hours call centers for bKash
subscribers
 The parent organization BRAC
is well reputed and recognized
NGO
 Opening a bKash account is
free.
Weaknesses
 Not attractive employee packages.
 Higher Service charge
 Comparatively less efficient management of
IT system
 Lack of external security
 Cash unavailability
 Unavailability of Bengali language service
menu
 Centralized management system
 Total monthly transaction amount is limited
Figure 9: Matching Internal Analysis
with Strength and Weaknesses
Identification

50
Table 5: SWOT identification at a Glance
Strengths Weaknesses Opportunities Threats
High Technology and
simple banking
Not attractive
employee packages.
Wide mobile network
coverage and large
number of active
mobile phone
subscribers, over 114
million, provides a
large target market.
Sudden change of rules,
regulations, conditions
and taxation policies.
Unique
advertisement and
marketing strategies
Higher Service
charge
Flexible rules and
regulations
Corruption of the
government and the
authority
Continuous
partnership
development with bill
payment and
merchant payment
Comparatively less
efficient management
of IT system
Traditional banking
services do not reach
to rural and remote
areas.
Hacking, fraud, and
abuse of the service
Wider range of
services & innovation
(Service
differentiation)
Lack of external
security
Traditional banking
hours are inconvenient
and it is difficult to
open as well as to
maintain a bank
account.
Legal allegation
concerning money
laundering, financing
criminal activities.
Service availability in
major mobile
network operators
Cash unavailability High growth of SME
and online businesses
Yellow journalism and
rumors
Capability to attract
foreign investors (e.g.
Money in Motion,
IBM)
Unavailability of
Bengali language
service menu
Hassles in bill
payments
Few mobile network
operators.
Strong financial
position
Centralized
management system
Lack of safety and
security in the street
High competitive
rivalry
Stronger customer
care (24 hours call
centers for bKash
subscribers)
Total monthly
transaction amount is
limited
Increasing no. of
population
The parent
organization BRAC
is well reputed and
recognized NGO
Technological
advancement in
adding value to the
services.

51
Opening a bKash
account is free.
Acquaintance with the
new services is
increasing in day to
day life.
Massive market of
low income people.
Business canvas and the current Model of bKash
Table 6: Business Canvas
A. Key Partners
Equity Partners:
BKash Limited, a subsidiary of BRAC Bank, started as a joint venture between BRAC Bank
Limited, Bangladesh and Money in Motion LLC, USA. In April 2013, International Finance

52
Corporation (IFC), a member of the World Bank Group, became an equity partner and in
April 2014, Bill & Melinda Gates Foundation became the equity investor of the company.
Mobile Network Operator (MNO) Partners:
Bkash has partnered with the major mobile network operators to provide comprehensive
coverage of their services across Bangladesh. Bkash started their partnerships with
RobiAxiata Limited in July 2011, Grameen Phone in January 2012, Banglalink Digital
Communication Limited in August 2012 and Airtel Bangladesh Limited in January 2013.
Technology Platform Partner
On the 4th of August 2011, Fundamo, part of Visa Company, was selected to power the bkash
service in Bangladesh. Through the deal, Fundamo facilitated the delivery of mobile
financing services to unbanked and under-banked mobile users in Bangladesh. Bkash enabled
a large portion of the population of Banlgadesh to their first access to basic and secure
financial services.
B. Key Activities
Providing an efficient, competitive, and simple mobile banking service
Bkash looks to provide uninterrupted, timely and cost efficient mobile banking service to
their customers. A lot of bkash’s basic services, such as registration, cash in, token encase,
checking balance, checking statement, merchant payment, online payment, have no additional
service charge. Furthermore partnerships with all the major mobile operators have made
bkash available nationwide.

