1

Measuring Consumers’ Attitudes towards Mobile Financial

Service: A Case Study on bKash

Mirza Mohammad Adnan Shezan

University of Dhaka
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Measuring Consumers’ Attitudes towards Mobile Financial Service: A

Case Study on bKash

A theses report submitted in partial fulfillment of the requirement for

the degree of Bachelor of Business Administration (BBA)

PREPARED UNDER THE SUPERVISION OF

Md. Nazmul Hossain

Assistant Professor
Department of Marketing
University Of Dhaka

PREPARED BY

Mirza Mohammad Adnan Shezan

ID: 116; Batch: 17th; Section: B
Department of Marketing
University Of Dhaka

Date of Submission: 25th March, 2015

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25th March, 2015

Md. Nazmul Hossain

Assistant Professor

Department of Marketing

University Of Dhaka

Subject: Submission of theses report on “Measuring Consumers’ Attitudes towards Mobile

Financial Service: A Case Study on bKash”

Dear Sir,
With due respect, it is great pleasure to me to submit my theses report titled, “Measuring
Consumers’ Attitudes towards Mobile Financial Service: A Case Study on bKash” is based
on a qualitative research. This project gave me both academic and practical exposures and help
understanding the Mobile Financial Services from the core.
I am highly obliged to you for your valuable guidance and constant attention on me and when
required in accomplishing this report. I shall be highly obliged if you are kind enough to approve
this report and provide your valuable judgment.
Though I have tried my level best to make it authentic and worth reading that the report may
have some mistakes and that are unintentional. I hope that the report will meet your expectation.
I shall be pleased to answer any sort of query you think necessary as now and when required. I
would like to give you thank for giving me the authorization to prepare this report.

Sincerely Yours,
-------------------------------
Mirza Mohammad Adnan Shezan

ID: 116; Batch: 17th; Section: B

Department of Marketing

University Of Dhaka
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Acknowledgement
While the writing of this report has been difficult, the preparation for writing has been even
harder. It certainly would not have been possible without the help of many people. I would like
to express my gratitude to all the people that were involved both directly and indirectly in the
preparation of this report.

First of all, thanks to merciful and almighty Allah for help me to accomplish this report. Then, I
would like to take the opportunity to thank, Md. Nazmul Hossain, Assistant Professor,
Department of Marketing, University of Dhaka. His guidance in choosing the topic of the report
helped me immensely and helped me to stay on the right track. More specifically, I would like to
thank him for imparting his time and wisdom.

Finally, I would like to thank my friends and family members who gave me mental support to
complete my report successfully.
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Executive summary:

Technology is changing rapidly to make our life more easy and comfortable. Organizations are
adopting latest technologies to optimize their business processes in order to provide effective
services and products to customers. Financial institutions are also adopting new technology to
provide more affordable and convenient services. Mobile Financial services (MFS) have seen
enormous growth in recent years in Bangladesh. Mobile Financial Services (MFS) is an approach
to offering financial services that combines banking with mobile wireless networks which
enables users to execute banking transactions.

The objective of this study is to investigate the factors influencing the consumer acceptance of
MFS in Bangladesh. This study presents findings from survey, including 100 respondents, which
examined consumers’ attitudes towards Mobile Financial Services. The demographic, attitudinal,
and behavioral characteristics of MFS users were also examined. Credibility, fastness,
availability, convenience, affordability and ease of use were found to positively influence
consumers’ attitudes towards mobile financial services. In contrary, impoliteness of agents,
reluctance of agents to help customers in opening personal account, relatively high agent charge
were found in resulting negative attitudes towards mobile financial services. This study also
offers an insight into mobile financial service sector in Bangladesh. Among all the MFS
providers, bKash has the highest un-aided brand awareness and top-of-mind associations.

By addressing the concerns of and benefits sought by the consumers, marketers can develop and
execute marketing programs to create positive attractions and policy makers can set regulations
for the expansion of mobile financial services in Bangladesh.
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TABLE OF CONTENT

Chapter Section Topic Page

1 Introductory Part 11-20

1.1 Introduction
1.2 Rationale of the Study 12
1.3 Literature Review 14

1.3.1 Mobile Financial Service (MFS) 14

1.3.2 Mobile Financial ServicesTrend in 15
Emerging Countries
1.3.3 Consumers’ Attitudes towards Mobile 16
Financial Service
1.4 Objectives of the Study 17

1.4.1 Broad Objectives 17

1.4.2 Specific Objectives 17

1.5 Organization of the Study 18

1.6 Scope of the Study 19

1.7 Limitations of the Study 19

1.8 Information needed and Sources 20

1.9 Methodology 20

1.9.1 Research Technique 20

1.9.2 Population 20

1.9.3 Sampling Frame 20

1.9.4 Sampling Technique 20

1.9.5 Sample Size 20

1.9.6 Questionnaire Design 20

1.9.7 Fieldwork and Data Collection 20

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2 Mobile Financial Services in Bangladesh 21-30

2.1 Background on the Bangladesh Financial Sector 22

2.2 Regulation of Mobile Financial Services 23

2.3 Market Development of Mobile Financial Services 24

2.4 Key Players of the Market 27

2.5 Industry analysis by Porters Five Forces Model 28

2.6 Findings on the Mobile Financial Services Market 29

Structure
3 Overview of bKash 31-38

3.1 Company Profile 32

3.2 Mission of bKash 32

3.3 Primary Values Offered in the Market 32

3.4 The bKash Story so far 33

3.5 Factors Influencing bKash Fast Drive in the Market 35

3.6 Major Challenges for bKash 38

4 bKash Analysis from Branding Perspective 39-52

4.1 bKash Brand Audit: Identifying Brand Positioning 40

and Values
4.1.1 History 40

4.1.2 Brand Inventory 40

4.1.3 Brand Exploratory 43

4.1.4 Recommendations 47

4.2 Integrated Marketing Communication (IMC) 47

Program of bKash
4.2.1 Media Advertising 47

4.2.2 Direct Response Advertising 49

4.2.3 Online Advertising 50

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4.2.4 Place Advertising 50

4.2.5 Point of Purchase Advertising 51

4.2.6 Publicity and Public Relations 51

4.3 Measuring Brand Performance of bKash 51

4.3.1 Brand Profitability 51

4.3.2 Brand Sales 52

4.3.3 Brand Market Share 52

4.3.4 Brand Distribution 52

4.3.5 Top of Mind Associations 52

4.3.6 Un-aided Brand Awareness 52

5 Consumers’ Attitudes and its Impact on Buying 53-59

Behavior
5.1 Understanding Consumer Attitudes Toward Brand 54

5.1.1 The Functional Theory of Attitudes 54

5.1.2 Multi-attribute Models 55

5.1.3 The ABC Model of Attributes 56

5.1.4 The Elaboration Likelihood Model (ELM) 57

5.2 Understanding How Brands Affect Consumer 57

Behavior
6 Findings 60-71

6.1 Demographic Characteristics of the 61

Respondents
6.2 Interest in Mobile Banking 62

6.3 Purposes for Using Mobile Banking 63

6.4 Consumer Responses about Fast and 64

Availability
6.5 Consumer Responses about Credibility, 66
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Affordability, and Convenience

6.6 bKash Enjoys High Consumer Awareness 68

6.7 Family Members and Mass Media Influence 69

to Use bKash
6.8 Favorable Attitude towards bKash 70

6.9 Summary of Findings 71

7 Recommendations and Conclusion 72-73

7.1 Recommendations 73

7.2 Conclusion 73

8 References and Appendix 74-84

8.1 References 75

8.2 Appendix 82
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LIST OF TABLES
Table 1: Holistic view of the MFS status......................................................................................................................... 24
Table 2: MFS comparative summary statement of December, 2014 and January, 2015 ................................. 26
Table 3: Coverage profile of bKash .................................................................................................................................. 35
Table 4: Comparision between bKash and DBBL mobile banking ........................................................................ 42
Table 5: bKash Pricing structure and Limitations ....................................................................................................... 44
Table 6: Gender of respondents in the Survey ............................................................................................................... 61
Table 7: Occupation of Respondents in the Survey...................................................................................................... 62
Table 8: Income level of Respondents in the Survey ................................................................................................... 62
Table 9: Consumer opinion about MFS regarding Fastness ...................................................................................... 64
Table 10: Consumers Opinion about Convenience ...................................................................................................... 67
Table 11: Consumers Response about Family and Mass Media Influence ........................................................... 69

LIST OF FIGURES
Figure 1: Major challenges for bKash .............................................................................................................................. 39
Figure 2: bKash Mental Map ............................................................................................................................................... 45
Figure 3: bKash CBBE Pyramid......................................................................................................................................... 46
Figure 4: Frequency of MFS Uses ..................................................................................................................................... 63
Figure 5: Purposes of Using MFS ...................................................................................................................................... 64
Figure 6: Consumers opinion about Average Waiting time for Receiving Money ...................... 65
Figure 7: Consumers Opinion about Average Distance to Agents .......................................................................... 65
Figure 8: Consumers Opinion about trustworthiness ................................................................................................... 66
Figure 9: Consumers Opinion about Affordability ....................................................................................................... 67
Figure 10: Un-aided Brand Awareness ............................................................................................................................ 68
Figure 11: M-Banking account ........................................................................................................................................... 69
Figure 12: Sources of Information ..................................................................................................................................... 70
Figure 13: Level of Satisfaction.......................................................................................................................................... 71
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Chapter 1

INTRODUCTORY PART
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1.1 Introduction:

Earlier this century, the mobile phone became the first communications technology to have more
users in developing countries like Bangladesh. The escalation and convergence of wireless
telecommunications has created a tremendous potential platform for providing business services.
It's estimated that mobile phone users are approaching the seven billion mobile subscriptions
mark globally, and business and operators alike are keenly aware of the opportunity to connect
with potential consumers through mobile phones (Mobi Forge, 2014). Technology has become
an increasingly vital element in the competitive landscape of the financial services industry.
Banking today is undergoing a radical transformation. The symptoms are obvious; new products,
new players, new channels are appearing daily. This transformation is taking place across all
sectors of the banking industry. Technology is a major force in this radical transformation that
led to breaking the geographical, legal and industrial barriers and has created new products and
services. 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.

Mobile Financial Service (MFS) is a method to offer financial services which integrate banking
with mobile wireless networks that makes enable users for executing banking transactions. It
indicates the ability to make deposits, withdraw, and to send or receive money from a mobile
account and habitually such services are enables by the use of bank agents which permit mobile
account holders to transact at independent agent locations outside of bank branches (Bangladesh
Bank, 2012). Mobile phone has turned into a device for daily usage which generates an
opportunity for the development of banking services for the unbanked people who have access to
a cell phone with the help of mobile phone banking. The remarkable progression of mobile
sector all over the world has made an exclusive chance for delivering financial as well as social
services through mobile network (Kabir, 2013, pp.96 – 114).

Bangladesh Bank has introduced permissions for Mobile Financial Service on July 2011 to
promote market development. Initially five banks have responded positively to establish active
deployments where three largest of these were launched immediately at the time of launching
and others in early 2012. According to CGAP (2014), by the end of the first quarter of 2012 the
fastest early expansion has come from bKash (Brac Bank) and Dutch Bangla Bank Limited
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(DBBL). Even though Bangladesh’s central bank has approved more than 20 licenses to offer
mobile financial services, more than 80 percent of transactions are through a single company—
bKash Limited. bKash launched in the second half of 2011, grew to 3 million accounts by the
end of 2012, and shot up to 11 million registered accounts by the end of 2013. According to
BTRC (September, 2014) the mobile phone subscribers in Bangladesh are 118.493 million and
71.9% people are living in low banking coverage are in rural (Bangladesh Bank). So, enormous
opportunities are waiting for the banking industry of Bangladesh in the platform of mobile
banking service.

