Could new regulatory guidelines in Bangladesh turn MFS into “nobody’s baby”?

With the recent release of new draft guidelines for mobile financial services (MFS) in Bangladesh, I caught up with payments expert Raihan to get his views on the state of play of the market, possible outcomes from the guidelines and how we may see Bangladesh consumer financial needs better addressed over the next 5 years.


Raihan, to set the scene could you please share a bit about your role in the Bangladesh payments scene?

When I joined Grameenphone in 2006 on completing my studies in the US, these were early days for mCommerce in Bangladesh. We designed it all from scratch - processes for financial operations, reconciliation, the channel commission, payments, fund management and more. Seeing our BillPay service so popular in Bangladesh made it all worthwhile. I then moved to airtel where even in a bank led model we have built an award-winning mCommerce portfolio with specialized products such as micro credit disbursement together DBBL, our banking partner and 13 MFS partners including bKash.

What is the current state of play of the Bangladesh MFS market?

Bangladesh MFS market is now 5 years old. The top 2 operators bKash and DBBL together accounts for an estimated 74% of the market, with bKash leading since launch in 2011. A recent cGAP study estimates that 30% of Bangladeshi adults have used bKash while 4% have used the DBBL service. bKash users are more likely to be active, with 81% account holders active, compared with 67% for DBBL users. DBBL users are more likely to be registered users with 44% registered as compared to 23% for bKash.

As of June 2016, there are 36.2 million mobile banking registered accounts but only 13.3 million are active users. However, this data does not represent the number of unique users of MFS.

What’s behind this success of bKash?

I think this is due to the awareness that bKash was able to create ever since their launch and also their extensive retail reach. In terms of transactions, bKash still leads with over 80% market share although their annual growth in revenue has come down to 50% in 2015 from 81% in 2014.

What challenges do you face regarding user identification, AML and KYC?

OTC (Over-the-counter) continues to be hugely popular in Bangladesh, with 2.5 times more users than registered mobile wallet users. Retailers often transact on behalf of customers and this could create AML/KYC issues.

In 2016 we have started National ID verification process for mobile subscribers as Instructed by our regulators. Fortunately, as 90% or more of the active users of Telecom Services registered their SIMs, this may not impact the revenue and transaction volume of MFS.

Regarding usage pattern, I notice that unregistered users are more likely to use basic money transfer services while registered users also use advanced services including bill payment and mobile top-up. Today an estimated 8% to 15% of mobile top-up is done through MFS.

How is sticking with OTC a drawback to poorer users who only need basic services?

Today almost everyone has access to a mobile phone. Hence a poor person living in the remotest corner of the country can get registered through MFS and enjoy proper financial inclusion with the kind of services that are normally only available over a banking counter. Transacting through someone else’s wallet rather than your own is almost like a “Digital Hundi” or Sending money through the courier service which was actually one of the ways to send money in Bangladesh prior to the launch of MFS.

What was the motivation for new regulatory guidelines for MFS in Bangladesh?

MFS has always been a key focus for the regulators, specially Bangladesh Bank. Despite the rapid development of MFS and the huge potential to grow and reach the remotest corners of Bangladesh to boost financial inclusion, complete financial inclusion via mobile banking has yet to reach its full potential. OTC or unregistered use of MFS is one of the biggest drawbacks of the service.

This is why the Bangladesh Bank has been working towards a revised guideline that can encourage appropriate business models that help the market reach its potential and create a win-win situation for all the entities in terms of equity shareholding. I believe that with a few minor changes, this new guideline could help boost MFS growth and ensure financial inclusion in Bangladesh

So what are the new guidelines, and do they help address the issues?

Here I’d like to discuss two of the major clauses included in the new Draft Guideline:


Clause 4.1

BB shall permit delivery of the following broad categories of financial services by scheduled commercial bank-led Mobile phone based Financial Service (MFS) platforms in Bangladesh.


The scheduled commercial bank-led MFS platforms may have both banks and non-bank entities including Mobile Network Operators (MNOs) as equity holders, subject to banks holding majority beneficial ownership in total equity, no bank or non-bank entity holding more than fifteen percent beneficial ownership in equity, and Beneficial ownership of MNOs in an MFS platform not exceeding thirty percent of its total equity.


In Clause 4.1 we see that it remains a bank-led model as specified by the previous guidelines published in 2011. However, Clause 5.2 requires that no bank or non-bank entity hold equity share more than 15% individually. Banks must have majority ownership and Telcos may not collectively hold more than 30%. This means MFS projects will become nobody’s baby! This potentially creates a huge issue in regards to ownership.

