Strategic Analysis of

bKash Limited
 Course No: W650
Course Name: Business Strategy

Term Paper on
Strategic Analysis of

bKash Limited

Prepared for

Dr. A. K. M. Saiful Majid

Professor
Course Instructor: Business Strategy
Institute of Business Administration, University of Dhaka

Prepared by

Saraf Nusrat
MBA 60D; Roll: RK-08

Institute of Business Administration, University of Dhaka

7 June 2020
June 7, 2020

Dr. A. K. M. Saiful Majid

Professor
Institute of Business Administration
University of Dhaka,
Dhaka-1000.

Subject: Submission of term paper on “Strategic Analysis of bKash Limited”

Dear Sir,

It is indeed a great pleasure for me to be able to hand over the result of my hardship - the report
on “Strategic Analysis of bKash Limited” as per the requirement of the course, “Business
Strategy”. This report is the outcome of the knowledge which has been acquired from the
respective course. Throughout the study, I have tried with the best of my capacity to accommodate
as much relevant information, real life data and interpretations as possible.
This report has been prepared as per your instructions, and no part of this report can be used or
shared without your authorized permission. This report has never been, and never will be,
reproduced for any other IBA course.
I fervently hope that you will find this report worth reading. I look forward to receiving your kind
appraisal on this report.

Thank you for your cooperation.

Sincerely,

_________________________________

Saraf Nusrat, Roll: 08, MBA 60D

 Acknowledgement

I would like to express my sincere gratitude to the faculty, Professor Dr. A.K.M Saiful Majid,
the course instructor of the course W650: Business Strategy, Institute of Business Administration,
University of Dhaka for allowing me to research on this topic. His step by step directions gave me
a clear understanding about how to proceed with my work.

I am also greatly thankful to Ms. Rukhsana Akter Mily, Assistant Manager, Media & Public
Relations, Corporate Communications Department of bKash Limited for giving me her valuable
time to provide information about the overall business of bKash.

Furthermore, I would like to thank my fellow course mates from Business Strategy course for
their constant support and guidance in any kind of situation of confusion.

Lastly, my gratitude to various authors, researchers and publishers whose books, articles and
writings have provided guideline to complete my study and help me in the proper execution of this
report.
Executive Summary

Mobile Financial Services (MFS) have become very popular in recent years. As the whole
country is adopting digitalization in every form, it’s nothing surprising for MFS to achieve rapid
business growth over years. Currently there are 15 banks who are providing mobile financial
services in Bangladesh. Among them bKash, a subsidiary of BRAC Bank who operates as a
separate entity is the market leader with 80% market share.

This report analyses the mobile financial service and the market leader bKash with the help of
some strategic concepts, tools and techniques which are based on primary and secondary data. The
study is mostly based on secondary data collected from company’s’ annual financial report and
other publications. Primary data was collected through an informal interview with a senior
employee from bKash.

After a brief introduction to the business profile of bKash, which includes the value proposition,
products and services, performance review, business growth etc., the report evaluates the vision
and mission statements of the company. The business model is evaluated with two frameworks:
Value-Price-Cost Framework and Business Model Canvas. A balanced score card is also formed
to evaluate if the financial and strategic objective of bKash are linked.

Later on, With the help of Porter’s five forces model, the strengths of the five competing forces of
the industry are identified from the perspective of the company. Through SWOT Analysis, the
internal and external environment of the company has been analyzed. By PESTEL Analysis, the
macro-environment of the company has been dissected for bKash as well as for the MFS industry.
The key success factors (KSFs) of the company have also been identified as KSFs related to
technology, skills & capabilities, marketing and product/service diversification.

The ethical aspects of the company have also been discussed and the reasons why the company
claims to be so ethical have been pointed out. The company also indulges in various CSR activities
and plan on doing more. Their current CSR related activities and future plans have been pointed
out in the report.

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The study indicates that bKash has achieved a sustainable competitive advantage and in a good
position in terms of market position. But then again, it’s vital for bKash to bring continuous
innovation to maintain this market position.

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Table of Contents
Executive Summary ...................................................................................................................................... v

1.0 Introduction ............................................................................................................................................. 1

1.1 Origin of the report .............................................................................................................................. 1

1.2 Objectives ............................................................................................................................................ 2

1.2.1 Broad Objective ............................................................................................................................ 2

1.2.2 Specific Objectives ....................................................................................................................... 2

1.3 Methodology ....................................................................................................................................... 2

1.4 Scope of the report............................................................................................................................... 3

1.5 Limitations .......................................................................................................................................... 3

2.0 Overview of bKash ................................................................................................................................. 4

2.1 Company Profile.................................................................................................................................. 4

2.2 Value Proposition ................................................................................................................................ 4

2.3 Management Structure ........................................................................................................................ 5

2.4 Products & Services ............................................................................................................................ 5

2.5 Price Structure & Limitations.............................................................................................................. 6

2.6 Business Growth ................................................................................................................................. 6

2.7 Performance Review ........................................................................................................................... 7

3.0 Strategic Analysis of bKash .................................................................................................................... 8

