bKash's Success Establishes Mobile Financial Services in Bangladesh ni five years, growth of mobile finand a serv ces Banig adesh has skyrocketed, with IFC clent bKash leading the way. CLIENT PROFILE Bangladesh's most successful mobile banking services provider, bKash Limited, is part of the BRAC Group, one of the world's largest non-governmental organizations. It is 51 percent owned by BRAC Bank, a socially responsible financial institution focused on small and medium-sized enterprises. The remaining shareholders include Money in Motion, the Gates Foundation, IFC and Alibaba Group which is keen to share its technological know-how with partners like bKash and has successfully brought financial services to the largely unbanked population. Established in 2011, bKash now processes more than 80 percent of mobile banking transactions in Bangladesh. bKash is focused on providing affordable, secure digital financial services relying on a 180,ooo-strong agent network covering each district. Operating in a poor country with over 16o million people with 68 percent mobile penetration, bl(ash saw a significant opportunity to support its social objectives by providing access to digital financial services. With revenue-sharing agreements with Bangladesh's four major mobile network operators, it was able to rapidly expand its customer base, reaching 21 million by March 2016. BACKGROUND IFC ROLE Bangladesh is a populous country of over 160 million people In 2013, IFC made a sio million equity investment in bKash with nearly 14 percent of the population living below the through its relationship with BRAC Bank. In addition poverty line. Furthermore, only 41 percent of all adults are to financing, IFC's provided significant global industry banked (2017). The Central Bank's policies supporting financial knowledge and expertise in the mobile payments space. inclusion are an important part of its strategy. IFC's engagement included: In recent years. the use of digital financial services has grown in large part because of regulatory changes implemented in * Market mapping and development of customers and Bangladesh in 2011. These changes allowed banks to establish merchants subsidiaries offering mobile banking services, but also required * Development of a merchant strategy that they be regulated within the banking framework. * Suggestions on greater process efficiency * Proposed improvements in technology for mobile The country's four major mobile network operators payments (MNOs) were also encouraged by the Central Bank and * Implementation plan for merchant acquisition telecommunications regulator to provide mobile banl1,000 178,300 50,000 USD 41.6m Total Clients Agents Merchants Monthly Transactions Source: IFC KEY LESSONS The success of bKash illustrates several important lessons: * There should be a problem to solve, i.e. expensive informal remittances * A clear conducive regulatory model should exist * A strong agent network strategically placed to capture money flows is essential * Simple, KYC-compliant registration is essential to acquiring customers, especially if low financial literacy is prevalent * Free cash deposits assist in encouraging customers to engage with the platform * Rural development benefits from simplified money transfers from urban ona IJ1~E mE Fiance orp oration areas. WORLDBANKGROUP Creating Markets, Creating Opportunities