What is the alternative you recommend?

In my view, we should first study what’s happening worldwide and learn from that. We should deploy a model which will be beneficial for the people of the country and will be owned by both Telecom and Banks. Telcos are good at things like branding, marketing campaigns, product management, agent management. Banks are expected to safeguard funds. Hence a model in which each of these players can execute to the best of their capability will be a successful one. My proposal would be that there should not be any restriction on the ownership of MNOs or any other equity holders. We should follow the good examples available across the globe.

Apart from equity participation, in what other ways are Telcos held back due to the guidelines?

There are several other areas where Telcos are not allowed to participate in the current MFS services. For example, Telcos are not allowed to promote the product, brand the product or launch different campaigns to promote MFS services. Telcos are only allowed to offer Telecom Data or talk time) for MFS promotions.

How do you see the market developing as we move towards 2020?

In the next 5 years, I expect the MFS market to be more mature and more compliant. SIM verification and re-registration will be imposed on MFS as well which will eventually limit the OTC usage and encourage use of mobile wallets. More advanced services will be launched so that people start to use MFS for services other than the basic money transfer.

Government already disburses payments (G2P) through MFS. In 5 years from now, I expect P2G to increase in a big way, so that payments including fees and taxes reach the government through MFS. Mobile Top Up usage will increase even more and may reach approximately 50% of total Telecom Top Up value.

MFS providers will further pursue Omni channel strategies, with some already providing the service through apps and the web. MFS services will be offered through other mediums such as NFC and it will not be only limited to USSD, apps or web and launch of 4G services will further boost usage.

Mobile Number Portability will be introduced in the country and, the need of having more than one MFS account with different Telecom operators will gradually decrease.

As stated by Bangladesh Bank, over the last couple of years, we have found that people at the “bottom of the pyramid” have been able to greatly increase their economic activities and that volume is increasing significantly each day. This contribution directly impacts the transactions volume in mobile banking.

Overall I look forward to MFS playing a major role in the growth of GDP of our country.



Ruhullah Raihan Alhusain is a payments professional with over 12 years of work experience in Mobile Banking Field. He graduated from the University of Texas at Arlington with Honors as Bachelor in Business Administration and led the Grameenphone mCommerce Operation Finance team before moving to airtel where he is Head of mCommerce Operations

Financial Inclusion at the Bottom of the Pyramid–Add your voice

In this interview Carol Realini, co-author of 'Financial Inclusion at the Bottom of the Pyramid’ tells how they use an innovative crowd-sourced solution to provide a deeper understanding of innovative financial services that are emerging to address the needs of unbanked and under-banked people around the world.

Q: Carol, could you let us know a bit about your new book – what’s it about?

fipKarl and I are fortunate to have been involved in financial inclusion projects around the world. We wanted to share how we see things changing, new models emerging and most importantly how this is happening differently in different places.

We thought it important that we provide a global view rather than focusing one market or one aspect – such as just Square or just Mobile POS, or just the USA.

We’re show-casing the best examples of tech-enabled financial inclusion from around the world.

Q: I’m interested in the way you are sourcing material – in a manner that is still pretty unique

Yes, although we have ourselves been in many of the countries where the new services are rapidly growing, we did not want to be limited in our thinking. By throwing the book open to contributions from around the world we expect to cover more ground and discover some of the breaking stories that will help create a good understanding of the state of play.

Q: Carol, how do you and Karl expect to make a difference with this book?

We believe the next 5 years will be a period of unprecedented change. Another 3 billion or more people will have access to the internet via mobile. Financial services will reach 1-2 billion more people in a similar timeframe. We want this book to help inspire people to understand more. We want the book to help people share about what they’ve achieved so we jointly celebrate their success and contemplate potential pitfalls together.

Q: How do people contribute to this initiative?

We have a campaign on for nominations for Global Financial Inclusion Pioneers. We would love to have more Europe and Africa nominations – we have extended the deadline to Dec 31, 2013. Full details are available at the Financial Inclusion at the Bottom of the Pyramid website. We’d like people to visit and nominate as well as submit their stories. This will help us showcase the best examples from across the world.


Carol Full AvatarCarol Realini is a successful serial entrepreneur who  dedicates her time to working with global pioneers in mobile banking & payments. Carol was a World Economic Forum 2010 Technology Pioneer.  Carol passionately supports entrepreneurship, banking for all, and women in technology. She is the author of the 5-Star-on-Amazon BankRUPT, a book about banking innovation in the US, and co-author of Financial Inclusion at the Bottom of the Pyramid.