3.1 Mission & Vision Evaluation .............................................................................................................. 8

3.1.1 Mission Statement: ....................................................................................................................... 8

3.1.2 Vision Statement:.......................................................................................................................... 8

3.2 Balanced Score Card ........................................................................................................................... 9

3.3 Business Model: Value-Price-Cost Framework .................................................................................. 9

3.3 Business Model Canvas ..................................................................................................................... 10

3.4 Generic Competitive Strategy ........................................................................................................... 11

3.5 Does bKash follow a winning strategy? – Three tests evaluation ..................................................... 12

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 3.6 Strategy Making Hierarchy ............................................................................................................... 13

4.0 Environmental Factor Analysis of bKash ............................................................................................. 14

4.1 PESTEL Analysis .............................................................................................................................. 14

4.2 Porters Five Forces Model ................................................................................................................ 15

4.3 SWOT Analysis................................................................................................................................. 17

4.4 Key Success Factors of bKash .......................................................................................................... 18

4.5 Strategic Group Analysis................................................................................................................... 19

4.5.1 Strategic Group Mapping ........................................................................................................... 20

5.0 Company Culture .................................................................................................................................. 20

5.1 Ethical Practices ................................................................................................................................ 21

5.2 Corporate Social Responsibility (CSR) Activities ............................................................................ 21

6.0 Recommendation .................................................................................................................................. 22

7.0 Conclusion ........................................................................................................................................... 24

References ................................................................................................................................................... 25

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List of Figures
Figure 1MFS Transactions in 2014-2018 ...................................................................................... 1
Figure 2Average Daily Transaction of bKash ................................................................................ 6
Figure 3 Trend of bKash Customers ............................................................................................... 7
Figure 4 Profit After Tax (2014-2019) ........................................................................................... 7
Figure 5 Revenue percentage of bKash .......................................................................................... 9
Figure 6 Strategic Group Map ...................................................................................................... 20

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List of Tables

Table 1Price Structure and Limitation of bKash Services .............................................................. 6

Table 2 Mission Statement Evaluation ........................................................................................... 8
Table 3 Balanced Score Card .......................................................................................................... 9
Table 4 Business Canvas Model of bKash ................................................................................... 10
Table 5 Strategy Making Hierarchy of bKash .............................................................................. 13
Table 6 Mobile Financial Services in Bangladesh ........................................................................ 19

x|Page
1.0 Introduction
With almost 180 million people with nearly 21.8% of the population living below the poverty
line, Bangladesh is known to be a densely populated country. (Asian Development Bank , 2020)
Before the advent of Mobile Financial Services (MFS) in Bangladesh, less than 15% of the
population was connected to the formal banking system. While there had been a good number of
micro-finance institutions (MFIs) in the country for the unbanked people and small businesses,
they primarily provided a limited number of financial services. Most of the marginalized
population still had a lack of access to core financial needs such as money transfer, deposit
withdrawal, payment etc.

But Bangladesh had a key strength in one area that could help to solve the problem in a
different way. More than 70% of the people had a mobile phone, and mobile network services had
been available even in the most remote rural areas. This is where technology and banking merged
to give rise to MFS in Bangladesh which has been following an increasing trend for last 5 years.

Only in February 2020, transactions

TRANSACTIONS VIA MFS
(IN CRORE BDT) of around 41,334 crore BDT were made
Transation via MFS (in crore taka) all over the country where the average
378,885
400,000 daily transactions were of 1,425 crore
350,000 314,661
300,000 BDT. (Bangladesh Bank , 2020)
IN CRORE BDT

234,690
250,000
200,000 157,776 As of February 2020, there are 15
150,000 103,157
100,000 banks currently providing mobile
50,000 financial services in Bangladesh. And
0
2014 2015 2016 2017 2018 bKash Limited is one of the pioneers in
Figure 1MFS Transactions in 2014-2018 this field.

1.1 Origin of the report

The report has been done as a partial requirement of the course “Business Strategy”, instructed
by Dr. A. K. M. Saiful Majid, Professor, Institute of Business Administration, University of Dhaka.

1|Page
1.2 Objectives
1.2.1 Broad Objective
The broad objective of this report is to have an in-depth look into the overall business strategy
of bKash Limited and evaluate their operation in the mobile financial service industry using
different strategic concepts, tools and techniques.

1.2.2 Specific Objectives

In order to fulfill the broad objective, there are some specific objectives that the report aims
to accomplish:

i. To understand the business model and current performance of bKash Limited

ii. To evaluate the mission, vision and also the objectives using balanced score card
iii. To identify the generic competitive strategy and different strategic levels followed by
bKash Limited
iv. To perform the three tests of a winning strategy on bKash Limited
v. To learn about the macro-environmental factors of bKash using PESTEL
vi. To assess the MFS industry and competitive environment of bKash using the five-force
model and strategic group mapping
vii. To identify the driving forces and key success factors of MFS industry
viii. To evaluate the competitiveness of bKash using SWOT analysis
ix. To evaluate the ethical practices, corporate culture and CSR activities of bKash Limited
x. To learn the diversification strategies of bKash Limited

1.3 Methodology
Methods and procedures which have been followed in conducting this paper are described
below:

• Primary Source
The primary data have been collected through an informal phone interview with Ms. Rukhsana
Akter Mily, Assistant Manager, Media & Public Relations, Corporate Communications

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Department of bKash Limited. Furthermore, a focus group discussion was conducted among the
frequent users of mobile financial services for qualitative data collection.