Consumer attitudes are both an obstacle and an advantage to a marketer. Choosing to discount or
ignore consumers’ attitudes of a particular product or service—while developing a marketing
strategy—guarantees limited success of a campaign. This research aims to investigate the
consumers’ attitude toward mobile banking especially on bKash Limited, the largest player of
the market. This study will be a practicable one for those who want to do research further about
Mobile Financial Service in Bangladesh as well as feasible one for the actual and potential
customers of Mobile Financial Service. It will also be an important one for the government when
the government will need information about Mobile Financial Service.

1.2 Rationale of the Study:

There are around 160 million people in Bangladesh, of which only 13 percent have bank
accounts where as more than 90 percent are mobile phone users. 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 90% has mobile phones (bKash Limited, 2014). 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.
The use of mobile devices for conducting banking transactions and accessing other financial
information is an emerging service that has yet to be widely adopted by mobile users. Analyzing
the consumers’ attitude toward mobile banking reveals a large and heterogeneous picture. It is
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imperative for marketers to understand attributes leading to the adoption of or resistance to the
adoption of mobile banking services. As current market environment is going to be more
competitive, to stay and run a business in this competitive market, marketers have to take more
strategies for attracting customers to their business by creating better facilities and attractive
services. In this study I tried to measures the consumers’ attitudes towards mobile financial
service especially on bKash Limited.

1.3 Literature review:

1.3.1 Mobile Financial Service (MFS):

The latest innovations in telecommunications have capacitated the launch of new access methods
for banking services; one of these is mobile financial service; whereby a customer interacts with
a bank via mobile phone (Barnes and Corbitt, 2003, pp.273-288). MFS and M-banking is almost
synonymous. Mobile Financial Service involves conducting account balance and transaction
history inquiries, funds transfers, bill payments, stock trades, portfolio management, as well as
insurance ordering, via a mobile device (Suoranta, and Mattila, 2004, pp.354-66). MFS or
Mobile banking can also be considered as the convergence of mobile technology and financial
services (Chung & Kwon, 2009, pp.539-543). The requirements for this process are to have a
mobile device and mobile network connection. Mobile payment is a subset of mobile banking
which is defined as the use of a mobile device to conduct a payment transaction in which money
or funds are transferred from a payer to a receiver via an intermediary, or directly without an
intermediary (Mallat, 2006, pp.17-22). Mobile devices can be used in a variety of payment
scenarios, such as payment for digital content (e.g., ring tones, news, music, or games), physical
goods, tickets, parking fees and transport fares, or to access electronic payment services to pay
bills and invoices. Mobile banking banking has become a significant source of revenue to both
banks and telecom service providers. (Nysveen, Pedersen and Thornbjørnsen, 2005, pp.330-46).
Clark (2008, pp.3-27) suggested that as a Channel the mobile phone can augment the number of
channels available to consumers, thereby giving consumers more low-cost self-service options
by which consumers can access funds, seek banking information, transfer funds and make
payments. In this process of banking customers are allowed to access into the banking system in
anytime from anywhere. Despite its many advantages, the use of mobile phones in banking
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services is still in its evolutionary stage and Internet banking retains its position as the leading
channel in electronic banking (Laukkanen, 2007, pp.788-797).

1.3.2 Mobile Financial Services (MFS) Trend in Emerging Countries:

According to the World Bank (2014), half the people in the world fifteen years of age and older -
about 2.5bn people - do not have bank accounts. In emerging markets, formal banking reaches
about 37 percent of the population, compared with a 50 percent penetration rate for mobile
phones. For every 10,000 people, these countries have one bank branch and one ATM—but
5,100 mobile phones (Christopher, Beshouri and Jon Gravrak, 2010). In the Philippines, for
example, mobile-subscriber penetration is almost 80 percent, but banking penetration is only
around 35 percent, leaving 21 million mobile subscribers with no bank account. From a bank’s
perspective, however, bringing basic financial services to the worlds unbanked is a huge market
opportunity - and a philanthropic one, too. The opportunity isn’t new, of course. In recent years,
however, mobile technologies have matured to the point that they provide a cost-effective
delivery channel, which has put the opportunity within reach (Sanjay, 2013). Dutch Bangla-Bank
Limited (DBBL) is among the pioneers in mobile banking for the unbanked. In early 2012, the
Bangladesh-based bank launched a suite of mobile banking services targeting the unbanked and
underbanked. In only ten months, it garnered more than 1m new customers. Since then, an
average of 100,000 customers has been signing up for services each month, and these customers
have deposited more than $7.75m using the mobile banking platform. (Islam, 2010, pp.127-135)
The Mobile banking services are especially popular in emerging markets such as Mexico, Peru,
South Africa and India where bank branches are few and far between, roads are poor or non-
existent and transportation options are slow and/or unreliable. Mobile technology bridges these
gaps. In countries as diverse as China, Brazil and Kenya the number of new users of mobile
banking soared over 100% in 12 months, as banks leapfrogged traditional service models and
moved directly to mobile (Thomas, 2010). In fact, a new mobile banking report from Juniper
Research (2014, pp.2-30) predicts that more than 1bn people will use their mobile devices for
banking by the end of 2017. After the launch of mobile banking in India, mobile banking
transactions have seen some growth. What attracts customers to mobile banking is the round the
clock availability and ease of transactions. But mobile banking still has a long way to go as
majority of customers prefer banking in the traditional ways (Ashta, 2010). Laforet and Li
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reasoned behind the barriers to mobile banking adoption were lack of awareness and
understanding of the benefits provided by mobile banking (2005, pp. 362-380). According to
Gartner (2013, pp.2-47), the proliferation of the mobile device and 3G (third generation of
wireless) and their widespread implementation will generate the development of more
sophisticated services links to m-banking. As worldwide economies move away from cash and
toward mobile payments, it is important to consider that those without bank accounts will get left
even farther behind unless mobile services are available that meet their unique needs - in both
developing and developed economies. (Akinci, Aksoy, & Atilgan, 2004, pp.212-232). The
numbers are large enough to create a real opportunity and mobile technology provides a cost-
effective delivery channel, as evidenced by DBBL’s successful mobile banking deployment.
There is still plenty of room for more. The emerging markets have created a successful model for
the unbanked that developed economies could follow (Sanjay, 2013).

1.3.3 Consumers’ Attitude and Perception towards Mobile Financial Service:

Consumers’ motives predetermine consumers’ attitudes and behaviors towards different banking
technologies (Barczak, Ellen and Pilling, 1997, pp. 131-139). According to Rogers (2003,
p.175), there are five perceived characteristics of innovation that can be used to form a favorable
or unfavorable attitude toward an innovation, namely: relative advantage, compatibility,
complexity, trialability and observability. It’s a useful framework to test the influence of several
factors on mobile bank services adoption. The framework offers an integrated view, taking into
account more predictors than other studies on the adoption of innovations. It was also observed
that the predictors’ influence over the criterion variable was different for each group of mobile
banking users and non-users (Puschel and Mazzon, 2010, pp. 389-409). It is argued that adoption
will not take place unless customers perceive the service to be useful (Ali & Bharadwaj, 2010).
Perceived usefulness, perceived risk, cost and compatibility were found to affect consumer
acceptance of M-banking. The results also support a mediation model, whereby attitude transfers
the effects of the consumers’ perceptions to their intention to use M-banking (Wessels and
Drennan, 2010, pp. 547-568). Trust and credibility are crucial in reducing the overall perceived
risk of m-banking (Koenig-Lewis, Palmer and Moll, 2010, pp. 410-432). Comninos et al. (2008)
suggested that consumers will only transact electronically (online/mobile banking) if there is
convenience and security. Further Sharma and Singh (2009, pp.1-4) found that Indian mobile
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banking users are specially concern with security issues like financial frauds, account misuse and
user friendliness issue - difficulty in remembering the different codes for different types of
transaction, application software installation & updating, due to lack of standardization. For
consumers in developed countries, m-banking can be a complementary service (additional
platform for managing financial transactions) offered by financial institutions in addition to
ATMs and Internet banking. Therefore, factors such as convenience and ease of use may become
an importance criteria when they consider adopting m-banking. However, consumers in the
developing countries, the appeal of m-banking may be less about convenience, but more about
accessibility and affordability due to network coverage, quality connection, and costs (Donner
and Tellez, 2008, pp.318-322). For example, Laforet and Li (2005, pp.362-380) investigated
consumer behavior, attitude, motivation, and cultural influence on online/mobile banking
adoption in China. Their findings suggest that there are large discrepancies between China and
western countries in terms of users’ demographic characteristics and attitudes towards mobile
banking. Perceived risks (hackers and fraud) and technological skills were the most important
factor influencing Chinese adoption of online and mobile banking. However, consumers in China
do not attach much importance on convenience, ease of use, and free access to a wide range of
services. However, irrespective of country there are some common factors such as: perceived
usefulness, perceived social risk, perceived performance risk and perceived benefit directly
affect attitudes towards mobile banking, and that attitude is the major determinant of mobile
banking adoption intention (Akturan and Tezcan, 2012, pp. 444-459).

1.4 Objective of the Study:

1.4.1 Broad Objective:
i. To give an overview of Mobile Financial Service (MFS) industry in
Bangladesh;
ii. To identify consumers’ attitudes towards Mobile Financial Service;

1.4.2 Specific Objective:

i. To figure out the demographic characteristics of mobile financial
service users;
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ii. To give an overview about cost, usage and all other benefits of
Mobile Financial Service as well as to produce a scenario of MFS in
Bangladesh.
iii. To evaluate the performance of bKash;
iv. To determine the factors that help bKash fast drive in the market;
v. To determine the factors that influence consumers’ in adopting
MFS;

1.5 Organization of the Study:

There are 8 chapters in this study. The brief summary of each chapters are given below:

Chapter 01:

It contains the introduction, rational of the study, literature review, objectives of the study, scope
and limitation of the study, and research methodology.

Chapter 02:

This chapter elaborates an overview of the Mobile Financial Service (MFS) industry in
Bangladesh including background on the Bangladesh financial sector, regulation of MFS in
Bangladesh, market development of MFS, key players of the market, industry analysis by
Porter’s five forces model and findings on the MFS market structure.

Chapter 03:

This chapter presents the overview of bKash including company profile, corporate mission,
primary values offered in the market, the bKash story so far, factors influencing bKash’s fast
drive and major challenges for bKash in the upcoming days.

Chapter 04:

This chapter presents analysis of bKash from branding perspective including bKash brand audit,
IMC program executed by bKash and bKash brand performance.
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Chapter 05:

This chapter reflects on the theoretical analysis of different model of consumer attitude and the
impact of strong brand on consumer behavior.

Chapter 06:

This chapter reflects the findings from the survey in details regarding consumers attitude towards
mobile financial service.

Chapter 07:

This chapter includes some recommendations and conclusion.

Chapter 08:

The final chapter contains references and appendix.

1.6 Scope of the Study:

Although the operational activity of bKash is huge, I develop my report based on Mirpur and
Chakaria only. I have selected 25 bKash points in Mirpur from where people get bKash service. I
discussed with many rural people in Chakaria about bKash to understand their perception and
attitude toward bKash. I provided respondents with survey questionnaires and assisted them to
understand the statements. On the basis of this, I develop my report.

1.7 Limitations of the Study:

The sample size of this study was not necessarily representative of the Bangladeshi population as
a whole as it ignored large rural population. Secondly, the generalizability of this research may
be impacted by fact that the sample’s is skewed towards males. This may be due to general
tendency of Bangladesh culture to do outside tasks by maximum males. In addition, this research
only explores the factors to influence motivators and inhibitors on behavioral intentions. In terms
of future research, a large scale study with more representative sample could be conducted to
validate the factors of this study and to enhance the generalizability of the research conclusions.
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1.8 Information Needed and Sources:

Data has been collected from various sources; there is a combination of both primary and
secondary data that has been used in this research. Secondary data are collected from related
studies done in present timeline and primary data are collected from the survey. Different
journals, books, internet and reports of the banks have been used as the important sources of
secondary data.

