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bKash has taken Bangladesh by storm by allowing individuals of low income to embrace electronic money for primary use compared to physical money. In a mere 6 years, bKash has created a disruptive company with over 26 million customers and a 58% market share within the Bangladeshi financial technology industry. Now that the company has reached break-even, Kamal Qadir, the CEO, would like to strengthen the foundation of his business so that it continues to grow in the midst of a changing landscape for regulations.Before bKash introduces any additional products through mobile financial services (MFS), it is important for them to continue building customer loyalty and branding for their primary market. The “bottom, unbanked segment of society” has various socio-economic factors that prevent them from understanding certain financial technologies that others in more developed areas grasp quickly.
As such, bKash needs to work on increasing and/or maintaining consumer confidence in these applications. As mentioned, it was initially challenging to get people in rural villages to use the service because they did not believe that “money could be transferred through the air.” In areas such as these, word-of-mouth marketing is critical and one of the most organic methods to increase awareness of the product offerings. Due to this, bKash needs to continue to leverage their agents (or others) for in-person demonstrations to help understand the new products bKash would release. This can include educational programs that teach individuals in these areas how insurance works, for example, or “Ambassador” programs in universities across the country to continue rapid adoption amongst the youth in Bangladesh.
While bKash has heavily focused on B2C, one area they can expand on is formalized B2B transactions. They have executed this with the garment industry to implement payroll solutions, however, it could be expanded even further. This could include the use of bKash to help local merchants pay their suppliers. Shops in larger cities can go to banks, however, for the reasons mentioned in the case (distance, time, risk, etc.), many small businesses in villages may not be able to effectively do so. In addition, bKash has been widely successful due to the support of the central bank; they could potentially implement G2C services in very remote areas of Bangladesh, such as pension payments or subsidies to farmers. Qadir outlined that he may not be interested in forming credit instruments that banks offer as a strategic direction for the company, however, marketplace lending could potentially be a viable solution.
This is a new area in financial technology where loaning money is on an online platform that matches individual lenders with borrowers. In remote areas, this once again can be more feasible than them making the trip to banks in bigger cities. The educational programs described above would highlight these new products and why they should be used. Specifically, they could host workshops on how these loans would work for those that have not borrowed money before. This could be a great branding opportunity for bKash as they are helping to educate villages with low literacy rates.
With any of these new concepts, bKash is fortunate that the central bank is “open-minded” and interested in increasing financial inclusion; this will be reflected in any regulations they pass. bKash should not be treated like a bank and instead should have a separate set of policies to enhance their functionality. This is similar to companies in Western countries for applications such as Wealthsimple, which it is not considered a bank but has to comply with the CDIC, amongst others. Having a supportive government is critical to ensure a successful impact on the economy, and it appears that the prominent organizations in Bangladesh are supportive of Qadir’s initiative, which will continue to help the country well into the future.
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