• Secondary Source
For secondary data, previous research works, reports, publications and various existing
external sources were used. Apart from this, the internal sources, company’s website, social media
pages, annual reports have helped to gather various information.

1.4 Scope of the report

• Industry: Mobile Financial Service Industry of Bangladesh
• Timeline: 2016 – 2020

1.5 Limitations
• Impact of COVID-19:
As the whole country is currently under lockdown for Covid-19 pandemic, it wasn’t possible
to conduct a one-to-one in-depth interview with a senior manager of bKash Limited other than
an informal phone interview.
• Lack of access to the confidential data:
bKash operates in a highly competitive industry which is also constantly updating itself. This
is why, bKash Limited doesn’t like to maintain any annual publications or documentations
which could be used for this report.
• Lack of publicly available information over the internet:
bKash is not a publicly enlisted company. Hence, there are very little information available
over the internet.
• Lack of comparison with any other internationally recognized MFS:
A brief comparison between bKash and any other internationally operating MFS could have
helped to produce a better analysis

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2.0 Overview of bKash
2.1 Company Profile
bKash Limited, popularly known as bKash, a bank-led mobile financial service provider in
Bangladesh is a subsidiary of BRAC Bank Limited. bKash started its journey in July 2011 as a
joint venture between BRAC Bank Limited, Bangladesh and Money in Motion LLC, USA.
The major shareholder, BRAC Bank has 51% share of bKash. Here’s a timeline showing when
bKash acquired other investors:

• April 2013: International Finance Corporation (IFC), a member of the World Bank Group
became an equity partner of bKash
• April 2014: Bill & Melinda Foundation became the investor of the company
• April 2018: Ali Pay, an affiliate of Alibaba Group became an investor in bKash

In 2017, bKash was ranked as the 23rd company to make changes based on social issues in
the annual list of Fortune Magazine's 'Change the World in 2017' among the top 50 companies.
bKash is currently running a network of more than 180,000 agents throughout urban and rural
areas of Bangladesh with over 30 million registered accounts. (bKash, 2020)

2.2 Value Proposition

The primary values offered by bKash are:

• Fast: Money travels within seconds; no queue-no waiting,

• Affordable: Lowest in cost specially for lower tokens, 100% free for money transfer
• Secure: Under regulation and compliance to meet the highest standard
• Convenient: Few steps, supported by any handset; 24/7 service
• Nationwide: Available within walking distance

The main target of bKash is to ensure broader financial inclusion in the simplest way. In a
country of almost 180 million people where there are only 9,000+ traditional bank branches and
6,000+ ATM booths, bKash boasts an astonishing 180,000+ agent network in its portfolio, which
helps its claim of being truly a nationwide service. Moreover, bKash provides such platform where
4|Page
the user only requires a mobile phone to access the financial services which perfectly justifies the
company tagline: It’s that simple!

2.3 Management Structure

Although BRAC bank has 51% share of bKash, bKash operates as a single entity. All other mobile
financial services in Bangladesh operate as a single division under different banks. But bKash
claims itself as a tech company with their own management structure and business departments.
The company was formed by Mr. Kamal Quadir, the proud CEO of bKash Limited.
“It is tremendously exciting that we have done something that has a profound impact on the
way common people behave with their finances. And technology allows it. It was not possible
earlier. Now it is.”- Kamal Quadir, CEO, bKash (Asiamoney, 2018)

2.4 Products & Services

bKash started its journey in 2011 by providing only money transfer service. In last 9 years of its
business, it has added various featured services which has helped it gain a better market position.
Currently bKash provides the following services:

• Send Money: This is the core service of bKash. The user only needs a mobile phone to transfer
money within seconds.
• Cash In & Cash Out: bKash customer can simply walk into any of the vast agent network
and deposit or withdraw money in a matter of minutes.
• Payment: There are nearly 50,000 merchants of bKash, including prominent brands like
Aarong, Agora, Meena Bazar, Bata etc, and also small grocery stores, pharmacies, e-commerce
websites where customers can make their payments using their bKash account. Users can also
pay their electricity, gas, water, telephone, internet and education bills using bKash.
• Mobile Recharge: This is the most famous bKash service in terms of transaction count
• Inward Remittance: bKash has partnerships with authorized and enlisted Foreign Banks,
Monet Transfer Organizations (MTO) and Money Exchange Houses to provide international
remittance services in a country, which heavily depends on it.

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• Interest on Savings: Users can enjoy up to 4% of interest annually on their savings in the
bKash account
• Donation: Anyone can donate from their bKash account to several NGOs which are partnered
with bKash.