1.9 Methodology:
1.9.1 Research Technique: I designed this study in descriptive format. The study is developed
in qualitative point of view. I collected information by conducting a survey and related
survey data to measure consumers’ attitude towards mobile financial service.
1.9.2 Population: Users of Mobile Financial Service is the population of this study.
1.9.3 Sampling Frame: As I prepare my report on the basis of bKash point of Mirpur area, so
the sample size is limited to this area only.
1.9.4 Sampling Technique: I used convenience sampling technique with random respondents
for sampling. I accessed my nearest mobile banking service agents’ locations and
conducted survey on the customers who came to take the service.
1.9.5 Sample Size: I conducted my survey on 100 respondents.
1.9.6 Questionnaire Design: The questions in the questionnaire were based on review of
literatures and the specific characteristics of Bangladeshi people & market context. The
specific characteristics represented different services and facilities provided by the MFS
institutions and expected by the MFS consumers of Bangladesh. The questionnaire was
translated into Bengali language to make clear and simple to understand by every
respondent. The items in the questionnaire were constructed based on the consumer
attitude and acceptance of mobile financial services.
1.9.7 Fieldwork and Data Collection: The field study was carried out in March 2015 using
empirical data. The sample size decisions were primarily based on cost considerations
and in line with studies on consumer attitude and acceptance of mobile banking. A total
of 100 respondents from Mirpur, were collected randomly at the time of transaction from
M-Banking agent stores through interview. Respondents verbally replied to a structured
questionnaire and their answers were recorded accordingly by the interviewers.
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CHAPTER 2

M O B I L E F I N A N C IA L S E R V IC E S I N
BANGLADESH
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2.1 Background on The Bangladesh Financial Sector:

Bangladesh is the 8th largest populated country in the world with around 161 million
populations. In Bangladesh, almost 31.5% populations are living under poverty (CIA, 2013).
From this huge population only 13% people have bank account (Bangladesh Bank, 2014).
Agriculture generates over 17% of GDP, and has become increasingly important as policy
makers grapple with climate change and spikes in global and domestic food prices (CIA, 2013).
Simultaneously, there is a shift underway to transition from subsistence to commercial
agriculture. Bangladesh’s financial architecture started developing within public sector
institutions established at the time of Bangladesh’s independence. According to Bangladesh
Bank (2015), after the independence, banking industry in Bangladesh started its journey with 6
nationalized commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In the
1980's banking industry achieved significant expansion with the entrance of private banks. Over
the last thirty years several new generations of private banks have entered and today make up
about one‐half of banking assets. Bangladesh has been a global leader in financial inclusion,
building some of the original and still largest microfinance institutions (MFIs). In addition to 4
state owned commercial bank, Bangladesh’s financial sector consists of 39 domestic commercial
banks, 9 foreign banks, 11 government‐owned specialized (development) banks, and 33 non
bank finance institutions (Bangladesh Bank, 2015). The Banking Sector has responded to the
agricultural needs, with increased products (notably cards and green financing) to support
development of agriculture (and sustainable agriculture). It creates an opportunity to examine
mobile channel applications. According to Bangladesh MICROCREDIT REGULATORY
AUTHORITY (2014), the MFI sector continues to grow, but with slower uptake amongst
women entrepreneurs and increasing uptake with SMEs – demonstrating market saturation in one
area, and market diversification in another. The combination of a large microfinance market and
a growing banking system has led to significant progress on financial inclusion. Where
Bangladesh is well ahead on credit with 23.3% of adults gaining access to credit, more than
double the global average for low income countries. Bangladesh’s overall access to accounts for
adults (age 15 or over) of nearly 40% compares favorably with South Asia’s average of 33% and
the low‐income country average of 27%. In terms of number of savings accounts at formal
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institutions, Bangladesh’s progress is higher than the global and regional average. Only 1.2% in
Bangladesh receive payments over the mobile phone whereas average in low income countries is
closer to 9.1%. (World Bank, 2012)
However, the financial sector has been somewhat stressed as banks have demonstrated instability
over the last few years. Bangladesh failed to meet its 7% growth target in 2014, though it is
intended to surpass 7% in 2015. Recent bank policies are targeting financial inclusion to build
and extend wealth. This includes new Mobile Financial Service Guidelines (2011). This is
catalyzing banking innovation, and it is supported by donors to build new scalable platforms, e.g.
bKash. Given the need to continue to advance financial inclusion Bangladesh Bank believes that
fully developed MFS operations can reduce barriers of physical access and cost and over time
enable a much higher proportion of the population to use basic formal sector deposit and
payment services. Access into the formal system might eventually lead to product innovations in
insurance, credit, pensions and government payments that reach many millions of Bangladeshis.

2.2 Regulation of Mobile Financial Service:

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 Bank 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:

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)
 24

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 mobile account)
8) Other Payments (microfinance, overdraft facility, insurance premiums, deposit
pension scheme deposits)

Bangladesh Bank has established limits on P2P transactions of taka 10,000 per day and 25,000
per month. These amounts are subject to change from time to time at the discretion of
Bangladesh Bank. 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 the
recipient cashes out a payment without opening a mobile account. Twenty eight banks have been
granted permission to introduce MFS by Bangladesh Bank. Nineteen banks have launched MFS
and of these five are licensed to offer a range of service beyond inward foreign remittances.
(Bangladesh Bank, 2015)
A holistic view of the MFS status as of December 2014 are given in the table below-
No. of Banks permitted : 28
Started MFS operation : 19
Registered customers : 25.18 million
Agents : 5,40,984
TABLE 1: HOLISTIC VIEW OF THE MFS STATUS

2.3 Market Development of Mobile Financial Service:

The second half of 2011 marked an important turning point in MFS for Bangladesh. Earlier ad
hoc permissions from Bangladesh Bank were replaced with a set of guidelines providing the
regulatory certainty critical to promote market development. Providers have responded positively
 25

with five banks establishing active deployments. The three largest of these were launched in
2011 and early 2012 just as the Bangladesh Bank’s guidelines were being finalized and made
public. By the end of the first quarter 2012 the fastest early expansion has come from BRAC
Bank/bKash and DBBL that have the largest numbers of registered customers and agents. These
two players have also each signed up 3 and 4 MNO partners respectively. Bank Asia is notable in
that it offers an alternative mobile phone technology which does not require MNO agreements
and instead enables transactions over Smartphone using internet based applications. The
deployments that focus on establishing mobile accounts and basic P2P services have grown the
fastest so far. Earlier licenses offered to banks and their MNO partners solely for inward foreign
remittances have not grown much– a pattern consistent with international experience. The MFS
market is at an early stage of development as the newest providers are seeking to stabilize their
technology, build out agent networks and acquire new customers. This involves a complex,
sequenced set of activities that includes: (1) finding and training agents, (2) marketing to bring
attention to the service, (3) acquiring customers using know‐your‐customer (KYC) and account
opening processes while at the same time helping new customers to begin to transact. The
deployments that are most active today are seeking to expand their customer bases during 2012.
For example, BRAC Bank/bKash and DBBL aim are aiming for multi‐fold growth during 2012
which could push their combined customer accounts to between 2 and 3 million within a year’s
time, possibly more. It is hoped that other providers entering the market might also grow and
provide more alternatives and competition. It is still early and much more will be learned about
MFS in Bangladesh over the coming year. (CGAP, 2012)
Mobile Financial Services (MFS) comparative summary statement of December, 2014
and January, 2015
Serial Description Amount (in Amount (in % Change
no. December, January, (December, 2014
2014) 2015) to January, 2015)
1 No. of approved Banks 28 28
2 No. of Banks started to 19 19
convey the service
3 No. of agents 540,984 535,821 -0.95%
4 No. of registered clients in 251.86 252.36 0.2%
 26

Lac
5 No. of active accounts in Lac 121.54 110.53 -9.06%
6 No. of total transaction 74,473,558 82,068,551 10.2%
7 Total transaction in taka(in 10,483.04 11,337.58 8.15%
crore BDT)
8 No. of daily average 2,482,452 2,735,618 10.2%
transaction
9 Average daily transaction (in 349.43 377.92 8.15%
crore BDT)
10 Additional information Amount (in Amount (in
crore BDT) crore BDT)
a. Inward Remittance 3.00 2.85 -5%
b. Cash In transaction 4,376.37 4,742.44 8.36%

c. Cash Out Transaction 3,887.17 4,174.56 7.39%

d. P2P transaction 1,975.07 2,139.52 8.33%

e. Salary Disbursement (B2P) 64.70 76.93 18.9%

f. Utility Bill Payment (P2B) 50.08 59.79 19.39%

g. Others 126.64 141.49 11.73%

TABLE 2: MFS COMPARATIVE SUMMARY STATEMENT OF DECEMBER,
2014 AND JANUARY, 2015
 27

2.4 Key Players of the Market:

bKash: bKash is a joint venture between BRAC Bank and Money In Motion LLC, USA. bKash
is a leading MFS in Bangladesh, helping BRAC expand its reach beyond its ATM network and
branches, and serving smaller rural villages. The Bill and Melinda Gates Foundation invested
$10 million to help build a scalable MFS platform. Because Bkash has partnerships with 4
MNOs, 98% of mobile users have access to Bkash. According to CGAP (2013), it has 11 million
registered with cumulative transactions of $14.8 Million. bKash has 40,000+ agents (one in
almost every 2 rural villages in Bangaldesh). The range of services provided by bKash includes
Cash in/ Out, Payments, International Remittances, P2P payments, Bill Pay etc. (Bangladesh
Bank, 2012)

DBBL Mobile: DBBL Mobile is the mobile financial service of Dutch Bangla Bank. It is
available on every MNO. It has 172,020 registered customers and cumulative transactions of
$11.0 Million (2011). The numbers of agents are 23,974. DBBL has notably developed
partnerships with insurance providers and employers to use its platform for distributing
payments. Services offered by DBBL Mobile are: cash-in/Out, International Remittances, Salary
Disbursement, P2P payments, Mobile top-off, Bill Pay. (Bangladesh Bank, 2012)

Trust Mobile Money: Trust Bank offers “Trust Mobile Money” a service under its Alternative
Delivery Channel group in the bank. It has been partnering with Teletalk. The cumulative
Transactions is $0.02 Million with 1104 Customers and 170 Agents (Bangladesh Bank, 2012).

Bank Asia: Bank Asia launched its MFS in the first quarter of 2012. What differentiates Bank
Asia is that its technology base is a platform called iPay that is accessible via SmartPhones. This
allows use of internet based applications for transactions. Thus, this service can be used without
relying on a channel negotiated with an MNO. Any client with a SmartPhone could potentially
use the Bank Asia service. Bank Asia’s mobile service is comprised of four parts: Reimittance,
Ektee Bari Ektee Khamar (for the ultra poor), mobile banking based on smart phones, and
 28

mobile banking based on smart POS (using a smart card). It has cumulative transactions of $0.01
Million. (Bangladesh Bank, 2012)
Mercantile Bank: Mercantile Bank’s MFS service has been tested and allows the agent to
transact using a Java based program over an internet enabled Smartphone. Clients are however
free to use any phone and transact over an IVR driven menu based service. Mercantile has
established 148 agent locations mostly from the UISCs. Thus far Mercantile has opened 1,392
mobile accounts, though this is mostly from within a closed group of bank staff. Its’ cumulative
transactions are $12.5 Million. The service has not been marketed heavily to outside consumers
yet. (Bangladesh Bank, 2012)