53
Marketing and Branding
Bkash has been more active in promoting their mobile financing services in the media than
their competitors. Bkash has looked to improve their visibility and market their financial
services, not only through traditional newspapers advertisements and billboards, but they
have looked to reach out to those in rural areas through boat branding and dramas and TVC.
Maintaining Customer Relationship
Bkash has a helpline, 16247, that is open to subscribers of any Robi, Grameen Phone,
Banglalink, Citycell, Teletalk, Airtel and BTCL Number from 8 am to 10 pm. They have
customer cares in Dhaka, Mymensingh, Sylhet, Chittagong, Khulna and Bogra. Furthermore
they can be contacted by their customers through a form available on their website.
Maintaining and developing technology platform:
Bkash is constantly ensuring that their services are online; subscribers and their followers are
notified prior to any maintenance through their twitter and facebook pages. Furthermore they
are constantly upgrading their software to provide even more efficient and timely
transactional services for their customers.
Continuous partnership establishment with business and nonprofit organizations to
provide payment service.
Bkash has strived to establish partnerships with business and nonprofit organizations alike in
order to provide their services across Bangladesh. They have achieved this by partnering
themselves with all the major mobile operators of Bangladesh, making it possible for people
living even in rural areas access to a broader range of financial services.
Raising funds from international investors and donors

54
Bkash’s affiliation to BRAC, Money in Motion, International Finance Corporation and the
Bill and Melinda Gates Foundation has made it possible for them to raise substantial funds
and capital to continually expand and improve their services. It has enabled them to serve the
low income masses of the country and to achieve broader financial inclusion by providing
services that are convenient, affordable and reliable.
C. Key Resources
Strong Customer Base
Bkash Limited is at present leading the mobile financing industry with around 6
million subscribers out of a total market size of approximately 13.2 million subscribers
as of February 2014 , which is double the number of subscribers they had in 2013. DBBL
mobile banking, their closest competitors, has only 2 million subscribers in the industry.
Brand Value and Recognition
Unlike other banks, Brac has taken the positive initiative to create brand value and
recognition for its mobile financing service, Bkash. Bkash has used boat branding, car
stickers, drama and TVC along with traditional newspaper advertisement to promote brand
value and recognition. Furthermore bkash’s equity partners, BRAC Bank, Money In Motion,
International Finance Corporation, Bill and Melinda Gates Foundations, are all well
renowned across the globe, and Bkash’s partnership with them has helped boost their brand
value even further.
Financial Resources:
BKash has built its foundation capitalizing the unique resource base of its four stakeholders--
BRAC Bank, Money in Motion, International Finance Corporation and the Bill & Melinda
Gates Foundation. BRAC Bank, a SME focused private commercial bank in Bangladesh,
works closely with its parent organization, BRAC, which has grass-root presence in every
corner of Bangladesh. Money in Motion, besides bringing entrepreneurial leadership brings
together investors and initiators of successful mobile network, mobile money and mobile

55
commerce operators. IFC and Gates Foundation, along with the capital, bring global
governance practices and knowledge on Financial Inclusion.
Country-wide service coverage:
Through their partnerships with all major mobile operators of Bangladesh; Grameen phone,
RobiAxiata limited, Banglalink Digital Communication Limited, AirtelBanlgadesh Limited,
bKash’s technology allows 98% of the country's mobile users to access its service via very
basic handsets. Furthermore they have 85,000 agents and over 300 ATMS to service their
registered users.
Strong network of agents
From its inception on July 21, 2011 bkash has managed to create a strong network of agents,
which stood at more than 85,000 agents as of February 2014. This means bkash now has
about one agent in every village of rural Bangladesh, “this assures access to agents in the
remotest part of the country”.
Accessibility
Robi ,GP, Airtel and Banglalink subscribers can access the system Registered users
access directly through USSD by dialing *247#. Furthermore bkash has 85,000 agents and
over 300 ATMs for their registered users to top up and withdraw money from their bkash
accounts all within reasonable distance.
Wider range of services
Bkash provides a wide array of both transactional services- Cash In, Cash Out, Sending
Money, Creating Tokens, Redeeming Tokens, Merchant Payments, and non-transactional
services- Registration, Check Balance, Request Statement, Changing PIN, all available on the
palm of their hands. Furthermore, several educational institutes such as North South