2.5 Price Structure & Limitations

Table 1Price Structure and Limitation of bKash Services

Action Type Corporate Accounts Limitations End-User (P2P) Limitations

Opening an account FREE FREE Per Day Per Month
Cash In N/A FREE None
Collection 1.50% Corporate Collection No Limits N/A BDT 25,000 & 5 BDT 150,000 & 20
Settlement Charge times times
Cash Out from agent N/A 1.85% charge will be N/A
automatically
deducted from bKash
Account

Cash out from ATM 2% charge will be Between BDT 2% charge will be BDT 25,000 & 3 BDT 150,000 & 10
automatically deducted from 2,000 to 20,000 automatically times times
bKash Account deducted from bKash
Account

Cash out from Bank Branch NA N/A N/A

Transfer Money Corporate Disbursement Through bank BDT 5/Transfer BDT 10,000 & 20 BDT 25,000 & 70
Charge: 0.50% order via times times
email/hardcopy
Merchant Payment N/A FREE Unlimited
Mobile Recharge N/A FREE BDT 10,000 BDT 100,000
Remittance FREE Between BDT 50 FREE Between BDT 50 Between BDT 50
to 1,25,000 to 1,25,000 to 1,25,000

2.6 Business Growth

bKash, the market leader with 80% market AVERAGE DAILY TRANSACTION OF
BKASH
share in 2019 became the world’s largest
Average daily transaction of bKash
Mobile Financial Service (MFS) by the number 5.3
6
4.3
of accounts, and the second largest by the
IN MILLION TAKA

3.6
4 2.9
transaction volume in the speed of light.
1.3
2
With revenue-sharing agreements with
0
Bangladesh’s four major mobile network 2014 2015 2016 2017 2018

operators, bKash was able to rapidly expand its Figure 2Average Daily Transaction of bKash

6|Page
customer base, reaching above 30 million by March 2018. The average daily transactions also
faced a tremendous growth in last 5 years by constantly following an increasing trend. Two of the
main reasons of this rapid business growth are the technological advancement which was possible
by the bKash app and the acquisition of 20% stakes in bKash by Alipay, a Chinese e-commerce
giant, in 2018. (The Business Standard , 2019)

TREND OF BKASH CUSTOMERS

Customers Active Customers

35 30.95
28.76
30 26.17
25 20.74
18.79
In Million

20 15.69 14.42
15 11.28
9.1
10 6.52
5
0
2014 2015 2016 2017 2018

Figure 3 Trend of bKash Customers

2.7 Performance Review

Although, bKash faced an
incredible growth over years, the PROFIT AFTER TAX OF BKASH
Profit after tax
profit margin is quite
600 488
dissatisfactory. The company 335
400 238
189 185
faced a loss of 62 crore in 2019 200
IN MILLION TAKA

because of the huge cost it incurred 0

2014 2015 2016 2017 2018 2019
last year. bKash went for massive -200
-400
investment in technologies to -625
-600
improve its service in view of new -800
competitors entering the market.
Figure 4 Profit After Tax (2014-2019)
It also increased its marketing
cost to strengthen its communication with customers. (The Business Standard , 2019)

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3.0 Strategic Analysis of bKash
3.1 Mission & Vision Evaluation
3.1.1 Mission Statement:
“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, 2020)
Table 2 Mission Statement Evaluation
Evaluating Questions: Evaluation:

1. Who we are? The mission statement clearly specifies that the company, bKash is a
mobile financial service company.
2. What we do? It clearly mentions that the company provides a convenient, affordable
and reliable financial service.
3. Why we are here? It also defines that bKash wants to provide a platform so that people
can safely send and receive money via mobile devices.

3.1.2 Vision Statement:

“To ensure access to a broader range of financial services for the people of Bangladesh. bKash
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, 2020)
✓ Good Points:
• The vision statement is graphic; it clearly points out where the company is headed
• It’s forward looking and directional
• It’s focused and inspiring for the managers to make right decisions
 Bad Points:
• It doesn’t have any wiggle room; no indication of adjustments in case of customer or
market change
• The statement is not concise; it mentions twice that the company wants to ensure broader
financial inclusion - which was repetitive and unnecessary
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3.2 Balanced Score Card
The following table shows how the strategic and financial objectives were linked for bKash
in 2018. (BRAC Bank , 2019)
Table 3 Balanced Score Card

Strategic Objectives Financial Objectives

1. Overtaking competitors through 1. Increased market share by 20%

technological advancement
2. Acquiring Ali Pay as investor 2. Increased 13% cost for R&D and marketing

3. Adding more services than rivals 3. Increased revenue by 10.5%

4. Retaining more customers by enhancing 4. Increased operating cost by 10%
communication
5. Achieving 23% increased transactions 5. Increased ROA by 6%
volume

3.3 Business Model: Value-Price-Cost Framework

• Customer Value Proposition:
o Provides one-stop solution platform for the unbanked population through constant
innovation
o Offers low priced, 24/7, uninterrupted, 180,000+ wide network money transfer service
which is more convenient than competitors