2.5 Industry Analysis by Porter’s Five Forces Model:

In recent years, the competitive environment in the mobile financing industry has become
intensely competitive, with not only constant special offers and new value added services, but
also with new and bigger entrants.
The following sections describe the competitive environment in the industry using Michael
Porter’s five forces model.
2.5.1 Threat of Intense Segment Rivalry
This mobile financing industry is growing very fast. Now bkash and DBBL Mobile Banking
dominated the market. This two are covering the market very fast. Besides this they are try to
maximize their market share. But in recent days Ialami Bank Bangladesh introduce M-Cash. It
poses a real threat to the existing ones. If M-Cash can gain some momentum, it is likely that the
monopoly soon come to an end in this industry. In mobile financing industry there are some
banks who are offering mobile banking services; such as: Prime Bank, Bank Asia, Trust Bank,
Dhaka Bank, Mercantile Bank, Premier Bank, Jamuna Bank etc. They all are very much
potential competitors in this industry. But they are not concentrating in this sector as much as
bKash and DBBL, so it’s easy to bkash and DBBL for capturing the market. So, the rivalry
among existing competitors is moderate.
2.5.2 Threat of New Entrants
Bangladesh Bank introduces a new rule that every Bank should have mobile banking service.
So it is not that much hard to new entry in this industry. But beside this Bangladesh bank has
some regulation for new entrees. Existing companies have created brand positioning and
 29

economies of scale in coverage- that also act as entry barrier. In addition the price battle between
the competitors in service charge. So potential direct entry to the industry is relatively restricted
at the moment, due to control over licenses. However, companies are finding other ways to enter
the industry, i.e. through merging with existing operators. So, entry barriers in mobile financing
industry are moderate.
2.5.3 Threat of Substitute Products
Mobile Banking is a high-tech industry and the substitutes that would replace the services of
today are strongly related to the factor of innovation. In case of Bangladesh mobile banking
industry, substitutes exist in the form of government post office and some. However, there is no
strong competitive substitute for mobile banking industry as the existing alternatives are either
nearly obsolete or in embryonic stage. But the courier service; such as: SA Paribahan, Sundorban
Courier etc. poses little threat to the industry. So, the threat from substitutes is weak in
Bangladesh.
2.5.4 Threat of Buyers Growing Bargaining Power
There are mainly 3 mobile banking service providers in Bangladesh and they offer almost
homogenous services which have low switching costs between operators and thus has provided
buyers with extremely high bargaining power. The bargaining power of buyers in this industry is
moderate. With the exception of remote-area customers who have no alternative service
available in their vicinity.
2.5.5 Bargaining Power of Suppliers
The bargaining power of suppliers in the mobile industry varies depending on the brand name
and strategic importance of the network as well as the size of the Company, such as Grameen
phone, Banglalink, Robi, Citycell, Teletalk; enjoy strong bargaining power in this industry. On
the other hand there are many potential suppliers and vendors in mobile banking industry e.g.
various agents, merchants such as aarong, agora, bata and major suppliers of telecom equipment
in Bangladesh. So the bargaining power of suppliers in the industry is moderate to weak.

2.6 Findings on the Mobile Financial services Market Structure:

Nabi et al. (2012) outlined the following findings in a policy paper for Bangladesh Bank:
I. The MFS guidelines and the ‘honest broker’ role taken on by Bangladesh Bank have been
instrumental in the recent growth of this sector. After several years of uncertainty, the
 30

firm move by Bangladesh Bank to establish MFS guidelines provided a positive signal
that is enabling market growth. Bangladesh Bank has also been proactive in bridging
differences between commercial banks and MNOs, and this ‘honest broker’ role has been
instrumental to the recent rapid growth of BRAC Bank and Dutch‐Bangla Bank in this
sector.
II. Banks and MNOs share the view that the potential for MFS lies initially with P2P, small
merchant payments and mobile top ups.
III. BRAC Bank/bKash and Dutch Bangla Bank are the early leaders in the market. Both
Dutch Bangla and BRAC Bank/bKash launched in 2011 and have moved to activate
agent networks in nearly all districts.
IV. The more recent launch of Bank Asia’s program is notable. Bank Asia is a more recent
entrant and has a different approach. It offers an MNO independent technology, but is
limited to those with Smartphones which have higher computing capability and can use
existing data services provided by MNOs with no need for a special contract with any
MNO.
V. The most significant efforts are currently on identifying, quantifying and negotiating
mutually beneficial partnerships between banks and MNOs. MNOs have opened up their
USSD channels to banks and more such agreements are being actively negotiated.
 31

CHAPTER 3

O V E R V IE W O F B K A S H
 32

3.1 Company Profile:

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
Corporation (IFC), a member of the World Bank Group, became an equity partner and in April
2014, Bill & Melinda Gates Foundation became the investor of the company. 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 masses of the country to achieve
broader financial inclusion by providing services that are convenient, affordable and reliable.
(bKash, 2014)

3.2 Mission of bKash:

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. (bKash, 2014)

3.3 Primary Values Offered in Market:

i. Fast: 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 in the fastest way.
ii. Affordable: bKash helps to send and receive money with minimal effort and cost. 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.
 33

iii. Secure: bKash places a high priority on protecting customer information to assure that
their transactions and data are secure with bKash. bKash’s security and compliance
practices are regularly audited to ensure that they meet the highest standards.
iv. Convenient: bKash users enjoy increased convenience of accessing their finances from
their own mobile phones anytime, anywhere. bKash gives you 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.
v. Nationwide: bKash’s extensive distribution network with more than 100,000 Agents
covering each district and Thana along with around 300 BRAC Bank ATMs provides
customers with the nationwide reach and capacity that customers need to avail bKash
services at a close proximity. The service is supported by mobile networks of all the
leading MNOs which enable customers to access bKash Wallet even from the remotest
areas of Bangladesh.

3.4 The bKash Story So Far:

bKash is a private limited company created specifically to provide mobile financial services in
Bangladesh. It is part of the BRAC group, a nongovernment organization (NGO) that provides
social services and includes 18 related social enterprises. Within this group is BRAC Bank, a
commercial bank that owns 51 percent of bKash. Bangladesh regulations issued in 2011 require
mobile financial services to be provided by a bank or a company that is classified as a bank
subsidiary by the central bank. While bKash manages nearly all facets of the mobile financial
service operations, BRAC Bank is responsible for regulatory compliance, and bKash must
deposit the full value of its mobile account balances with a prudentially regulated commercial
bank. A U.S. based company called Money in Motion LLC invested the initial minority 49
percent shares in bKash. The International Finance Corporation (IFC) and the Bill & Melinda
Gates Foundation joined as minority investors in 2013 and 2014, respectively, with BRAC Bank
retaining 51 percent ownership.
For users, bKash works like mobile money in many markets. Users can open an account linked
to a mobile phone number. Account owners can deposit or withdraw at appointed agents using
most handset models. In its first year bKash acquired 5,000 agents under a contract with BRAC
whereby BRAC recruited and managed agents. This temporary arrangement enabled bKash to
 34

get started without an existing distribution network. After one year bKash shifted and directly
linked to more than a 100 regional distribution companies that could each manage hundreds of
agents at a time. These distributors and their retailers were already organized in distributing
airtime, fast-moving consumer goods, medicine, and groceries. Timing worked to bKash’s
advantage because margins for reselling airtime had fallen to historic lows by 2012 leaving
airtime resellers hungry for new sources of revenue. With this change the growth of bKash’s
agent network surged, growing to nearly 80,000 in the subsequent two years.

To promote a new service bKash invested significantly in above-the-line marketing through

television spots, radio, and billboards. “bKash” is a play on words— when said quickly in the
local language the word sounds like the term for progress. The term bKash has become so
commonplace that it is synonymous to mobile money payments.

Most transactions so far are made by people sending money to family members. These include
migrant laborers, garment factory workers, and rickshaw pullers sending money home as well as
students receiving money for living expenses. A majority of transactions are over-the-counter
where senders or receivers do not use their own accounts and instead enlist the help of an agent
to send and receive. One of the early challenges for bKash is to change this behavior and get
clients to transact using their own accounts.
Type Number nationwide Additional details
Subscribers (Active)
• 6,000,000+ • Country wide coverage

Agents
• 85,000+ • Country wide coverage
• Own agent of bKash (3rd
Party Agent)

ATMs
• 300+ • Only BRAC Bank ATM
booths are applicable for cash
 35

out of bKash. Major Cities of

Bangladesh is the geographic
coverage.

Full service branches

• 150+ • BRAC Bank branches

Partial service offices

• N/A • N/A

Merchants
• 1,000+ • Dhaka & CTG Based

TABLE 3: COVERAGE PROFILE OF BKASH

Source: mSTAR Bangladesh Mobile Money Infosheet-bKash (Last updated: February 21, 2014)

3.5 Factors influencing bKash’s Fast Drive:

bKash is neither a MNO nor a bank. It is a separate company that built its business on its own
and scaled up quickly. According to CGAP (2014), three factors have combined to help drive
this fast start. Such as:
I. A specialized organization built to deliver Mobile financial services:
bKash is purpose built for what it does. BRAC expects bKash to have its own identity and build
its own business. One important distinction from other companies in which BRAC invests is that
the minority investors have significant influence. The minority investors bring specialized skills
and experience that have helped create the business, including providing the CEO, Kamal
Quadir. The role of the minority investors is balanced with BRAC Bank appointing the chair of
the bKash board and other directors. Although other banks in Bangladesh offer mobile financial
services, BRAC Bank is the only one so far to establish a special-purpose company for mobile
financial services, and beyond Bangladesh this is rare for banks or MNOs.
 36

The special-purpose organization establishes a high level of focus on mobile financial services
alone, in contrast with banks that often rotate staff in and out of their mobile financial service
departments. bKash staff do not come in large numbers out of banking but from other industries
and commercial backgrounds. bKash is a standalone business that is expected to drive its own
financial performance whereas in many bank environments mobile financial services are treated
as an alternate delivery channel to serve the needs of other parts of the bank, for instance, to
collect deposits for the retail business. Bank units focused on mobile delivery channels must
often respond to the needs of other parts of the bank rather than focus on building their core
business.
BRAC has a track record of creating special purpose businesses, with some 18 in its portfolio,
that are expected to be accountable for their own performance. This approach has made bKash’s
existence more difficult since it cannot assume or expect to gain business from other parts of
BRAC. For instance, there have been minimal links (so far) to making salary payments,
collecting loans, or linking to any related companies, including BRAC Bank. These links could
increase in the future, but so far a “sink or swim” imperative has required bKash to push hard to
succeed on its own. This has been further reinforced by the minority investors who have injected
risk capital and stand to lose or gain on bKash’s mobile financial services performance.
bKash has developed its own culture designed to fit the kind of business it operates. This
different mindset begins with the CEO who has a background in technology-driven start-ups.
bKash’s business model is also fundamentally different from conventional banking. Instead of
focusing on credit or savings and building a balance sheet, bKash drives transactions and earns
revenue through fees. Many banks begin in one urban region or focus on a particular customer
segment, often more affluent segments. bKash has had national reach in all districts of the
country almost from the beginning and aims to serve everyone.
II. A shared vision for scale among a diverse investor group
Fazle Hasan Abed, the founder of BRAC, is fond of saying, “Small may be beautiful, but scale is
necessary.” Going to scale has been at the core of BRAC’s work since the 1980s when BRAC
pursued, against many experts’ advice, a national program to fight child deaths from diarrhea
with a homemade oral rehydration solution. BRAC was able to take this to every household
across Bangladesh. (Chowdhury and Cash, 1996)
 37

bKash did not pilot test, rather it aimed to scale from launch and took a “learn as you do”
approach. The push for scaling an agent network and a large customer base has been difficult,
and bKash has had to make many adjustments to its business along the way. For instance, the
shift from the BRAC-acquired agents to direct recruitment required a new distribution team and
a re-design of the distribution incentives. Even while it made this fundamental correction bKash
continued to grow, changing on the fly.
The scale mentality has been reinforced by bKash’s funding and investors. Money in Motion
initially invested $5 million. And even before bKash had much of a track record the Gates
Foundation provided a $10 million grant that included funds to expand as well as source
technical assistance—for example, linking bKash to expertise on agent network management
from Kenya. More recently, IFC and the Gates Foundation have come in as minority investors.
Each investor has reinforced the drive for national scale. (Intermedia, 2014).
III. An enabling and flexible regulatory environment
The launch of bKash in July 2011 came on the heels of Bangladesh’s central bank (Bangladesh
Bank) issuing guidelines on mobile financial services that provided the certainty and clarity
needed for bKash and others to invest and build a business. Bangladesh Bank was comfortable
issuing a license to BRAC Bank to launch bKash, since the bank was a well-managed
commercial bank the regulator knew well.
The idea of regulation that would allow nonbanks and particularly MNOs to launch their own
services had first been debated in 2008, but Bangladesh Bank did not feel comfortable at that
time to allow MNOs to lead. However, in addition to allowing banks to offer mobile financial
services, the 2011 regulations included a clause that allowed banks to set up subsidiaries
specifically for this purpose. This allowed conventional banks to establish separate companies in
partnership with funders with relevant experience and, importantly, the risk appetite and
entrepreneurial bent needed to make the business succeed. This nuanced light-touch regulation
provided the environment that allowed bKash to be an operationally new and different kind of
business while still being regulated under the umbrella of banking norms. As of yet, no other
bank subsidiaries have been established for mobile financial services in Bangladesh, but the
possibility remains.
The regulators made another important decision early on. When bKash launched it had an
agreement to link only into the subscribers of one of the four large MNOs. bKash as well as
 38

other bank-based mobile financial service providers sought access to unstructured supplementary
service data (USSD) channels of all the major MNOs, and Bangladesh Bank actively encouraged
mobile operators to open up to mobile financial service providers. Eventually the
telecommunications regulator also pressured mobile operators to provide access. With this
obligation and with Bangladesh Bank’s support, bKash was able to enter revenue-sharing
agreements to access a USSD gateway with all four big MNOs, providing access to over 98
percent of Bangladesh’s 100 million mobile phone subscriptions. bKash could reach the
customers of nearly all MNOs within its first year of operations. While this has been unpopular
with MNOs who wanted to offer mobile financial services themselves, it has been a crucial
factor in bKash’s fast start. bKash had the communications limitations on who it could reach
with its service removed and established an industry norm for revenue sharing with MNOs. This
stands in contrast to many early-stage MNO deployments that often reach only their own voice
subscribers early on.

