DHAKA – In 2011, BRAC Bank launched Bangladesh’s first mobile financial service provider, bKash Limited. Today, bKash mobile banking benefits more than 24 million customers, most of whom now have access to a banking system in Bangladesh for the first time.
Bangladesh remains one of the world’s poorest countries, with 31.5 percent of the population living below the poverty line in 2010. Little more than one-third of Bangladeshis live in urban centers. Traditional brick-and-mortar banks have a limited capacity to service the rural population, and bank fees are often an insurmountable cost to the average worker. Banking facilities are concentrated in densely populated cities and exist too far from rural dwellers.
bKash reaches the unbanked people of Bangladesh. “bKash has a single minded focus of providing financial services to the poor and unbanked,” says Kamal Quadir, CEO of bKash. The service targets the portion of the Bangladeshi population ill-suited for traditional banking. The program uses a USSD gateway, allowing all users with a mobile phone to access the platform by dialing an access code. Relying on this modem lets customers with even the cheapest cellular devices to utilize the service.
Registering and cashing in money are free functions on the platform. Person-to-person transfers cost a flat fee of just BDT 5 ($0.04). The cash-out fee is 1.85 percent of the amount withdrawn.
The success of the platform depends on the use of retail agents across Bangladesh who act as human ATMs. bKash mobile banking customers can visit these agents to fulfill cash-in and cash-out functions. These employees eliminate the need for infrastructure capital to build ATMs. They also familiarize first time users with the functions of an electronic financial system.
Through bKash, mobile banking has revitalized rural areas by empowering the country’s poor with control over their finances. Now, urban workers can send wages home quickly and conveniently. Prior to bKash, money transfers were often fulfilled by the postal service. Recipients had to wait up to 15 days for transactions to be completed and many had to travel miles from their homes to access the sparsely located post offices. With bKash, urban workers can transfer money back home instantaneously.
Local corporations also benefit from the modernization of Bangladesh’s banking system. Prior to the rise of the mobile financial sector, wages were paid in cash — this meant factory owners had to count out and distribute money to thousands of workers. Now, salary transfers over bKash cost the corporations less and are hassle-free.
The scope of bKash is still limited; the platform is not accepted by all merchants. bKash has begun targeting smaller “mom and pop” vendors as potential new digital payment users. Furthermore, bKash mobile banking has not yet replaced some of the key functions performed by banks like granting loans.
Despite its limitations, bKash’s rapid growth proves the platform provides a much-needed service to the rural poor. The expansion of bKash to underserved communities has unquestionably transformed Bangladesh’s banking system.
– Katherine Parks