• Profit Formula
o Revenue Generation: bKash charges a fixed amount of fees for cash ins/outs. Out of
which, the majority portion of business
REVENUE PERCENTAGE
revenue, 17% goes to the vast distributors Agents/Distributors Telecom Operators bKash

network who bring the company the 16%

7%
maximum number of customers. Another
7% goes to the telecom operators 77%
providing the network, and the remaining
16% goes to bKash Limited. Figure 5 Revenue percentage of bKash

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 o Cost Structure: Fixed cost associated with developing software platforms to ensure
constant innovation, paying taxes to government exchequer, maintaining suppliers and
human resource. Fixed and variable costs related to promotional and marketing activities,
maintaining the technological infrastructure, acquiring new strategic partners.

o Profit Margin: Profitability dependent on generating larger number of users and revenues
from increased transactions volume to cover the costs.

3.3 Business Model Canvas

Table 4 Business Canvas Model of bKash

Key Partners Key Activities Value Proposition Customer Relationships Customer Segments
1. Equity Partners 1. Providing 1. Fast & convenient 1.Personal assistance 1. Geographic: Both
like IFC, Bill convenient money during opening account urban and rural
Foundation
2. MNO partners 2. Updating the tech 2.Avalability of cash 2. 24/7 customer care 2. Psychographic:
platform service Unbanked
3. Technology 3. Establishing 3. Nationwide population
platform partnerships service through
partners with business and non- agents 3. Behavioral: Regular
profit org users
4. 180,000+ agent 4. Raising fund from 4. Fast transaction
international with the
investors help of MNO
5. Maintaining 5. Risk reduction by
customer providing
relationship security
6. Marketing &
Branding
Key Resources Channels
1. Strong customer Various prominent
base brands like
2. Brand value and Aarong, Agora, Bata,
recognition etc,
3. Financial resources different hospitals, e-
commerce
4.Country-wide websites, gov
service coverage organizations
5. Strong network of including WASA,
agents DPDC etc.
6. Wider range of
services
Cost Structure Revenue Stream
1. Commission 1. Send money (5tk per
given to agents transaction)
2. Fees sharing with network providers 2. Cash out from ATM
3. Continuous technology development and 3. Cash out from agent
maintenance cost
4. Marketing cost

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3.4 Generic Competitive Strategy
bKash follows the Broad Differentiation strategy. Let’s have a look on what bKash offers
according to the distinguishing features of this strategy:

• Strategic target:
• The 85% unbanked population of Bangladesh. bKash initially targeted the low-income
people, but rebranded itself in 2015 to target a broad cross-section of the market of all
income level with a slogan “প্রয় োজয়ে পোয়ে বিকোে”
• Basis of competitive strategy:
• There are few other players in the market who offers the same service like mobile
transaction, deposit/withdrawal of money etc. But the service platform that bKash offers
is the most convenient among all. It works as a one-stop solution to all problems.
• Product line:
• bKash offers variety of featured services like cash in/out, money transfer, mobile recharge
etc. But the fact that users can easily make their payment to different organizations or pay
their bills through the bKash app just in few seconds is the wow factor of bKash service.
• Production emphasis:
• To ensure product superiority, bKash is always the first one to understand the customer
need and bring solution in the market.
• Marketing emphasis:
• bKash charges 1.85% for cash out from agent and 2% foe cash out from ATM which is
higher than market average to cover the cost of differentiating features.
• Keys to maintain the strategy:
• Relentless innovation in last 2 years; bKash went for spending on technology advancement
over earning a constant profit margin with a view to achieving stronger market position in
future
• Resources and capabilities required:
• bKash made Ant Financial as a strategic partner which is one of the largest payment
solutions with over 800 million users worldwide. (bKash, 2020) These strategies help
bKash to gain the required resources and capabilities they need for business growth.
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3.5 Does bKash follow a winning strategy? – Three tests evaluation
The following tests can determine whether the broad differentiation strategy followed by
bKash is a winning strategy:

1. The Fit Test:

In an industry where few other players are competing with more or less low cost, the best
market opportunity for bKash was to bring differentiating features by continuous innovation.
Moreover, bKash targeted the mass population who were still unbanked which automatically
created a huge business opportunity. So, the broad differentiation strategy followed by bKash
exhibits external fit.
In order to ensure a sustainable growth, bKash has always emphasized on adding new features
with their resources. They made a huge investment on developing their mobile app which became
very popular later with 10M+ downloads. They also increased their agent network 12.5% from last
year. This proves bKash exhibits internal fit as well. (bKash, 2020).
Initially, bKash was perceived as a brand for poor people. To break the stereotype, bKash
rebranded itself in 2015, changing their brand slogan from “দেেজুয়ে টোকো পোঠোয়েো িো পোও োর

সিয়েয় সহজ ও বেরোপে উপো ” to “প্রয় োজয়ে পোয়ে বিকোে” to make it a brand for all people
irrespective of their income level. This proves bKash exhibits a dynamic fit.