3.6 Major Challenges for bKash:

bKash’s initial growth to large scale has been among the fastest globally. At the same time, it is
still early. The bKash board and management are the first to say that there is a long way to go
and much still to do to build the business. It needs to stabilize its technology platform to support
a much higher volume of transactions. It needs to shift users from doing their transactions via
agents to using their own accounts. It needs to move beyond payments to provide other financial
services. Major challenges for bKash in coming days are shown in the below chart:
 39

Capacity
Adapt multi-MNO
Local Regulatory benchmarking and
standard (who is
Guideline (dos’ and scalability
having what to
donts’) (projection,
integrate)
proactive measures)

Approval for Technology interoperability…

Economy model Integration internal and
(who grabs (capacity, tuning external (forget
steering) and development) prefix)

strategic alignment Service and Product Balance in market

with MNO synchronization with competition
(aspiration and (airtime/existing (exclusivity/open/b
objective) service adoption) alanced treatment)

Effective practice
Business scope
of SLA (clear
definition And Many
definition,
(technology/agent/c more……..
expectation,
ustomer service)
rigidity)
FIGURE 1: MAJOR CHALLENGES FOR BKASH

CHAPTER 4

B K A S H A N A L Y S IS F R O M B R A N D I N G
PERSPECTIVE
 40

4.1 bKash Brand Audit: Identifying Brand Positioning and Values

4.1.1 History:

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
Corporation (IFC), a member of the World Bank Group, became an equity partner and in April
2014, Bill & Melinda Gates Foundation became the investor of the company. 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 masses 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
 41

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.
bKash launched in the second half of 2011, grew to 2 million accounts by the end of 2012, and
shot up to 11 million registered accounts by the end of 2013. Now bKash is the market leader in
mobile banking service industry with 70% market share.

4.1.2 Brand Inventory:

4.1.2.1 Product-Related Attributes:
From the inception, bKash mobile banking services have maintained the highest quality,
affordable, credibility, and convenience on which they originally were founded. Following are
the attributes of bKash which make bKash number one mobile banking service provider in
Bangladesh.
i. Fast
ii. Secure
iii. Convenient
iv. Affordable
v. Nationwide
vi. Reliable
vii. Easy
viii. Multipurpose

4.1.2.2 bKash Brand Portfolio:

bKash provides different types of services in the market.
i. Cash in
ii. Send money
iii. Cash out
iv. Mobile recharge
v. Foreign remittance
vi. Salary disbursement
vii. Merchant payment
viii. Loan repayments
 42

ix. ATM withdrawal

x. Interest against savings

4.1.2.3 Competitor Analysis:

The main competitor of bKash is DBBL Mobile. They are also providing almost same facilities
of mobile banking for their customers. DBBL Mobile has been giving the toughest competition
to bKash. DBBL Mobile has 172,020 registered customers and cumulative transactions of $11.0
Million (2011). The numbers of agents are 23,974. DBBL has notably developed partnerships
with insurance providers and employers to use its platform for distributing payments. Services
offered by DBBL Mobile are: cash-in/Out, International Remittances, Salary Disbursement, P2P
payments, Mobile top-off, Bill Pay. Other competitiors are: Trust Mobile Money, iPay (Bank
Asia), M-Cash (Islamic Bank Bangladesh Ltd.), My-Cash (Mercantile Bank) etc.

Company Agents Customers Cumulative Market

Share
Transactions
bKash 40,000+ 2.2 million $14.8 Million 71%
DBBL Mobile 23,974+ 172,020 $11.0 Million 24%
TABLE 4: COMPARISION BETWEEN BKASH AND DBBL MOBILE BANKING

4.1.2.4 Communications, Pricing, and Distribution of bKash:

To promote a new service bKash invested significantly in above-the-line marketing through
television spots, radio, and billboards. “bKash” is a play on words—when said quickly in the
local language the word sounds like the term for progress. bKash’s image is also enhanced by its
extensive distribution and affordable pricing. bKash slogan is “The easiest and safest way to
send or receive money instantly on your mobile, nationwide”. The term bKash has become so
commonplace that it is synonymous to mobile money payments. bKash communications is
simple, clear and clever. bkash have in total 8 TV Commercial including a 3D advertisement. In
those commercial they are providing massage about their services. bKash extensively use
billboard to reach more people. Now bkash have 200 billboards all over the country. bKash also
 43

use wall paint to attract rural people. bkash have 2,00,000 SF of wall paint in all over the
country. Besides these, bKash successfully execute agent point promotion.
bKash has a high market coverage with 85,000 agents, 300+ ATM and 1000+ merchants in all
over the country. The most important fact is the number is not stagnant; it is growing in every
coming day. bKash makes it an integral part of business development to reach more people.
The pricing structure of bKash is affordable and simple. They charge from customers based on
types of transactions. The competitive pricing structure gives bKash an edge in the market. The
pricing structure of bKash is given below:

Pricing Structure and Limitations

Action type Corporate accounts Limitations End-user (P2P) Limitations
Opening an account FREE FREE None

Cash in N/A FREE

150,000/month

Collection 1.50%*Corporate No limits N/A N/A

Collection Settlement
Charge
Cash out from N/A 1.85% charge will be
agent** automatically
deducted from bKash
Account.
150,000/month

Cash out from 2% charge will be Between BDT 2,000 2% charge will be
ATM** automatically to 20,000 automatically
deducted from bKash deducted from bKash 2,000 to 20,000
Account Account

150,000/month

Cash out from Bank N/A N/A N/A

Branch**
Transfer money Corporate Through bank order BDT 5/transfer
Disbursement via email/hardcopy
Charge: 0.50%*
 44

25,000/month

Merchant payment N/A FREE

Mobile Top up N/A FREE

100,000/month

TABLE 5: BKASH PRICING STRUCTURE AND LIMITATIONS

** Maximum cash out in any mode in total is BDT 150,000/month.

4.1.3 Brand Exploratory:

4.1.3.1 Customer Knowledge:
BRAC has successfully leveraged its history and tradition of excellence along with innovation to
become the most respected development organization in the world. BRAC has a track record of
creating special purpose businesses, with some 18 in its portfolio, that are expected to be
accountable for their own performance. bKash is not an exception of these.

Consumers have a positive perception towards bKash and that is reflected in their performance
so far. Moreover, bKash has successful created some positive and strong brand associations, that
help bKash to maintain high rate of growth in the market. Typical consumer brand associations
for bKash are shown in the following bKash mental map:
 45

Fast
Affordabl
Helpful
e

Impolite
Reliable
agents

bKash
High
Available
quality

Trust Easy

Secure

FIGURE 2: BKASH MENTAL MAP

4.1.3.2 Sources of Brand Equity:

The bKash name, one of the largest mobile banking service providers in the world, is inarguably
the company’s most important source of brand equity. The name bKash itself is the synonymous
to mobile banking in the country. The bKash logo, an important source of brand equity, is
widely recognized in the country. The most important contributors to bKash brand equity are its
functional benefit, namely the credibility, convenience, and availability. Its extensive distribution
makes it a brand for mass people in the country. TV commercial is successfully executed to
makes it a brand for everyone. For example, in a recent TVC, bKash shows that Sokhina a
garments worker who uses bKash regularly to send money home to her family. She narrates how
bKash has made her life so much easier, and how it is transforming the lives of everyone around
her too. bKash corporate social responsibility is also a source of brand equity. For example,
recently bKash gives computer to Alumni Association of History Depratment of Dhaka
University. Besides these, bKash continuously developing its business by making partnerships
 46

with different organizations by which consumers of these organizations can use bKash to make
payments. This allows bKash to increase brand awareness among the consumers through co-
branding.

4.1.3.3 The Customer-Based Brand Equity Pyramid (CBBE):

The bKash customer-based brand equity pyramid is equally strong on both sides and it is also
strong from bottom to top. bKash is enjoying the highest brand awareness of any mobile banking
service provider as well as high repeat purchase rates and high customer loyalty. It is also
successful in building a strong, unique and favorable brand image. The following figure
highlights the key aspects of the bKash CBBE pyramid:

FIGURE 3: BKASH CBBE PYRAMID

 47

4.1.3.4 Criminals target bKash dealers: Threat to Equity

Over the last couple of years there happened many incidents where bKash dealers or agents were
mugged. Even in some cases, muggers killed bKash dealers and rob the money. It is an alarming
trend for the business. Because, it creates fear among the mass people and rises tensions among
the consumer. The law enforcing agency alone can’t make the situation better. Thus bKash must
come with some innovative ideas to face this unwanted challenge.

4.1.3.5 Impolite Agents: Threat to Equity

The impolite behavior of bKash agents is another threat to bKash brand equity. It greatly affects
consumer experiences while receiving service. bKash must develop some general guideline for
agents to provide mobile banking service courteously. In addition to this, bKash can arrange
training facilities for agents.

4.1.4 Recommendations:

The bKash brand audit reveals a very strong brand with significant equity. However there are
several areas of opportunity. Such as:

i. bKash need to improve their server on a regular basis because some time the server down
for one or two hour.
ii. bkash need to promote their service by doing one to one marketing because of the
complexity of the service.
iii. bKash international remittance service is yet to gain the momentum. So it need more
focus.
iv. bKash need to introduce a 24 hour open toll free helpline.
v. bKash need to spend more on philanthropic activities to

4.2 IMC (Integrated Marketing Communication) program of bKash:

 48

4.2.1 Media Advertising: bKash extensively use media advertising in the form of TV
commercials, Print media (Newspaper), and Radio.