56
University and Milestone colleges have started using bkash as their primary means of
accepting admission fees. bkash is also used by SMEs to pay the salaries of their employees.
D. Value propositions
Convenient and accessible for clients
bKash users enjoy increased convenience of accessing their finances from their own mobile
phones anytime, anywhere. bKash gives its customers the flexibility to perform transactions
24 hours a day, 7 days a week, regardless of time and place. "No queues no waiting"; the
most convenient way of transferring money. Be it on a bus, train, launch, or anywhere else; as
long as the customer has a bKash Wallet on his/her mobile phone, s/he can access the bKash
wallet and send or receive money in seconds. The bKash interface also uses a very easy and
simple instruction based USSD channel. By dialing *247#, anyone can transfer money just by
tapping a few buttons on his or her mobile phone. bKash is the most convenient way of
transferring money. From higher to lower income level, Bkash has created substantial value
among customers with its convenient/ usable services. The accessibility has reached the peak
even in attracting the unbanked, poor, illiterate people to have access to mobile banking
service by bKash.
Availability of cash
bKash ensures the availability of fund in agent stores and thus keeps an amount in advance in
case of cash shortage. Such preceding approach helps bKash in providing more services to
more customers and thus creating value for them.
Nationwide service through agents
bKash is the easiest and safest way to send or receive money instantly on your mobile,
nationwide. No matter where it is in Bangladesh, bKash is always ready to serve.bKash
focuses massively in providing customers with quality, hassle free services. In order to

57
achieve the idea, bKash follows the strategy of catering its customers from almost every part
of Bangladesh through a large crowd of agents so that the service can be availed at a close
proximity. The agents are also trained about the paper works and other activations needed to
sign up for bKash account so that the customers can show interest in signing up for bKash
account.
Fast transaction with the help of MNOs
The Multi MNOs play a significant role in connecting user-owned handsets and servers of
MFS providers and in transacting money with no late. Due to the partnership with four giant
MNOs of Bangladesh ( Grameen Phone, Robi, Banglalink, and Airtel), bKash has managed
to secure 98% of mobile users to have access to bKash. The partnership with the MNOs
creates value among customers by increasing reliability with the fastest transaction from any
operator they prefer sitting at the remotest area of Bangladesh. bKash is dedicated to
widening the net of financial inclusion among the people of Bangladesh by facilitating money
transfer through mobile phones. bKash provides Mobile Financial Services allowing
customers to send, receive, and pay money from their mobile phones. Send and receive
money, or make payments the fastest way there is!
Cost effective services
bKash has introduced itself within the mobile banking industry in the most cost effective
manner. Increasingly, free offers and low charges by bKash have been able to satisfy the
needs of price sensitive customers of Bangladesh. For instance, bKash has been able to
capture the majority market with its jaw dropping initiative of opening bKash accounts for
free. bKash provides the highest benefits to its customers at an affordable cost, enabling
everyone to access the formal financial system of the economy.In addition to eliminating
initial monetary costs involved in entering the banking system, bKash greatly minimizes
opportunity costs such as time and effort required to access such services. The service
charges are minimal and there are no hidden costs involved.

58
Risk reduction by providing security
Customers value reducing the risks they incur while purchasing any service. bKash has taken
all possible safeguard in ensuring the security of its client’s money. bKash offers individuals
with private PIN code to prevent any risk of misplacement or theft even if the mobile phone
is lost.State-of-the-art technology provided by VISA ensures that the client’s money is
always safe and secure in the system of bKash.bKash places a high priority on protecting
information to assure that the transactions and data are secure with bKash. Its security and
compliance practices are regularly audited to ensure that they meet the highest standards.
Brand status
bKash is a subsidiary of BRAC which is a reputed conglomerate in Bangladesh. The name
BRAC itself has helped to create a good image among people and thus bKash is cherishing
the brand image of its parent company in every stage of gaining customer’s trust.
How bKash is creating value for its customers by linking value propositions?
The overall bKash value proposition is simple: a safe, convenient place to store money; a
safe, easy way to make payments and money transfers. With the ultimate objective of
ensuring access to a wide range of financial services for the people of Bangladesh, bKash
specially focuses to serve the low income masses to achieve broader financial inclusion by
providing services that are convenient, affordable and reliable. Among 68% of Bangladeshis
who use mobile phones, bKash was formulated at the very first place to utilize the mobile
devices and the omnipresent telecom networks to expand financial services more securely to
the under-served remote population of Bangladesh. A bKash mobile wallet is customer's
financial account, into which money can be deposited and out of which money can be
withdrawn or used for various services. Customers are able to receive electronic money into
their bKash accounts through salary, loan, domestic remittance, and other disbursements and
eventually cash-out the electronic money at any of bKash's vast of agent network of 80
thousand retail points. One of the reasons for bKash's success is its focus on serving the poor.