2. The Competitive Advantage Test:

As bKash operates as a separate entity and backed by well-known investors like IFC, Bill and
Melinda Foundation and Ali Pay, bKash has always been one step ahead than the rivals. In just 9
years of its business, bKash has provided bKash app, the most convenient platform in the market
through which customers can transfer money within seconds. Also, people can find bKash agent
points anywhere and everywhere because of its wide range network.
Other competitors like Rocket gives almost the same services in same price, but it does not
provide any convenient, user-friendly service platform like bKash. The convenience and
accessibility that bKash offers are the winning points of their business. There were half a minion
downloads of the bKash mobile app within just 2 weeks of the launch in April, 2018.

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3 The Performance Test:

• Competitive Strength and market standing: bKash stands in a position where there’s a little
chance of new entrants giving it a tough competition. It’s the market leader with 80% market
share whereas Rocket, run by DBBL is in the 2nd position with only 17% market share. (BRAC
Bank , 2019)
• Profitability and financial strength: In spite of being the market leader, bKash doesn’t earn
and incredible profit regularly. Specially in last 2 years, the net operating profit has been
declining. Because of the technology development and marketing expense, bKash had to incur
a huge cost. But its tremendous business growth could attract more investors. Though bKash
faced 62% decline in their profit margin in 2018, it had acquired Ali Pay as another investor.

3.6 Strategy Making Hierarchy

As bKash is a single-business company, it has the following three levels of strategy:
Table 5 Strategy Making Hierarchy of bKash

Strategic Level Corresponding Strategy

1. Business Level • Working with government in various projects like disbursing

incentivized salaries to RMG workers, distributing PM aid to
distressed families during Eid-Ul-Fitr in May, 2020 for COVID-
19 pandemic
• Cross-selling of products & services
• Creating a strong overarching brand image by attaining investors
like Ali Pay
• Associating with government agencies like WASA, DPDC
2. Functional Level • Strengthening the technology infrastructure through continuous
innovation
• Increasing cost for sales & marketing to attract wider customer
segment
3. Operational Level • Increasing agent network by 12.5% in 2018

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4.0 Environmental Factor Analysis of bKash
4.1 PESTEL Analysis
The macro-environment of a company is highly crucial while crafting and executing
strategies. The components of the macro-environment of bKash are:

• Political Factors:
Political factors like fiscal policies, tariffs, regulations by the central bank have a direct impact
on bKash as well as other MFS in Bangladesh. In 2018, Bangladesh Bank stipulated that the MFS
providers must be led only by the scheduled commercial banks as the parent bank must own 51%
of the subsidiary’s equity. This led many of the new MFS applicants form a new subsidiary. (The
Financial Express, 2018)
In June 2020, the central bank issued another circular increasing the P2P transaction limit
from 75,000BDT to 200,000BDT. Also, the MFS cannot impose any transaction free in these
transactions while purchasing medical or essential goods. (Dhaka Tribune , 2020) These
regulations make the service providers redesign their business plans and strategies.

• Economic conditions:
The inflation, exchange rates, GDP trend has significant impact too. The higher GDP growth
rate signals growing demand in the economy, bKash can leverage this trend by expanding its
product range and targeting new customers.
As bKash has multiple foreign investors, it will be affected if the world economy faces any
trouble. For example, the world economy has already facing a crisis due to COVID-19. Many of
the organizations have stopped making investments as they are running out of money. bKash needs
to bring new strategy and superior product ideas to retain the investors.

• Sociocultural forces:
This is one of the main reasons of the success of bKash in recent years. In Bangladesh,
people’s attitude has changed towards savings, they tend to spend more over online nowadays,
specially e-commerce and f-commerce. As life has become busier, people look for faster solutions.
Hence, the continuous product updates, partnering up with more and more industries in case of
bKash will always keep them ahead of rivals.
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 • Technological factors:
Bangladesh is currently a country where the median age is 27.6years. (Worldometer, 2020)
The majority of this population, the Gen Z is habituated with leading their life with the most use
of technology. This is why, all MFS need to cope up with the ever-changing technological trends
worldwide. And, now, with the help of AI and big data, it has become possible to monitor the
customer behavior easily and make proper decisions. The right technological support for bKash,
the mobile app with 10+ million downloads already made bKash the market leader.

• Environmental forces:
bKash indirectly work with all sort of industries including farming, energy production,
tourism, transportations, utilities etc. which face a substantial effect during weather or climate
changes. Moreover, bKash has 180,000+ agents and ATMs widespread all over the country. Any
climate change or environmental crisis will hinder the business.

• Legal and regulatory factors:

bKash and all other MFS must comply with consumer laws, safety regulation laws, financial
service regulation laws etc. to operate and design their business plans.

4.2 Porters Five Forces Model

Michael Porter has identified five forces that are widely used to assets the structure of any
industry. The following discussion will help diagnose the principal competitive pressure for bKash
in the MFS industry.

1. Rivalry among existing firms:

bKash Limited has been running almost a monopoly business in the industry since the
beginning. bKash started its journey in 2011, the same time as another MFS, Rocket. But bKash
itself has 80% market share whereas Rocket has only 17%. The rest of the 3% is owned by other
players who barely have any impact. Another player, Nagad, backed by government may get some
regulatory advantages sometimes. But in the years to come, there is hardly any chance of any
competitor providing such convenient and scalable service as bKash.
As a result, the threat level from rivalry among existing firms is considered to be low.