4.2.1.1 TV Commercials:

bkash have many TV Commercial including a 3D advertisement. In those commercial they are
providing massage about their services. In bellow I am providing some ideas about theose TV
Commercial:
Open a bKash Account on your own mobile Rahmat, an elderly village dweller needs to send
money urgently to his son Shafiq, who forgot to take money while leaving for the city. Rahmat
goes to Iqbal, a nearby bKash Agent in his village. Iqbal explains to Rahmat that bKash gives the
ease of sending money from home, at his convenience.
International Remittance TVC (UK) Remitters from UK can now send money to bKash
Account in Bangladesh from BRAC Saajan and its partner outlets. The remitter needs to mention
bKash as the termination mode and the recipient needs to have a bKash account to receive the
money directly in his/her bKash Account.
Something for everyone Sokhina is a garments worker and uses bKash regularly to send money
home to her family. She narrates how bKash has made her life so much easier, and how it is
transforming the lives of everyone around her too.
No need to carry cash, pay with bKash Housewife Nina, needs to buy some urgent groceries
but does not have enough cash on her and is also in a hurry. On her walk to a nearby superstore,
she calls her husband and asks to send the money to her bKash Account. She shops and happily
pays with bKash at the store. Nina likes playing with bKash as it is simple, convenient and she
no longer needs to carry cash.
bKash brings safety to your hard earned money Milon is a driver who used to receive his
salary in cash. Now his employer pays through bKash. Milon is happy because bKash is a better
means to keep his money safe as he does not have a bank account.
Sending money home has never been this easy Sokhina is a garments worker who sends
money home regularly to her parents in the village. Hand-to-hand transfer was the only option
for her, which was neither convenient nor cost effective.
Bikoshito Bangladesh in 3D Keeping with the spirit of innovation and empowerment, bKash
proudly presents a world class 3D animation made entirely in Bangladesh. This explanatory
 49

video illustrates common problems related to money matters, outlining how bKash helps make
everyday transactions easier and how it is relevant and necessary in the lives of rural and city
dwellers.
Recharge your mobile airtime balance anytime, anywhere In this TVC we see a sweet
relationship of a mother and her son.The story starts at 1:00 AM, the night before Shumon‟s
final exam. Shumon wakes up his mom to borrow her phone to talk to his elder brother for some
last minute mathematics problems. Before Shumon could get the solution of his mathematics
problem, the phone runs out of mobile balance and the line gets disconnected. His world turns
upside down and has no clue how he will get mobile balance this late at night. To his surprise,
Shumon‟s progressive mother asks for the mobile phone and instantly recharges the mobile
balance for her son from her bKash Wallet. After that, the smile of happiness between the mother
and son brightens the night.

4.2.1.2 Print Media:

bKash provide advertisement in daily newspaper. Newspaper ad has high coverage with timely
value. bKash is trying to exploit this advantage. Here is a glimpse of a recent ad in a daily
newspaper:

Cash back offer bKash is offering 15% cash back to its customers at designated points of sales,
the company said in a statement yesterday. The offer is available at the outlets of Aarong,
Yellow, Cats Eye, O2, Kay Kraft, Anjan's and Monsoon Rain. Payment through bKash is free,
and the customers will receive the eligible cash back.

4.2.1.3 Radio:

bKash also use radio ad as it is relatively inexpensive medium and it provides local coverage.
bKash make some radio ad campaign with persuasive story of how bKash make life easy. The
main disadvantage is lack of visual image.

4.2.2 Direct Response Advertising:

 50

bKash execute some form of direct response marketing; such as: Telemarketing and SMS
marketing.

4.2.2.1 Telemarketing:
This is one of the regular direct marketing tools. bKahas has a strong call center department.
They give services to the Channel partner and customer. Channel partners are their agent and
distributors. They take help of call center If they face network problem and they take help to
know whether the transaction properly held or not. They also give service to the customer. They
give information about bKash‟s products and give solutions about service problems. The call
center department of bKash does this telemarketing.

4.2.2.2 SMS Service:

Today SMS service is one of the sufficient ways for direct marketing. bKash send bulk sms
through the help of telecom company to convince consumers for opening a bKash account.

4.2.3 Online Advertising:

bKash use online advertising or E-Marketing to build relations with customers and prospects
through regular, lowcost personalized communication. bKash is doing E- marketing in the form
of website and Social media (Facebook).
4.2.3.1 Website:
Through their website bKash is promoting their services & providing the feedback information
regarding their brand. They have launched their first bKash 3D animation (Bikoshito
Bangladesh) through their website. Keeping with the spirit of innovation and empowerment,
bKash proudly presents a world class 3D animation made entirely in Bangladesh. This
explanatory video illustrates common problems related to money matters, outlining how bKash
helps to make everyday transaction easier and how it is relevant and necessary in the lives of
rural and city dwellers. bKash also publishes stories through their website. Those stories are
about successful people in which bKash has contributed behind their success.
4.2.3.2 Facebook:
Now-a-days facebook is the most used social network site. bKash also has a very active
Facebook page. In Facebook bKash upload all their promotions and their advertising. With the
 51

help of Facebook bKash is connected 24 hours with their valuable customer. There is a particular
department of digital marketing who actually looks after the Facebook communication and
advertising. bKash regularly arrange different game show, contest, competition in their Facebook
page.
4.2.4 Place advertising:
bKash use place advertising in the form of Billboards and posters, Wall paint, and Boat
advertising.
4.2.4.1 Billboards:
One of the best ways of communication is billboard.. bkash has planned to have 200 billboards at
the end of 2013. Now bkash have 200 billboards all over the country. That will enhance their
reach to more people. The entire billboard has good visibility level and in prime location. They
are planning to cover each and every thana of Bangladesh by billboard. Their massage is very
match clear in the board.
4.2.4.2 Wall paint:
The main target market of bkash is rural people and lower class people. bkash had 1, 20,000 SF
of wall paint in all over the country in 2013. They had a plan to have 2, 00,000 SF of wall paint
at the end of 2013. This wall paints help bkash to increase their brand image.
4.2.4.3 Boat Branding:
One of the most effective and creative branding of bkash is there boat branding. They have in
total 500 bkash boats in shylet, B.Baria, Sunamjong, Bhoirob and many other places where boat
is the main transport.
4.2.5 Point-of-Purchase Advertising:
bkash use some branding item in their agent point which increase their brand image. They widely
use posters and sticker in agent shop. In agent point they have pointer, festoon, and posters. This
is more attractive than their competitors.
4.2.6 Publicity and public relations:
bKash has public relation department to manage all the public affairs and buzz marketing. bKash
timely release press note and arrange press conference. They also make it available in their
website.

4.3 Measuring Brand Performance of bKash:

 52

There are many brand metrics to measure brand performance. Here I try to use six brand metrics
to measure brand performance of bKash. Those are: Brand profitability; Brand sales; Brand
market share; Brand distribution; Top of mind brand associations, and Un-aided brand
awareness.

4.3.1 Brand Profitability:

bKash has high rate of profitability. Since Brac introduces bKash in the market it profitability is
only increase at an exceptional rate. bKash’s high level of profitability is due to low operational
expenses in running an agency in Bangladesh, primarily driven by the fact that over 90 percent
of agents have pre-existing, alternate businesses. From the brand profitability point of view, it
can be concluded that bKash is on the right track.

4.3.2 Brand Sales:

bKash has a monthly transaction volume of $680 million with an average transaction size of $27.
This is nearly double of the close counterparts. The most interesting fact is it is increasing at a
high rate. So, we can say that from brand sales point of view bKash is very much strong in the
market.
4.3.3 Brand Market Share:
Mobile financing industry is still in the evolutionary stage in Bangladesh. Now bkash is leading
this market with around 71% of market share. The nearest counterpart DBBL mobile banking
have the 24% of market share. Mainly bKash & DBBL mobile banking cover the most of the
market. Others company such as Trust Bank, Merkentile Bank, Eastern Bank and others cover
5% of total market share. So, from brand market share point of view, bKash is in the dominating
position.
4.3.4 Brand Distribution:
bKash has a strong distribution network. In Mobile financing industry agents is mandatory to
provide the service. bKash has around 80000 agents in the country, whereas DBBL has 30000
agents. But there are many agents who provide mobile banking services of different providers at
a time. Still it is a strong indication that bKash brand distribution is strong in the market.
4.3.5 Top-of-mind Associations:
 53

Most of the consumers have positive brand associations with bKash. The most common brand
associations that consumers exhibit in my survey were: fast, affordable, convenient, reliable and
widely available. They also have a favorable attitude towards bKash. From this we can conclude
that, bKash has favorable and strong top-of-mind brand associations.

4.3.6 Un-Aided Brand Awareness:

bKash has strong un-aided brand awareness in the mobile banking services. In my survey, when
I ask respondents to name the first mobile banking service provider that come to his or her mind,
almost 75% respondents reply that it is bKash. So we can say that bKash has high rate of un-
aided brand awareness.

CHAPTER 5

C O N S U ME R S ’ A TTI T U D E S A N D I TS
I M P A C T O N B U Y IN G B E H A V I O R
 54

5.1 Understanding Consumers’ Attitudes towards Brand:

Consumer attitudes are both an obstacle and an advantage to a marketer. Choosing to discount or
ignore consumers’ attitudes of a particular product or service—while developing a marketing
strategy—guarantees limited success of a campaign. In contrast, perceptive marketers leverage
their understanding of attitudes to predict the behavior of consumers. These savvy marketers
know exactly how to distinguish the differences between beliefs, attitudes, and behaviors while
leveraging all three in the development of marketing strategies. (Dean, 2010)

An attitude in marketing terms is defined as a general evaluation of a product or service formed

over time (Solomon, 2008). An attitude satisfies a personal motive—and at the same time,
affects the shopping and buying habits of consumers. Dr. Lars Perner (2010) defines consumer
attitude simply as a composite of a consumer’s beliefs, feelings, and behavioral intentions toward
some object within the context of marketing. A consumer can hold negative or positive beliefs or
feelings toward a product or service. A behavioral intention is defined by the consumer’s belief
or feeling with respect to the product or service. Perhaps the attitude formed as the result of a
positive or negative personal experience. Maybe outside influences of other individuals
persuaded the consumer’s opinion of a product or service. Attitudes are relatively enduring
(Oskamp & Schultz, 2005, p. 8). Attitudes are a learned predisposition to proceed in favor of or
opposed to a given object. In the context of marketing, an attitude is the filter to which every
product and service is scrutinized.

5.1.1 The functional theory of attitudes

 55

Daniel Katz (1960), a social psychologist, developed a functional theory of attitudes to account
for the different types of roles that attitudes can play. He identified four main functions.

The first one is utilitarian function that deals with attitudes formed on the basis of rewards and
punishments. That is a consumer’s attitude is clearly based on a utility function when the
decision revolves around the amount of pain or pleasure it brings.

The second one is value-expressive function that deals with attitudes formed to express an
individual’s central value or self-concept. This particular function is used when a consumer
accepts a product or service with the intention of affecting their social identity.

The third one is ego-defensive function that deals with attitudes formed to protect an individual
from either external threats or internal feelings of insecurity. The ego-defensive function is
apparent when a consumer feels that the use of a product or service might compromise their self-
image. Moreover, the ego-defensive attitude is difficult to change.

The fourth one is knowledge function that deals with attitudes formed to satisfy an individual’s
need for order, structure and meaning. The knowledge function is prevalent in individuals who
are careful about organizing and providing structure regarding their attitude or opinion of a
product or service.

Consumers thus form attitudes toward brands to provide the function they are seeking. In this
way, they might like and use certain brands because they satisfy their needs (utilitarian function),
allow themselves to express their personality (value-expressive function), bolster a perceived
weakness they have (ego-defensive function), or simplify decision making (knowledge function).
Advertising campaigns that appeal to consumer behaviors based on the value-expressive or
utilitarian functions are the most common (Sirgy, 1991). Utilitarian advertisements deliver a
message regarding the benefits of using a product or service. Advertising targeted to consumers
with value-expressive attitudes will typically include product symbolism and an image strategy.
In either case, it is important to understand why a consumer holds a particular attitude toward the
product or service. (Solomon, 2008)

5.1.2 Multi-attribute models

 56

Perhaps the most widely accepted approach to actually modeling attitudes is based on a multi-
attribute formulation, in which we assume brand attitudes are a function of the associated
attributes and benefits that are salient for the brand. Fishbein and Ajzen (1980) have proposed
what has been probably the most influential mulri-attribute model. As applied to marketing, this
expectancy-value model views brand attitudes as a multiplicative function of two things. First
one is the salient beliefs that a consumer has about the brand (the extent to which consumers
think the brand possesses certain attributes or benefits). Second one is the evaluative judgments
regarding those beliefs (how good or bad it is that the brand possesses those attributes or
benefits). Thus, overall brand attitudes depend on the strength of association between the brand
and the salient attributes or benefits and the favorability of those beliefs.