Mobile Money Canada 2013 – Retail and Payments Experience of the Future


Karena de Souza, Shift Thought distributor in Canada shares her thoughts on the payments scene in Canada having recently attended Mobile Money Canada 2013. Mobile technology is starting to go mainstream. Learn how Canadian innovations such as Mintchip are developing shoulder-to-shoulder with new offers from global players such as PayPal and MasterCard.

The most recent Mobile Money Canada conference, chaired by Brent Ho-Young took place on November 13, 2013. It brought together thought leaders across commerce, mobile, retail and technology in a discussion on the challenges in accelerating the acceptance of Mobile Commerce into mainstream Canada. A well designed agenda included a number of TedX sized presentations, interspersed with themed panel discussions.

Canada offers technologists and business a unique playground in which to experiment and fast-track consumer acceptance. With Canadians being an unusually tech-savvy population, platforms such as Interac launched and became mainstream ahead of their adoption in other countries. An enabling yet protective regulatory environment provides an umbrella within which local businesses, Telcos, payment processors and banks are free to partner and innovate.

Presentations built on recent announcements:


Rogers David Robinson presented the next generation of suretap wallet, offering Rogers customers an all-in-one branded Telco-based mobile money experience – from branded NFC enabled handset containing a secure SIM, with payment made from a Rogers’ branded prepaid MasterCard or retail gift card.

imageWe also heard about Ugo’s latest plans. A few days ago Loblaw, Canada’s largest retailer, joined Ugo as their first retail partner. Ugo claims to be Canada’s first open mobile wallet that offers multiple payment and loyalty as a single package. Two major banks are involved: PC Financial and TD Bank Group. Both MasterCard and Visa cards will be loaded.


imagePayPal showcased their cloud based app – a first aimed at masking ‘payment’ within the greater transaction ‘experience’. The use of BLE allows a new proposition – customers check-IN instead of checking out.


imageMintchip is an innovative offering from the Canadian Mint. We heard about  the MintChip Challenge: MintChip now in R&D stage has developers participating in a challenge to develop what aims to be the evolution of currency.


The panel on Mobile Commerce & Payments for Retailers chaired by Pierre Roberge engaged Tanbir Grover from Lowe’s, Nurez Khimji from Urban Barn, PC Financial’s Jimmy Dinh and SecureKey’s Christian Ali. Retail is embracing the reality of a connected customer base and extending ways to offer them a more complete shopping experience. A big challenge in this sector is how to cost-effectively integrate the various existing technologies and legacy infrastructures to present a seamless environment for the customer. Also, in a consumer culture that is getting used to ‘want it now’, virtual stores pose a challenge to physical delivery in a country the size of Canada, given the transportation infrastructure.

An engaging panel that included Blackberry, Visa and MasterCard – and a very entertaining Timothy Grayson from Canada Post – discussed the components necessary to achieve that tipping point in the Canadian market that will encourage consumers to gravitate towards mobile as their main choice for payment.

A number of initiatives appear to be aiming to break the Tap&Go resistance barrier by cajoling the client to park their many loyalty cards conveniently within one mobile wallet.

The evening was packed with presentations filled with interest, intellect and innovation. “3 Ways to Launder Mobile Money” caught my attention. Others were informative – the Kili POS and Vince Kadar’s review of Telepin’s global timeline.

But for me, the most compelling presentation of the evening was by Nicolas Dinh for MasterCard. It spoke to the spirit of innovation present in Canada, in the best traditions of a nation that has given the world technologies such as Interac and Blackberry.


The N>XT challenge sponsored by MasterCard resulted in many innovative ideas. Watching the presentation of a $10,000 check by Kevin Faragher of CIBC to the  Crescent School Coyotes was inspirational. These five 11th and 12th graders won the CIBC People’s Choice award. They had a waiter use his/her smartphone as a POS to calculate the tab, split it between the customers and then process the split payment from 4 different patrons using NFC technology.

I came away with 3 main impressions:

  • Mobile technology is seeping into the mainstream. Mobile operators and financial services providers have established good building blocks and infrastructure and are ready to partner with retail to extend the mobile experience into many areas of our lives.
  • Retailers are now on board to engage a customer base that is technically connected as they walk into the virtual and bricks & mortar stores. They have to work on joining the older vertical infrastructures behind the scenes so that the customer is presented with an integrated seamless shopping engagement – from the point of browsing, through shopping, payment to final physical delivery.
  • Canadian innovations such as the Mintchip and the Kili POS are well-poised to be potential enablers for a new shopping experience.