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 2. Threat of new entrants:
New firms are bound to get attracted by the profitability in this sector. Even though, there is
a possibility that bKash will lose its market share even for a little upon the entrance of new players
in the market, bKash will always get the first mover advantage. Moreover, there are certain barriers
to entry in this industry like infrastructure & resources, access to channels of distribution &
relationship and ease of legality. The way bKash has broadened its network, the new players have
to be high resource oriented to mark a competition.
So, the threat level of new entrants is moderate.

3. Threat of substitutues:
The substitutes of bKash are the traditional payment options, debit/credit card payment,
traditional banking and other MFS. bKash entered in the market at a time when these options were
already available to the customers but not convenient enough. bKash brought the smartest solution
possible. Moreover, buyers don’t see the traditional options as comparable in terms of quality.
So, the threat level here is low.

4. Bargaining power of buyers

The MFS players operating in the market offer almost same price for cash in/outs. bKash
charges 2% for cash outs from ATM whereas Rocket charges 1.50%. But this 0.50% charge
doesn’t make any difference as bKash offers much more convenient way of taking service. So,
there is not much chance for the buyers to make any bargaining here.
Hence, the threat level is low.

5. Bargaining power of suppliers

The key partners of bKash include the MNOs, merchants, various agents, foreign stockholders
etc. The MNOs and merchants are well branded with their own strong market positions. As bKash
operations are quite dependent on them, the bargaining power of these suppliers is always high.
Also, bKash Limited mainly run on investments. So, it will face a big threat if the stockholders
stop investing on it.
So, the threat level here is high.

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4.3 SWOT Analysis
Strength:

• Unparallel technological support

- The bKash app, launched in 2018 was downloaded over half a million times in just 2
weeks of its launch. The app currently has 10million+ downloads, far higher than
competitors.
MFS bKash Rocket Nagad Nexus Pay iPay

No of 10M+ 1M+ 1M+ 1M+ 100k+

downloads

• Stockholders like IFC, Bill & Melinda Foundation and Ali Pay are world renowned
institutions. Strategic alliances with these organizations keep bKash in a stronger financial
position.
• bKash is the most accessible service option compared to traditional banking.

ATMS Booths Traditional Bank Branches bKash Agents

6000+ 9000+ 180,000+

• Continuous partnership development with merchant payment.

- Users can now make their WASA, electricity, internet bills through respective websites
through bKash.

Weakness:

• Lack of external security

- bKash still finds it difficult to maintain 100% safe transactions. Although, customers
only need a mobile phone and national ID to open a bKash account. Still, there are
number of cases where accounts were created using fake IDs and bKash couldn’t trace
all these immediately.

• Cash unavailability
- The local bKash points often run out of adequate cash in the later part of the day. In
those cases, users need to wait a day or two to get those services.
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 • Limited monthly transaction amount
- As the monthly transaction amount is limited, people wouldn’t use bKash as an
alternate of traditional bank.
• No refund policy in case of wrong transactions

Opportunities:

• 114 million active mobile subscribers in Bangladesh – bKash can still target attaining
more customers.
• High growth of SME and online businesses in Bangladesh provides opportunity for more
business growth
• Due to COVID -19 pandemic, there is a high chance that in next 1/1.5 year, all payments
will be through mobile wallet. This is an opportunity for bKash to add more special
features on their portfolio so that customers get habituated with using their services.

Threats:

• As bKash is highly dependent on foreign investors, there’s a chance of not getting enough
investment in future due to economic recession coming for COVID-19. Moreover, bKash
expanded their business without making profit last year. (BRAC Bank , 2019) So, it would
be a big crisis for the company if the stockholders stop investing.

• Hacking, Fraud and abuse of the service

• bKash will not be losing the market position in near future as it holds a huge portion of
market share. But, MFS in a competitive industry and to maintain the position and
popularity bKash has now, it needs to strive for constant innovation.

4.4 Key Success Factors of bKash

The key success factors for bKash are:

• 100% transparency and safety in transactions.

• Providing new solutions for customers even before customers demand it

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 • Keeping pace with the technological changes worldwide
• Bringing data driven solutions
• Providing customized services for customers to strengthen customer relationship
• Engaging with more strategic alliances

4.5 Strategic Group Analysis

bKash maintains the blue ocean strategy in the MFS industry. There are few other players
operating in the market but they hardly give any competition.

Although there are certain advantages of each of the MFS. For example, Nagad is backed by
government. So, it has larger transaction limit. But irrespective of the advantages of any other
players, bKash has the highest market share of 80%.