5.1.3 The ABC Model of Attitudes

The ABC Model of Attitudes—consisting of the three components: affect, behavior, and
cognition—accentuates the relationship between knowing, feeling, and doing (Solomon, 2008).
Affect is the feeling an individual has regarding an object. In the current context, affect
represents the emotion or opinion about a product or service. Behavior is the responses of a
consumer resulting from affect and cognition. Behavior only implies intention. Cognition is an
individual’s belief or knowledge about an attitude object.

The hierarchy of effects is the result of all three components working together. The hierarchy of
effects is a concept used to distinguish between the involvement levels or motivation an
individual might have toward the attitude object. The standard-learning hierarchy, low-
involvement hierarchy, and experiential hierarchy are the three hierarchies of effects. Dr. Jill
Novack, from Texas A&M University, includes a fourth member of the hierarchy of effects.
Novack states that behavioral influence should be included, and represented by the component
order—behavior, belief, and affect (Novack, 2010).

The standard-learning hierarchy, also known as the high-involvement hierarchy assumes that the
consumer will conduct extensive research and establish beliefs about the attitude object. The
consumer will then establish feelings regarding the attitude object. The feelings—or affect—are
followed by the individual’s behavior. The cognition-affect-behavior approach is prevalent in
purchase decisions where a high level of involvement is necessary.
 57

The low-involvement hierarchy consists of a cognition-behavior-affect order of events. A

consumer with an attitude formed via the low-involvement hierarchy of effects bases the
purchase decision on what they know as opposed to what they feel. The consumer establishes
feeling about a product or service after the purchase. This limited knowledge approach is not
suitable for life-changing purchases such as a car or new home.

The experiential hierarchy of effects is defined by an affect-behavior-cognition processing order.

In this scenario, the consumer is influenced to purchase based entirely on their feeling regarding
a particular product or service. Cognition comes after the purchase and enforces the initial affect.
Emotional contagion is common in attitudes formed by the experiential hierarchy of effects
(Solomon, 2008). Emotional contagion, in this situation, suggests that the consumer is influenced
by the emotion contained in the advertisement.

5.1.4 The Elaboration Likelihood Model (ELM):

The elaboration likelihood model (ELM) offers a theory concerning attitude change. Similar to
the ABC model of hierarchy, the ELM model is based on the level of involvement in the
purchase (Petty & Cacioppo, 1981). Depending on the level of involvement and motivation, the
consumer will follow one of two possible routes. The central route is when the consumer is
highly involved in every aspect of the purchase. A consumer following the central route extends
extra effort in researching and understanding the products or services. The peripheral route—as
the name implies—is followed by a consumer with low involvement in the purchase process.

Attitudes can be influenced by many factors outside the product attributes. Social and cultural
environment as well as demographic, psychographic, and geographic conditions can sometimes
shape consumer behavior. Consumer attitude, if positive, is an advantage to a marketer. A savvy
marketer can build a model for prospecting new consumers from the attributes of a satisfied
customer.

5.2 Understanding How Brands Affect Consumer Behavior:

Academic researchers have identified a number of different theoretical mechanisms, based on

consumer behavior, to explain why strong brands for which consumers have high brand
 58

knowledge receive a differentia response. Hoeffler and Keller (2003), classify the mechanisms in
three different stages of consumers’ creation and use of brand knowledge. These are:

i. Attention and learning, that is, the building of brand knowledge structures;
ii. Interpretation and evaluation of marketing information or brand alternatives, that is, the
use of brand knowledge;
iii. Mechanisms that affect the actual choice process, which is the application of brand
knowledge.

All through these three different stages of consumer behavior, research has documented
advantages for strong brands.

Attention and Learning:

Strong brands can have an advantage over unknown or weak brands because consumers familiar
with the brand have better encoding ability and better developed procedural knowledge. They
can develop a greater number of strong links for familiar brands. Moreover, because strong
brands have better developed brand knowledge structures in the minds of consumers, consumers
are more likely to uniquely associate these links with the brand. When consumers have less
developed knowledge structures, on the other hand, associations may end up being stored under
the product category and not the specific brand. Learning can even decrease for brands that are
late to enter a market, because consumers see them as having fewer or less novel features.

Consideration:

Another advantage related to brand strength is that strong brands with more associations are
more likely to be in consumers’ consideration sets. Strong brands also receive an advantage
when consumers begin their search with well-known and well-regarded brands that they see as
more likely to satisfy their needs.

Selective Attention:

Consumers may automatically encode frequency information as they are exposed to brand
names, symbols, slogans, and logos through various marketing activities. Nonverbal information
 59

may be more potent than verbal cues. Consumers might also give strong or well-known brands
more attention, comprehension, and retention. In short, it appears that consumers more easily
notice information about strong brands, and the frequency of advertising may create favorable
associations even in the absence of voluntary processing of brand information.

Interpretation and Evaluation:

There is evidence that both direct and indirect mechanisms create differences in the way
consumers interpret and evaluate brands and related marketing information.

Direct effects occur when brand-related information is input directly into the decision process.
For instance, in loss aversion, the losses of switching from a known brand loom larger than the
potential gains from using a lesser-known brand. Thus the possibility of a potential loss leads to
an advantage for strong brands. The halo effects related to positive feelings about a strong brand
can positively bias the way consumers evaluate brand advertising. Similarly, consumer
confidence increases when consumers get more familiar in a domain and may lead to use more
favorable associations when making a decision. Indirect effects are perhaps more common than
direct effects and are driven by uncertainty or ambiguity in the decision process. After they
acquired brand information, consumers may interpret or evaluate it, which can be especially
critical if the information is ambiguous. The primary factor that determines our decisions under
ambiguity is our prior attitudes. If they are positive, we are usually more receptive and less
critical.

Finally consumers may use brand names as a signal of the credibility of product claims. Thus,
evaluation advantages-through more elaboration- may help strong brands to indirectly create
even stronger and more favorable associations.

Choice:

Perhaps the most frequently cited advantage for strong brands at the choice stage is the notion of
brand recognition or familiarity as a choice heuristic. Essentially, when consumers have limited
prior knowledge in a product category, the brand names may be the most accessible cue
available. In addition, using a familiar brand name as a diagnostic cue is thought to be a
 60

consumer strategy for dealing with risk and uncertainty, especially when consumers have limited
prior experience. The presence of a known brand can limit consumers’ ability to detect
differences in product quality across brands, even when they sample other brands. C. learly, one
of the most effective mechanisms that provide advantages to strong brands is their inherent
familiarity.

CHAPTER 6

F I N D I N GS
 61

6.1 Demographic Characteristics of the Respondents:

Demographic characteristics of the study were investigated in regards to the respondents’ gender,
occupation, and income.
Gender of Respondents:
Out of total 100 respondents 72 were male and 28 were female. The majority of the respondents
were male which may represent that male consumers’ use mobile banking services more
frequently than the female consumers’.
Gender Frequency Percent Valid Percent Cumulative
Percent
Male 72 72.0 72.0 72.0
Female 28 28.0 28.0 100.0
Total 100 100.0 100.0
TABLE 6: GENDER OF RESPONDENTS IN THE SURVEY

Occupation of the Respondents:

The majority of respondents in the survey were students which is about 36% which may also
indicate that students are the most frequent users of mobile money transfer services. The service
holders are in the second position with 34%, which may also reflect that they use mobile money
transfer services frequently too. Another fact is businessmen has the lowest tendency to use
mobile money transfer service as we know business transactions are generally done in larger
amounts and which is not affordable and accessible through mobile money transfer service.
OCCUPATION Frequency Percent Valid Percent Cumulative
Percent
 62

STUDENT 36 36.0 36.0 36.0

BUSINESS 20 20.0 20.0 56.0
SERVICE 34 34.0 34.0 90.0
OTHERS 10 10.0 10.0 100.0
TOTAL 100 100.0 100.0
TABLE 7: OCCUPATION OF RESPONDENTS IN THE SURVEY

Income of the Respondents:

The majority respondents has income less than 10000 Taka which means that the limited earning
people are the main users of mobile financial services. It also shows us that customers with
higher income has lower tendency to use mobile financial services.
EARNING PER Frequency Percent Valid Percent Cumulative
MONTH Percent
(TAKA)
UNDER 10000 62 62.0 62.0 62.0
10000-15000 20 20.0 20.0 82.0
15000-20000 10 10.0 10.0 92.0
20000-25000 5 5.0 5.0 97.0
ABOVE 25000 3 3.0 3.0 100.0
TOTAL 100 100 100
TABLE 8: INCOME LEVEL OF RESPONDENTS IN THE SURVEY

6.2 Interest in Mobile Banking:

Mobile financial service is a new technology which was introduced in 31st March 2011. In my
survey of 100 people, which includes student, businessman, service holder and other profession,
replied that 100% of them heard about Mobile Financial Service or Mobile Banking. Many
people heard about Mobile Banking, but some of them yet have not felt that they should use it
regularly as they are happy to use traditional banking system. So, it is clear to understand that
MFS or M-Banking has already reached to each and every stakeholder of banking industry.
 63

50%
45%
45%
40%
35%
30%
24%
25%
20% Percentage
15% 13%
11%
10% 7%
5%
0%
Very Infrequently Uncertain Frequently Very Frequently
Infrequently

FIGURE 4: FREQUENCY OF MFS USES

However, the extent of uses varies from person to person. About 45% of respondents said that
they frequently use mobile financial services and another 24% replied that they use mobile
financial services very frequently. On the other hand, about 13% respondents said that they use
mobile financial services infrequently and around 7% respondents opined that they use mobile
financial services very infrequently.

6.3 Purposes for Using Mobile Financial Services:

People use mobile banking services for different purposes. Fund transfer and cash withdrawal are
the most popular mobile banking services among the consumers’. Out of 100 respondents about
93% opined that they transfer fund and around 95% said that they withdraw cash through mobile
banking. Airtime recharge through personal mobile banking account is another service that is
gaining popularity. About 11% respondents replied that they recharge airtime from their personal
mobile banking account. Utility bill payment through mobile banking is yet to gain popularity
which accounts only 3%. On the other hand, around 8% respondents said that they use their
mobile banking account to make payments of purchasing. There is another interesting fact that is
about 9% respondents replied that they save money in their personal mobile banking account.
 64

Purposes of using Mobile Financial Services

Purchasing

Cash Withdrawal

Savings

Bill Payment

Fund Transfer

Airtime Recharge

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Airtime Fund Cash
Bill Payment Savings Purchasing
Recharge Transfer Withdrawal
Percentage 11% 93% 3% 9% 95% 8%

FIGURE 5: PURPOSES OF USING MFS

6.4 Consumers’ Responses about Fast and Availability:

Mobile Financial Service, a real time on-line banking service, is available anytime, anywhere
throughout the country. So it can save one’s time. People need not to wait by standing in a long
line so it takes less time than traditional banking. In my survey, about 87% respondents agreed
that mobile banking is speedier than traditional banking.

Statement Yes No
Mobile banking is speedier than traditional 87% 13%
banking
TABLE 9: CONSUMER OPINION ABOUT MFS REGARDING FASTNESS

However, average waiting time for receiving money through mobile banking is yet to match
standard. Out of 100 respondents 71% replied that they receive money within 15 minutes. And
22% replied that they receive money within 30 minutes. Above 15 minutes to receive money is
too more. So, it is an area where bKash should focus.
 65

Waiting time for receiving money

0%

7%
Less than 15 minutes
22%
15-30 minutes
31minutes-1hour
71% More than 1 hour

FIGURE 6: CONSUMERS OPINION ABOUT AVERAGE WAITING TIME FOR

RECEIVING MONEY

Availability of mobile banking agents in nearby is important to provide seamless service. In my

survey, around 38% respondents said that their average distance to agents is less than 0.5
kilometers. But other 48% respondents said that their average distance to agents is 0.5 to 1
kilometers. Also, 12 % respondents opined that it is 1to 2 kilometers.