Karena de Souza is a forward thinking and entrepreneurial professional with a special interest in payment streams for small business. Karena’s focus on mobile finance blends the challenges and opportunites she faced as a small business owner in Canada with her experience using technology to facilitate financial services while at Morgan Stanley in New York. She graduated from the University of Westminster with a BSc (Hons) Mathematics and Computing.

Re-imagining India – the global payments factory of tomorrow


My title is based on my favourite book “Imagining India” by Nandan Nilekani. Though I now live in the UK, I am fortunate to be a global worker and when I analyse news on India it is always with fond affection for the country of my birth. As India celebrated its 66th Independence Day a few days ago, this blog series is dedicated to focussing on its achievements over the last decade and imagining where next for this amazing country.

Transformation at home

clip_image001In the 1990s the Telecoms revolution opened the doors to a new level of progress for India. Entrepreneurs freed from shoddy fixed-line services today manage little empires from mobile offices based on a trusty cell phone, a less reliable pair of chappals and an occasional rickshaw ride. The figure shows the steep growth of mobile connections in this, the second most populous country in the world.

Now India has an opportunity to usher in the next revolution: based on Aadhaar identity, real-time money transfer across the length and breadth of the country, card payments through the RuPay domestic card scheme and mobile wallets that can be used to cut through layers of middle-men and go direct to the consumer. The mobile phone is truly evolving into an “office in a box”, as it becomes a means of identification, information dissemination and payment. Digital payments are set to revitalise the domestic economy and create a strong impetus for the next stage of growth. At 60 million, the MSME sector of India is just getting started and reduction of friction in payments will grease the wheels.

It is not gold but cashless payments that holds the key to India’s future. Money going digital is the solution that is needed to control black money and stop the flight of capital. As the need for cash payments reduces it will be so much easier to eradicate behaviour that destroys the very fabric on which poverty reduction measures rest.

Transformation abroad

As I write this Wipro has just been named amongst the top 3 in the 2013 Global Outsourcing 100 list. The list ranks companies on parameters including customer experience, global presence and competencies. In the 1980s I am proud to have been a part of the revolution as Wipro led by Azim Premji (my first employer) along with Infosys (Narayan Murthy, Nandan Nilekani), Tatas and countless others set out to prove that a power cut or two could not stand in the way of a good nation turning itself into the IT Centre of the world.

I believe prerequisite conditions now exist for Indian entrepreneurs to craft a new success story. This story will build on past successes, using technology to create innovative digital money solutions for the world, just as India did in the space of Information Technology.

Can India make payments cheaper, faster and more secure by injecting low cost value added services and payment platforms into payment chains for the new online “global customers”? There are many factors to support this. In my next blog I expect to touch on the many recent changes that perfectly poise the country to capitalise on new payments, at home and abroad.

Mobile Money in China – a classic example of Digital Money

Many a brave pioneer has attempted to break into the highly desirable China payments market without success. Yet as the first foreign licenses are granted and PayPal awaits theirs, other global providers question whether it is once again time to venture east. The Shift ThoughtDigital Money in China 2013” provides a guidebook to would-be marketers, with unique insights on the current state of play and potential navigation strategies for each category of player. It will not be possible to succeed in Mobile Payment and Mobile Money without understanding the larger context of Digital Money .


The size of the prize

It does not take long to convince any senior management team that the potential of the China payments market is massive. Homogenous, large segments do exist within the population of 1.35 billion. This major and rapidly growing economy is rapidly opening up to new technology and electronic commerce. Alipay, part of the mammoth Alibaba group has long ago claimed to have users in excess of the number of customers PayPal has world-wide, with a reported 550-700 million registered digital wallet holders.

Now they, along within an army of 250 other would-be payments providers equipped with third-party payments provider licenses are rapidly seizing key segments. Over 2013 the trend is for them to offer mobile wallets to their existing digital wallet customers. Historically Shift Thought believes this is the first time that new mobile services can start up with an existing captive base of hundreds of millions who can use the services on cheap smartphones through high speed mobile internet connections.

“Big hitter” providers hail from across multiple industries

The way this market has evolved is unique, as is the sheer variety of heavy-weight players bearing down on the alternative payments scene. The Chinese banks, now some of the largest companies in the world, are finding themselves at the starting line, as are the very large mobile operators. The relatively young and highly nimble payment operators grew beyond recognition, on the back of an SME market eager to do business on the Internet. Now they are using widely available, cheap smartphones and mobile internet technology to offer their digital wallets as mobile wallets to a captive consumer base of merchants and consumers shopping on the go.

