MAHMUDUL HASAN and MD MEHEDI HASAN

In 2011 when mobile financial service (MFS) was introduced in Bangladesh, 27 banks took the approval from the central bank as many had correctly predicted an impending boom in mobile banking amid rising usage of cell phones.

Not all licencees saw the light of the day and 19 firms rolled out the service by 2016. Of them, 13 entities currently exist in a market that witnesses more than Tk 3,500 crore worth of transactions every day and the amount is only rising.

Dutch-Bangla Bank Ltd pioneered the country’s first MFS operation in March 2011 by introducing DBBL Mobile, which was later rebranded Rocket.

bKash, a subsidiary of Brac Bank, followed suit three months later.

Currently, bKash, Nagad -- an MFS wing of Bangladesh Post Office that made a foray into the industry in 2019 -- and Rocket control more than 80 percent of the market in terms of subscribers, which numbered 20.4 crore in May.

One of the MFS operators that saw early demise was Standard Bank’s Spot Cash.

“We couldn’t attract enough customers in the beginning, so we didn’t go ahead,” said Md Rabiul Hasan, an official of the private commercial lender.

For Spot Cash, high operating expenses, driven by escalated customer acquisition costs and the high price of software, were the main factor for its closure.

Since the MFS was almost inactive for some years, the Bangladesh Bank instructed it to close down last year.

MYCash, owned by Mercantile Bank, has been operational for more than six years but is yet to establish a vibrant presence.

Mati Ul Hasan, additional managing director of the bank, said: “It is true that MYCash is going slowly, but we have almost reached break-even.”

Not only MYCash, other MFS operators except bKash, Nagad and Rocket, have not thrived due mainly to higher expenditures.

Hasan said leading MFS providers such as bKash and Nagad have been able to widen their footprint by way of appointing agents, which costs exorbitantly.

“If we want to appoint agents, our service will incur losses. MYCash has a specific group of clients and they are always using our service.”

Meghna Bank was awarded the licence in 2016 and its brand name was Tap & Pay. Recently, the bank changed the name to “MeghnaPay” as part of the rebranding.

Sohail RK Hussain, managing director of the bank, says the bank had been operating the MFS through a third party and it did not run it properly.

The bank has cancelled the agreement with the third party.

Currently, Meghna Bank runs the service on its own and plans to make it profitable. It signed a deal with mobile phone operator Grameenphone to settle cash-out and cash-in services.

“Distribution channel is very important for the success of MFS, so we have a plan to roll out the same cash-out and cash-in points like those of bKash and Nagad.”

MeghnaPay has 5 lakh clients.

A senior official of the BB’s payments system department says subsidiary-based MFS providers are doing well than those being offered as a product of a bank.

He cited the example of Upay of UCB Fintech Company Ltd and Trust Axiata pay: tap of Trust Axiata Digital Ltd.

TeleCash is an MFS product of Southeast Bank and now the bank wants to form a subsidiary to run it. The bank has already sent a proposal to the BB to this effect, said an official.

Presently, bKash and Nagad dominate the sector with more than 75 percent market share between them in terms of customers. In terms of transactions, the share stands at over 85 percent.

Experts and industry insiders say the reluctance to invest, a lack of skilled workforce and the dominance of two to three players have been standing in the way of other operators.

“The main problem is that banks have been uninterested in investing substantially. They want quick returns, but you can’t make a profit overnight An He