59
It was important to come up with a simple interface that can be accessed by the cheapest (i.e.
$15) handset. Smart-phones would make it easy to implement mobile money, but the service
would then be limited to only affluent customers and would defeat the purpose of reaching
the unbanked and poor. bKash opted for USSD that allowed anybody to access bKash
platform by dialing an access code, regardless of the sophistication of the handset. With all
the value propositions along with the brand value of itself, bKash is creating value for its
customers and finally reaping customer satisfaction.
E. Customer Relationships
Bringing mobile top-up service:
In 2014, Mobile financial service provider bKash has launched 'Buy Airtime' service
allowing the bKash wallet users to top up mobile balance of Banglalink, Robi and Airtel
numbers through bKash. According to a statement, any individual bKash wallet user can
recharge his/her own or someone else's Bangalink and Airtel connection, both prepaid and
postpaid, and Robi's prepaid connection through this service and no additional charge is
applicable for buying airtime through bKash; opening of bKash wallet is also free of cost.
This form of Customer Relationship was driven by aggressive acquisition strategies. More
operators of Banglalink, Robi and Airtel would want to open new bkash accounts as both
opening of bkash wallet and buying airtime is free of additional charges. Due to this bkash
would be able to expand their customer base.
Signing agreements with universities
To introduce a new and convenient mobile payment option for DIU students from their
bKash account, a memorandum of understanding (MoU) was signed between Daffodil
International University (DIU) and bKash in 2014. According to this agreement DIU’s
existing and new students will get the opportunity to pay their payment of admission fee,
registration fee, semester fee and all other fees and to utilize other mobile financial services

60
offered by bKash. Bkash also signed an agreement with North South University in 2012
which facilitates the payment of tuition fees through Bkash.
Launching campaigns
In 2014, before the celebration of bangle New Year, bkash launched a campaign that offered
20 percent cash back to its customers for use of the service at Deshi Dosh outlets to mark the
Bangla New Year or Pahela Boishakh. A statement was also placed by Rezaul Hossain, chief
commercial officer of bKash regarding this campaign: “We are very happy to be partnered
with Desi Dosh to launch the campaign as it is going to be a rewarding experience for our
valued customers. We have planned to bring more exciting offers for our customers in
future.”
Through personal assistance
Bkash maintains customer relation that is based on human interaction. Any Bkash customer
can communicate with a real customer representative of Bkash to get help or to satisfy any
query. In order to get direct help customers can call at 16247 from any mobile operator or
may email at support@bkash.com. Bkash also maintains customer service centers where
customers can visit to get help. The centers are located at 6 different zillas in Bangladesh:
Dhaka, Mymensing, Sylhet, Chittagong, Khulna and Bagura.
Contribution to BishwoShahittoKendro (World Literature Center)
In February 12, 2014 Bkash lent 34,000 books to the BishwoShahittoKendro (World
Literature Center) for the school and college students of Bangladesh. Through this
contribution 45,000 students of 460 schools in Bangladesh will get books each year.
Signing agreement with Yellow

61
In January 19, 2014 Bkash signed an agreement with “Yellow” a clothing brand of Beximco
Group. According to this agreement the customers of Yellow can make the payments through
bkash for both purchases from yellow outlet and purchase from Yellow website.
Signing agreements with various hospitals
Bkash signed agreements with Farazi Diagnostic and Hospital and Ibrahim Cardiac Hospital
in 2014 and 2013 respectively. According to these agreements the patients of these hospitals
can make their medical payments through bkash.
Celebrating Birth Anniversary of Rabindranath Tagore
ShurerDhara, a music school founded by RezwanaChoudhuryBannya organized a three-day
festival on the occasion of the 150th birth anniversary of Rabindranath Tagore. The festival
was held at the Bangabandhu International Conference Centre, Dhaka from December 29 to
31, 2011. As a commitment to preservation and spread of the arts and culture of Bangladesh,
this was a unique and exclusive opportunity for bKash to showcase and support the best of
Bangla arts and literature. Alongside other organizations, bKash and BRAC Bank jointly
participated to celebrate this great occasion with special sponsorship for Musical Evenings on
29th and 30th December of 2011.
Qubee Laptop Fair 2013
Qubee Laptop Fair, the 13th laptop fair in the country, was organized at the Military Museum
Ground, BijoySharoni for seven (7) days in 2013. bKash was the official Ticketing Partner of
this event. Those who opened a bKash Account at the venue were given FREE Entry to the
fair.

