Case Study - BKash

1
GSMA Mobile and Development Intelligence
bKash
bKash
bKash is a mobile money system in Bangladesh operating under the jurisdiction
of Bangladesh Central Bank as a subsidiary of BRAC Bank, a local bank. The
service aims to serve users at the bottom of the economic pyramid (BOP)
ensuring a broader range of financial services across Bangladeshs population
as a whole. The service uses a USSD interface, accessible via a basic handset,
offers no cashing-in fee and low cashing-out and person-to-person transfer fees.
These elements provide a system by which BOP users can send money in a
way that is fast, secure, and affordable. Launched in July 2011, the service now
has 2.2 million registered customers.
Year launched
Background and opportunity:
2011
In Bangladesh, as with many other countries in the developing world, people travel to urban
centres to earn a livelihood so they can support families in rural areas. One fundamental
insight driving the development of bKash was to cater for this growing class of workers,
creating an efficient system by which they could send money home in a secure, fast and
affordable way. bKash came up with a simple USSD interface, accessible by the cheapest
(i.e. $15) handset. Smartphones 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.
Business model
Consumer
Targeted Device
Basic/ Feature Phone
Primary Delivery
Technology
SMS/USSD
Products & Services

Payments
Markets deployed in
Bangladesh
Estimated number of
users
2.2 million
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http://www.bkash.com/
Image courtesy of bKash
Registering for bKash and cashing-in services are free of charge. For person-to-person
transfers, customers pay a flat fee of BDT 2 (or $.02) irrespective of the size of the
transaction. In case a customer wants to cash-out, there is a flat fee of 1.85% on the
amount withdrawn. For example, if a user wants to cash-out BDT 50, the cash-out fee is
BDT 0.92 (or $.01). Many bKash customers have such small tickets, but their large volume
compensates for the apparent small ticket size. As per the central banks prescription,
bKash deposits the full value of its customers wallet balances in a designated BRAC Bank
account, which is under the surveillance of the central bank. Separately, BRAC Bank
maintains the record of all individual bKash accounts in its own system. In the process,
bKash maintains an arrangement that is cost effective, but stays fully under the central
banks jurisdiction. Once users have electronic money in their bKash mobile wallets, they
can send the money to another bKash mobile wallet instantly. Recipients can walk to
bKash retail agents who give physical cash in exchange for electronic money and charge
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bKash
service fees. bKashs focus on reaching the poor distinguishes it from services that have
fees for cash-in or a minimum cash-out fee.
Progress since launch:

How have things gone so far?
After 17 months of operation bKash now has 30,000 agents, almost one in every two
villages in rural Bangladesh, this assures access to agents in the remotest part of the
country. The service was launched on July 21, 2011. It now has 2.2 million registered
customers. In addition, 98% of mobile users in Bangladesh have access to bKash. This
kind of penetration is achieved via partnerships with four major GSM operators of the
country.
Scalability:
How is the service being scaled to reach a larger audience?
In the short term bKash plans to stimulate growth through various product innovations
which they are already working on. These include solutions for international remittance,
mobile airtime top-ups, loan repayments, transport ticketing, etc. bKash will also be
working closely with telecom operators whose wireless networks are essential for the
service. They see that financial institutions and mobile network providers must work hand
in hand if they are to reap the benefits of new technologies in the pipeline. This will ensure
that services are delivered in an increasingly consumer-friendly way, and if that is assured,
there is no end to how efficiently the poor can manage their resources.
User centric attitudes:

How does the organisation build itself around the end user?
The service has a core objective: to see low income users adopt electronic money as a
genuine alternative of physical money. With this in mind, they understand that a key
qualification needed to use bKash is confidence the confidence to believe that one can
take control of her financial decisions, save money, spend wisely and complete
transactions in a manner that was never possible before.
Achieving these levels of user confidence depends upon understanding current user
requirements and habits in detail. Old habits (like keeping the money under a mattress,
insecure transfers, and paying high transfer fees) need to be replaced by new habits
(keeping money in a safe digital system, secure transfers, paying low fees, recognizing the
importance of being part of financial inclusivity). The organisational goal of shifting these
old habits to new improved habits depends upon first understanding and building around
the end user.
Challenges:
What are the internal and external challenges currently faced?
One of the core challenges stems from the perception of technology maintained by low
income users. For example, many users mistakenly think that they require advanced skill to
use the technology. A similar issue arises in that users often think that advanced English is
required to use bKash (although, in fact, very little English is required to use the service).
bKashs education program seeks to overcome these issues, our menu is so easy to use
that, once a user becomes familiar with the steps, she or he can opt for the required
service by simply choosing a numerical input and not have to respond with any text reply.
(the same point was mentioned earlier: seems repeating) With a longstanding perception
that advanced and modern things are not for them, low income users are led to believe
that they are dependent on others for receiving a service. Breaking this vicious cycle is
one of the toughest parts of taking bKash to a level where physical cash would be
obsolete.
Partnerships:
What is the value of partnerships, particularly with MNOs?
bKash regards partnership as a central theme in any mobile financial service. This includes
partnership with agents, mobile operators, banks, and technology providers; where each
one represents an essential element of the service structure. Its not a sprinters game,
rather more of a rally race, where multiple partners contribute in assuring the service. In
the case of bKash in Bangladesh, the right partnerships with mobile operators were
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bKash
essential. The financial regulator, the central bank, had prescribed the bank or its
subsidiary, which is regulated by the central bank, to offer the mobile financial service. The
central bank guidelines in Bangladesh clearly define the role of mobile operators and
mobile financial service (MFS) providers. Mobile operators provide the connectivity
between user-owned handsets and servers of MFS providers. For such connectivity,
mobile operators receive revenues from MFS providers. As the mobile operators provide
only connectivity, they have the appropriate incentive to maximize the volume of
connectivity that would be their source of revenue. This is a replicable model that on one
hand maintains the regulatory integrity and, on the other, offers adequate economic
opportunities for the mobile operators. After securing arrangements via revenue sharing
models between bKash and mobile operators, bKash managed to secure 98% mobile user
access to the service in Bangladesh.
Looking back, looking forward:

What key lessons have been learnt, and what are the organisations future
objectives?
One important lesson is the difficulty experienced by low income users in activating
features on their phones. However, as phones reaching financially constrained audiences
become cheaper, internet-enabled, and have more intuitive features, bKash is optimistic
that this area of difficulty will improve. This would increase the ease of accessing services
on mobile phones and hence increase mobile literacy. bKash have also learned that
human contact, one-to-one or one-to-many education and training sessions, are essential
components in their educational efforts. When our sales teams and agents interact with
individuals and explain the service, users learn very quickly.
Looking forward, bKash aims to keep contributing to the nations socio-economic
development. Fundamentally, this is facilitated by moving increasing numbers of people
operating outside the formal banking facility into an expanding financial system. bKash also
makes further use of this system: All the little amounts can potentially add up to provide
larger pools of capital to address larger problems. The organization is putting all the little
idle bits of capital to use to move the countrys economy forward
Acknowledgements:
The Mobile for Development Intelligence team would like to thank Kamal Quadir (bKash,
CEO) for assisting the GSMA to produce this case study.
About the GSM Association

The GSMA represents the
interests of mobile operators
worldwide. Spanning 220
countries, the GSMA unites
nearly 800 of the worlds
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entertainment organisations.
The GSMA also produces
industry-leading events such
as the Mobile World
Congress and Mobile Asia
Congress.
About Mobile for

Development - Serving the
underserved through mobile
Mobile for Development
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We identify opportunities for
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2012. GSMA Head Office Seventh Floor, 5 New Street Square, New Fetter Lane, London EC4A 3BF
UK
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GSMA Mobile and Development Intelligence

Background and opportunity:

Products & Services

Progress since launch:

User centric attitudes:

Looking back, looking forward:

About the GSM Association

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