Distance to agents
2%

12%

38% Less than 0.5 Kilometers

0.5-1 Kilometers
1-2 Kilometers

48% More than 2 Kilometers

FIGURE 7: CONSUMERS OPINION ABOUT AVERAGE DISTANCE TO AGENTS

 66

6.5 Consumers’ Responses about Credibility, Affordability and Convenience:

Credibility is an important criterion for consumers’ in adopting technology based services.
Mobile banking is also a service based on telecommunication network. bKash has already
established credibility in consumers mind. Around 91% respondents agreed that they are
confident in withdrawing money alone from agents.

Confidence in withdrawing money

9%

Yes
No

91%

FIGURE 8: CONSUMERS OPINION ABOUT TRUSTWORTHINESS

Mobile banking service must be affordable as its target users have limited income. Interestingly,
only 29% respondents agreed that bKash agent’s service charge is affordable. And another 9%
strongly agreed that bKash agent’s service charge is affordable. In contrary, 41% respondents
think that bKash agent’s service charge is not affordable. In addition to this, around 7%
respondents strongly disagree that bKash agent’s service charge is affordable. So, bKash need to
reconsider their fee structure.
 67

Affordability
Strongly Agree 9%

Agree 29%

Uncertain 14%
Percentage
Disagree 41%

Strongly Disagree 7%

0% 10% 20% 30% 40% 50%

FIGURE 9: CONSUMERS OPINION ABOUT AFFORDABILITY

Mobile banking system is easy to use. In my survey, around 10% respondents strongly agreed
and 68% respondents agreed that mobile banking system is easy to use. Also, about 58%
respondents agreed that bKash save their time. But, 40% respondents disagreed and another 15%
respondents strongly disagreed that opening a personal account is easy. Moreover, about 30%
respondents disagreed that bKash agent are polite.
Statements Strongly Disagree Uncertain Agree Strongly
disagree agree
Mobile banking system is 2% 11% 9% 68% 10%
easy to use

Opening a bKash 15% 40% 32% 11% 2%

personal account is easy

bKash agents are 14% 30% 20% 25% 11%

courteous (polite)

Using bKash save my 2% 7% 9% 58% 24%

time

TABLE 10: CONSUMERS OPINION ABOUT CONVENIENCE

 68

6.6 bKash Enjoys High Consumer Awareness:

bKash enjoys highest brand awareness in the mobile financial service sector. About 78%
respondents opined that bKash is the first mobile financial services provider name that comes to
their mind when think about mobile banking service providers. bKash’s close counterpart is
DBBL mobile banking which accounts only 22%. So, bKash has highest un-aided brand
awareness in the mobile banking service sector.

Un-aided brand awareness

DBBL M-Banking
22%

bKash
78%

FIGURE 10: UN-AIDED BRAND AWARENESS

On the other hand, out of 100 respondents, 30% said that they have bKash account and 10% said
that they have DBBL mobile banking account. Here the most important fact is around 60%
respondents replied that they have no personal account and they conduct transactions through
agents account.
 69

M-Banking account

bKash
33%
None
50%

M-Cash DBBL M-Banking

1% 16%

FIGURE 11: M-BANKING ACCOUNT

6.7 Family Members and Mass Media Influence to Use bKash:

bKash users are influenced by family members and mass media. Out of 100 respondents, 38%
replied that they known about bKash from advertising. So, advertising plays an important role to
raise awareness among consumers about mobile financial service. Moreover, 41% respondents
agree that mass media such as TV commercial, newspaper, radio etc. influence them to use
bKash.
Statements Strongly Disagree Neither Agree Strongly
Disagree agree or Agree
disagree
Mass media (e.g. TV, 11% 10% 28% 41% 10%
newspaper, articles, radio)
influence me to use bKash
Family member/relatives 7% 13% 24% 35% 21%
have influence on my
decision to use bKash
TABLE 11: CONSUMERS RESPONSE ABOUT FAMILY AND MASS MEDIA
INFLUENCE

After mass media, friends and relatives are the most influential ones. About 35% respondents
agree that family members or relatives have influence on their decisions to use bKash. Moreover,
 70

28% respondents replied that they know about bKash through their friends and relatives. So,
reference from existing users is very much important in adopting mobile banking. Another 20%
respondents replied that they know about bKash from agent stores and about 8% replied that they
know about bKash from bKash website.

Sources to gain knowledge about bKash

Friends or Relatives bKash Website Advertising Agent Stores Other

6%

28%
20%

8%

38%

FIGURE 12: SOURCES OF INFORMATION

6.8 Favorable Attitude towards bKash:

Consumers have an overall favorable attitude towards bKash. In my survey, when they are asked
about the first thing that comes to their mind when they think about bKash, more than 70%
replied with positive feelings or associations. Some of the answers are bKash is an easy way to
cash transfer, bKash is available, bKash is reliable, bKash is easy to use etc. Some respondents
also expressed negative feelings such as bKash agent is not polite enough, network sometimes
fail, charge need to a bit lower etc. Overall most of the customers are satisfied with bKash
performance. When they are asked to rate bKash in terms of satisfaction around 43% rated
bKash with 7. And another 8% and 25% rated it with 8 and 6 respectively.
 71

Level of Satisfaction
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1 2 3 4 5 6 7 8 9 10
Level of Satisfaction 0% 0% 0% 9% 12% 25% 43% 8% 2% 1%

FIGURE 13: LEVEL OF SATISFACTION

6.9 Summary on Findings:

6.10 Summary on Findings:
i. Mobile Financial Service is a new technology in Bangladesh which started from 31st
March 2011. Most people heard about mobile banking but not have a clear idea.
ii. Most of the people use mobile financial service to transfer and withdrawal cash.
iii. Still most people make transaction from agent’s accounts.
iv. bkash provides the best quality service among all the MFS providers and it is the market
leader also.
v. Overall bKash consumers are satisfied with bKash performance.
vi. bKash agent are not polite enough and help customers little to open new personal
account.
vii. Mass media and family members have strong influence in adopting mobile financial
services.
viii. bKash brand awareness is very much strong in the market.
ix. Consumers’ are not satisfied with bKash existing pricing structure.
x. Fast, convenience, availability and reliability are the factors that influence consumers’ to
choose bKash.
 72

CHAPTER 7

R E C O M ME N D A TI ON A N D
C O N C L US I O N
 73

7.1 Recommendations:

i. Mobile financing services mainly depend on the technology so bkash need to improve
their server as early as possible because some time the server down for one or two hour.
ii. bkash need to promote their service by doing one to one marketing because of the
complexity of the service.
iii. The payment service of bkash is not satisfactory so if they want to capture the urban
people they need to revise their pricing strategy.
iv. bkash need to promote airtime recharge service as it has tremendous potentiality.
v. International remittance service of bkash is not clear to everyone so that they need to
promote that service with high priority.
vi. In resent time Islami Bank Bangladesh introduce mobile banking service called M-Cash.
So bkash need to have close observation on M-Cash, because they may become the
threat for bkash.
vii. bKash should execute a campaign to encourage people to open bKash personal account.
viii. bKash should facilitate training program for bKash agents.

7.2 Conclusion:

Mobile Financial Service is very new to Bangladeshi consumers and it is still at early stages in
Bangladesh. bKash’s initial growth to large scale has been among the fastest globally. At the
same time, it is still early. The bKash board and management are the first to say that there is a
long way to go and much still to do to build the business. It needs to stabilize its technology
platform to support a much higher volume of transactions. It needs to shift users from doing their
transactions via agents to using their own accounts. It also needs to move beyond payments to
provide other financial services. This research has served to enhance the understanding of the
consumers’ attitudes towards mobile banking in the context of Bangladesh. This study has also
explored the reasons behind bKash fast drive in the market. It will help the government policy
makers, m-banking service providers and practitioners in the field of Mobile Financial Service.
 74

CHAPTER 8

REFERENCE AND APPENDIX

 75

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Bangladesh Bank (2012), “Mobile Financial Services in Bangladesh: An Overview of Market

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25, 2015).
 76

bKash Limited (2014), Company Profile, (Online), Available from:

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Comninos, A., Esselaar, S., Ndiwalana, A., & Stork, C. (2008). Towards evidence-based ICT
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 78

Intermedia (2014). Financial Inclusion Insights. Available from: www.finclusion.org

(Accessed: 7 March, 2015)

Juniper Research (2014), Predicting Mobile banking, pp.2-30

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Koenig-Lewis, N., Palmer, A. and Moll, A. “Predicting young consumers’ take up of mobile
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 80

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8.2 Appendix
8.2.1 Survey Questionnaire:
(A survey questionnaire to measure consumer attitude towards Mobile Financial Service)

Name of the Participants:

………………………………………………
Gender: Male; Female. Age:…….
Profession:…………….………….
Income: …………………
1. Heard about Mobile Financial Service /Mobile Banking?
a. Yes b. No
2. How frequently do you use mobile banking?
Infrequently Very frequently
1 2 3 4 5
3. What's the FIRST Mobile Financial Service provider that COMES TO YOUR MIND?
……………………….
4. Which, any of the following mobile banking accounts do you have?
a. Bkash
b. Dutch-Bangla bank
c. Mobi-Cash
d. Others
5. I use my mobile banking account for the following purposes (you can choose more than
one option)
a. Airtime recharge
b. Fund transfer
c. Bill payment
d. Savings
e. Cash withdrawal
f. Purchasing
6. Average waiting time for receiving money?
a. Less than 15 minutes
b. 15-30 minutes
c. 31-1hours
d. More than 1 hour
7. Avg. distance to Agents?
a. Less than 0.5 kilometers
b. 0.5-1 kilometers
c. 1-2 kilometers
d. More than 2 kilometers
8. Are you confident in withdrawing money alone from the agents?
a. Yes b. No
 83

9. Mobile Banking is speedier than traditional banking?

a. Yes b. No
10. bKash agent’s service charge is affordable
1. Strongly Disagree 2. Disagree 3. Uncertain 4. Agree 5. Strongly Agree

11. Opening a bKash personal account is easy

1. Strongly Disagree 2. Disagree 3. Uncertain 4. Agree 5. Strongly Agree

12. bKash agents are courteous (polite)

1. Strongly Disagree 2. Disagree 3. Uncertain 4. Agree 5. Strongly Agree

13. Using bKash save my time

1. Strongly Disagree 2. Disagree 3. Neither agree 4. Agree 5.Strongly Agree

nor disagree

14. Family members/relatives have influence on my decision to use bKash.

1. Strongly Disagree 2. Disagree 3. Neither agree 4. Agree 5. Strongly Agree

nor disagree

15. Mass media (e.g. TV, newspaper, articles, radio) influence me to use bKash.

1. Strongly Disagree 2. Disagree 3. Neither agree 4. Agree 5. Strongly Agree

nor disagree

16. What is the first thing that comes to your mind when you think about bKash?
………………………..
17. What is good about bKash?
………………………
18. What is bad about bKash?
………………………
19. How did you come to know about bKash?
a. A friend, relative or acquaintance
b. bKash website
c. Advertising
d. Agent stores
e. Other (please specify)
 84

20. How satisfied are you with your overall service from bKash in scale of 1 to 10 (10 being
VERY SATISFIED)
Level of Satisfaction 1 2 3 4 5 6 7 8 9 10

8.2.2 Key Definitions in Mobile Financial Services

Agent: A person or organization authorized by a bank to carry out financial transactions on behalf
of the bank. Often these are small shops whose proprietor can provide cash‐in and cash‐out
services to a bank’s clients.

MNO: Mobile Network Operator – Airtel, Banglalink, Citicell, GrameenPhone, Robi, Teletalk.

SmartPhone: Handheld phone with more advanced computing power than a normal mobile
phone with the ability to undertake internet web based transactions using mobile network data
service with no need for a special channel negotiated with mobile network operators.

SMS: Short Message Service – text messaging over mobile phones.

USSD: Unstructured Supplementary Service Data – a real time communication channel between
a mobile handset and the servers of a mobile network operator. MFS providers typically require a
commercial agreement with a mobile network operator to gain access to USSD, but this has the
advantage of being accessible over any handset.