62
E-Commerce Fair 2013
Computer Jagat, a pioneer and the most popular ICT magazine of the country has recently
organized a 3-day long first ever “e-BanijyoMela 2013” (e-Commerce Fair 2013) in
Bangladesh. The event took place on 7-9 February 2013 in Sufia Kamal Public Library,
Shahbagh, Dhaka. bKash participated in this event as Gold Sponsor, where we distributed
leaflets explaining bKash and its range of services to visitors. Visitors were able to open
bKash accounts with their Robi, Grameenphone, Banglalink, and Airtel connections.
Digital World 2012
Digital World 2012 – Knowledge to Prosperity conference in Bangabandhu International
Conference Centre, Dhaka. The three-day Digital World comprises thematically inter-related
conferences, plenary and technical sessions with workshops, seminars, discussion and
exhibition. bKash participated in the exhibition with a stall where visitors were able to
register for free and open bKash accounts with their Robi, Grameenphone and Banglalink
connections. Also the visitors have been clued-up with an in-depth knowledge on mobile
financial services which they may access from their mobile phones using bKash.
F. Channels
bKash possesses channel partners in order to cater its services to customers. The partner
channels are indirect which comprises agents, mobile network partners, customer centers,
schools, universities, shopping places, travel agencies, restaurants, NGOs and other different
media. bKash has also signed agreements with different organizations to facilitate salary
disbursement through bKash. In respect to build awareness about the service, bKash has
implemented its innovative marketing strategy in an extensive manner which is proven as a
fruitful step in the mobile banking industry indeed. However, 80,000 agents and 6 customer

63
centers of bKash along with 3 other distributors act as supporting partners in delivering the
service to the customers and providing post-purchase customer service respectively.
Moreover, mobile network operators are responsible for serving the superior connectivity
between mobile users and bKash and also allowing bKash to execute its new service of
buying mobile Airtime through bKash wallet as a method of serving its customers. Here are
some of the channel partners of bKash.

64
G. Customer Segments
bKash segments its customers according to
I) Similarity in needs and
II) Response to similar marketing program.
bKash follows a mass marketing segmentation where the company follows an
undifferentiated marketing program. It also segments its markets demographically where it
focuses on occupation, income. Students, business entrepreneurs, high and low level job
holders, all types of service holders are the demographically segmented customers for bKash.
People from social economic class A, B, C, D and E are also the segmented customers for
bKash.
Social class and VALS (Values and Lifestyles) are the psychographic segmentation for the
company. High, middle and low social class people and people with different attitudes and
lifestyles who are looking for value against their payments for particular services are the
customers of bKash.
bKash also follows behavioral segmentation. Depending on the usage rate it has segmented
its market into 3 groups- High Medium and Low. The company also divided its market
according to user status as Non user, Potential user, Ex-user, First time user and Regular user.
bKash has segmented its customers according to the benefit segmentation. bKash provides
money transfer benefits to its customers. Anyone who are seeking for money transfer benefits
are the prime customers of bKash.

65
H. Cost Structure
Cost structure of an organization is very important in determining the business model. bKash
has quite a bit expensive cost structure as it is the largest mobile banking service in
Bangladesh.
Fees given to network provider
Every year bKash gives good amount of fees to the 4 mobile network operators for initiating
the transaction by using mobile network. All the 4 mobile companies give the same amount
of value added services technological support to bKash in exchange of some handsome
amount of fees.
Commission given to the Agents
For every transaction the agents get some commission. For example for sending every 1000
tk. the agents get 20 taka as commission. It has extensive distribution network with more than
70,000 Agents covering each district and thana.
Technology
For security purpose bkash has used good technologies. Every transaction is protected by
customer’s own PIN, which are always safe and secure in system. On the other hand, bKash
security and compliance practices are regularly audited to ensure that they meet the highest
quality of standards. For these bKash has to spend good number of money. Meanwhile,
bKash uses the ATM services of BRAC Bank Limited by which bKash customer can anytime
withdraw money from their bKash account. For using this ATM services bKash gives some
fees to BRAC Bank. bKash also maintain some strategic partnership with some service
companies like Nandos, Pizza Hut and G4S where they have to provide agreed money to their

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