The following table shows the list of mobile financial services in Bangladesh.
(LightCastleBD, 2019)

Table 6 Mobile Financial Services in Bangladesh

Service Objective Institutional Banking Advantage

iPay Payment Platform N/A Digital Payment Focus
Nagad Digital Financial Post Office Larger Transaction
Service Limit: Regulatory
Advantage

D Money Digital Payment Post Office Digital Islamic Wallet

Platform 2tk Accounts

bKash Mobile Financial BRAC Bank Larger Market Share &

Service Network of Agents

Rocket Mobile Banking Dutch Bangla Bank Banking Facilities

Nexus Pay Mobile Financial Dutch Bangla Bank No transaction
Service for Existing commission charged
Customers

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4.5.1 Strategic Group Mapping
Here is a strategic group map showing the MFS of Bangladesh and the position of bKash
among all.

The map is constructed by putting the number of services on X-axis and the level of cash out
price on Y-axis. It is shown that all MFS more or less follow the same price. Although bKash
charges a little more.

The circles represent the market share of each MFS. bKash has the highest market share of
80% where Rocket has the 17% market share. The other rivals in the market: Nagad (1.30%),
Nexus Pay (0.90%) and iPay (0.80%) market share.

High
Price

Nagad (1.30%)
Moderat
Rocket
Nexus Pay
iPay
(0.90%)

Low
bKash

Few Moderat Many

No of services

Figure 6 Strategic Group Map

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5.0 Company Culture

5.1 Ethical Practices

The ethical practices maintained in bKash are:

• All workers who are working as vendors must follow the law of the land, TAX/VAT
regulations/regulatory requirement of the Government.
• The Vendors are asked to conduct all business dealings with highest level of ethical manner
and integrity.
• Vendors must not attempt to offer any bribe in any kind of dealings with bKash. In any such
case, bKash reserves the right to take all appropriate actions or remedies.
• Any unethical or integrity issues observed or encountered while dealing with bKash Limited
are brought to the notice of bKash Limited’s senior management with necessary proof.
• Vendor must comply with all the guidelines for use of the trademark and must not use the
Company trademarks and trade names without the prior written consent of the Company.
• Vendor cannot reproduce, any copyrighted work in hard copies, prints, video or electronic
copies in violation of the copyright laws.
• Vendor must follow the domestic and international trade control and customs laws and
regulations, including, but not limited to those relating to licensing, shipping and import
documentation.
• Vendor must also ensure they do not engage in any personal dealings with bKash employees,
especially those that they interact with on bKash business matters.

5.2 Corporate Social Responsibility (CSR) Activities

bKash has always actively participated in corporate social responsibilities (CSR). Specially
during COVID-19, in matter of a month, they came forward and took various initiatives (bKash,
2020) to help the nation. Some of the recent CSR activities done by bKash are mentioned here:

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• bKash handed over 6.5 lakh medical supplies including 50 ventilators from Alibaba
Foundation and Jack Ma Foundation to PM’s Relief fund in Jun4 4,2020 dut to COVID-19
pandemic.

• bKash provided food aid worth 35 lakh taka to 5,000 Corona affected families.

• Corona Info on bKash app for sharing information

• Easy bKash account opening for garment workers – Government incentives distribution
initiatives

• bKash provided 40,000 books to Bissho Shahitto Kendro in January 2020

• bKash signed an agreement with Family Health International (FHI 360), a US-based non-profit
human development organization to disburse funds to 2400 lactating mothers in November,
2019

• bKash-Biggan Chinta organized science fest in Sylhet and Chittagong

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6.0 Recommendation
Although bKash has been the market leader for few years now, still being in the competitive
industry, bKash has a lot more to offer. Some of the recommendations for bKash are mentioned
below:

1. Promoting the remittance service

- The lower income population of the market is still uneducated to some extent.
International remittance service of bKash is not clear to everyone. bKash needs to
promote their remittance service more to reach more people.

2. Educating Rural People for App usage

- Although, bKash app has over 10M downloads, majority of the users are from urban
areas. Rural people still find difficulty to access the app. So, bKash must take initiatives
to educate the rural people about the app usage.

3. Credit System Introduction & Credit Rating

- bKash may introduce credit system and rating to attract more customers. No other
players in the market has initiated this yet.

4. More focus into fraudulent and privacy issue

- With bigger power comes bigger responsibilities. bKash must address the fraudulent
issues more seriously for sustainable brand image.

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7.0 Conclusion
As Bangladesh is stepping towards Vision 2021, the overall development will be greatly
dependent on the technological advancement that the business organizations will offer. bKash has
been playing a vital role so far and making a difference in the mobile financial service industry of
Bangladesh. With the help of renowned investors and its own resourceful technological platform,
it already covers the payments of all major brands and organizations, both public and private. Upon
the strategic analysis of bKash using various tools it is quite clear that, bKash has a sustainable
competitive advantage. The strategy which has been followed by bKash so far has been quite
successful for them, in according to gaining market share or attracting more customers. It also
exhibits dynamic fit. In 9 years of its business, bKash has faced many other competitors, who have
almost no impact. So, maintaining the current market position would not be that difficult for bKash
in future. But, as technology rapidly changes over time, bKash must be prepared with the changes
and continuously update and bring more features which will always keep itself ahead of others.

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0to%209.2%25%20in%202019.
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