Of the 32 services that we at Shift Thought monitor, there are many that present opportunities in China. Starting with Online Payment, we note large numbers of online banking, mobile banking and mobile payment users. Money transfer has been a highly desirable market, both within the country and internationally. The largest number of people in the world travel over the Chinese New Year, an indication of how many people live and work away from home and have a need to send money home.

The perils of the Chinese market

Since before 2005 many have attempted to break into the Chinese market. Large foreign banks and mobile operators made do with small shares in large companies, as the only foothold that could blossom into something larger. However let alone mobile wallets, even mobile payments and mobile banking progressed at a snail’s pace as the authorities experimented with multiple standards before determining which to back. Local companies enjoy multiple advantages. Regulations come from many directions, and not unlike the US, this is a country where you simply cannot count on a single standardised market.

So why is 2013 different?

Payment providers grew rapidly in the absence of regulation, reaching a point where they presented a threat to a number of incumbent players. New regulations have forced them now to obtain licenses. Already many tranches of licenses have been granted; the latest ones even include foreign companies.

Meanwhile mobile payment standards are being finalised, and this should address the current problems of highly fragmented markets. There has also been a rapid spread of high speed mobile networks, and cheap smartphone handset to utilise the services.

The role of Digital Money

China presents a classic example in support of the Shift Thought Digital Money approach. Services started strongly on the Internet and have now gone mobile, in contrast to a number of African countries that grew on the M-Pesa Kenya model.

Regarding the relative importance of digital money services, China currently has the largest number of online shoppers in the world estimated at $1.29 trillion for 2012, with 220.65 million users in June 2013. Unless would-be new entrants understand the various existing dynamics and key players, they stand to risk losing out as the mobile money market explodes over 2013 and beyond. With the need for local partners, it is possible that large global players find themselves having to sit out the dance while their competitors take to the floor.

A navigational tool for the complex China payments market

Having attempted to enter this market on behalf of large mobile operator groups, global banks and money transfer operators, we at Shift Thought recognised the need for a navigational tool to steer entrants in their ambitions relating to entry into the China Payments market. Our latest report “Digital Money in China 2013” was written at the request of some of the most renowned world payment experts who had no means of obtaining the knowledge elsewhere. It offers an introduction to the complexities of the China payment market, regulations and timeline. It provides a complete guide on the ecosystem, with details on each initiative, player and partnership.

Our goal has been not just to deliver actionable insights to mobile operators, financial institutions, payment providers and vendors world-wide, but to also offer practical, concrete ways to progress on the insights. There are links to the websites of all the important regulators, providers and players, as well as details required for building your business case. Market segment and services are explored in detail to track the progress of e-money in the Chinese market.

The France Telecom Group turns completely Orange


As the France Telecom Group completes rebranding to Orange, this post offers a snapshot on the Group’s origins in Europe and its current focus on emerging markets in Africa. This will be useful to readers seeking partnerships with large operator groups across multiple countries, or for competitor analysis.


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Malala’s vision for Pakistan and Digital Money

Did you watch the amazing speech of Malala Yousafzai addressing the United Nations on July 12, 2013 as part of her campaign to ensure free compulsory education for every child? It is up to us to move from platitudes to action in realising her vision. How can Digital Money help?


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Get inside your competitor’s head with the Shift Thought Digital Money SAGE


Although mobiles and smartphones present an exciting new dimension for consumer payments, the Shift Thought Digital Money SAGE offers payments providers a panoramic view, so as to prepare for the eventual growth that is essential for building alternative payments services.

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What impact will Digital Money have on employment?

The chief executive of Barclays, suggested during investor meetings that Barclays aims to become a self-oriented company, allowing staff to focus on added value. Antony Jenkins envisages a future in which the bank employs as few as 100,000 people (current strength ~140,000).  

While this is being positioned as blue-sky thinking rather than a statement of potential job cuts, it got me thinking about how the advent of Digital Money is likely to impact what is closest to our hearts at Shift Thought, namely the creation of jobs world-wide.

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The case of Liberty Reserve – Identifying “The weakest link” in Digital Money Services

The news on the shutdown of Liberty Reserve money transfer raises concerns for the potential knock on impact on legitimate users – of that service, and of new ones like it, that are springing up around the world. What then is the most effective way in which this kind of use of digital money can be segregated from the daily transformative use of Digital Money as a tool for financial inclusion?