“SWOT ANALYSIS OF NAGAD MOBILE FINANCIAL

SERVICE DURING COVID-19 PANDEMIC”

The advancement of new technologies has introduced many inventions in the field of Finance
which make the financial system more comprehensive, speedier and more convenience. In 2011
Bangladesh Bank issued “Guidelines on Mobile Financial Services (MFS) for Banks” bringing
MFS activities under formal regulations. This includes the adoption of only bank-led model for
financial services, where customers deal with banks through a mobile finance intermediary. The
government has also taken initiatives to promote digital financial services through Access to
Information (a2i) with initiatives like Digital Financial Services Lab in partnership with
Bangladesh Bank, aimed toward startups targeting low-income groups. In Bangladesh, Digital
financial services have got its popularity very recently and aiming to lead the country’s booming
Digital Financial Service (DFS) revolution, Nagad is a venture by the Bangladesh Post Office
that facilitates the day-to-day financial transaction needs of the people. Nagad brand is operated
by Third Wave Technologies Limited (TWTL). The core philosophy of the service is to fuel
possibilities. According to the World Bank’s Global Findex 2017, only 50% of Bangladeshis had
mobile banking and/or financial institution accounts as of 2017, of which only 21.2% have
mobile money accounts. That leaves a large population of unbanked people who are in need of
reliable service to assist their financial needs. With a host of essential services such as cash
in/out, P2P money transfer and mobile top-ups, the purpose of Nagad is to enhance the lives of
people by empowering them with financial flexibility. Nagad sets itself apart by ensuring
meticulous customer service. Through its facilities, the company contributes to the financial
inclusivity & socioeconomic development of the country. Bangladesh Post Office's digital
financial service platform Nagad has sent shockwaves through the mobile financial service
(MFS) sector, which, till date, had been dominated by private sector players. The
disproportionately higher transaction limits under Nagad will create a monopoly by the state. For
instance, the daily transaction limit under Nagad is Tk 2,50,000 whereas it is Tk 15,000 for other
operators. Similarly, the monthly limit for Nagad customers is a hefty Tk 5,00,000 while for
private operators it ranges from Tk 25,000 to Tk 1,00,000.
Amidst the new challenges brought on by Covid-19, people are now increasingly depending on
digital solutions to adapt to the new normal, looking for simple-to-use services at one place to
meet essential needs ensuring personal safety. The new normal has accelerated digital
transactions and financial inclusion, strengthening the foundation of digital financial services all
over the world. And since Covid-19 emerged, MFS providers witnessed a tremendous surge in
the number of customers as it added around 1.5 crore clients in nine months (March to
November) last year, taking the number of registered clients now to 9.64 crore.

Monthly transactions through MFS rose by a staggering Tk 12,264 crore to Tk 53,598 crore in
November last year when compared with transactions in February. During the pandemic, utility
bill payments nearly doubled to Tk 831.43 crore in November last year, up from Tk 441.12 crore
in February of that year. The merchant payments more than tripled from Tk 581 crore in
February to Tk 1,879 crore in November last year. The government provided cash assistance to
50 lakh poor families hit by the coronavirus pandemic through four major MFS operators.
Bringing innovation and technological integration to the table, the country's 15 MFS operators
are now also providing services like sending money, cash-in, cash-out, salary disbursement,
donation for the poor, stipend disbursement, remittance, payments for different government
services, toll payment, credit card bill payment, insurance premiums, etc.

Nagad, the mobile financial arm of the postal department, added over 70 lakh new customers
during the pandemic taking the number of its customers to over 2.5 crore – making it the fastest-
growing MFS provider in the country. Launched in 2019, Nagad now has 1.78 lakh agents and
its daily transaction is now over Tk 200 crore. In what is a major success for an emerging
platform, Nagad is now distributing the government's stipends and allowances among 1.3 crore
primary school students. During the pandemic, it has introduced the digital distribution of
various government allowances, stipends and financial assistance, making it easier for the
beneficiaries to get the assistance.

Although Bangladesh has made tremendous progress in the MFS sector, extravagant charges are
the major impediment for greater financial inclusion, according to experts. Users and consumers'
rights groups have urged the government, at different times, to bring down the cash-out charges
for mobile banking to a single digit. Nagad, the financial service arm of the postal department,
has brought down the cash-out charge to Tk 11.49 per Tk 1,000 withdrawal whereas it was Tk
18.5 when the MFS industry had just come into being in Bangladesh a decade ago.

SWOT Analysis
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to
evaluate a company's competitive position and to develop strategic planning. SWOT analysis
assesses internal and external factors, as well as current and future potential.

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths
and weaknesses of an organization, initiatives, or within its industry. The organization needs to
keep the analysis accurate by avoiding pre-conceived beliefs or gray areas and instead focusing
on real-life contexts. Companies should use it as a guide and not necessarily as a prescription.

Strengths
Strengths describe what an organization excels at and what separates it from the competition: a
strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For
example, a hedge fund may have developed a proprietary trading strategy that returns market-
beating results. It must then decide how to use those results to attract new investors.

Weaknesses
Weaknesses stop an organization from performing at its optimum level. They are areas where the
business needs to improve to remain competitive: a weak brand, higher-than-average turnover,
high levels of debt, an inadequate supply chain, or lack of capital.

Opportunities
Opportunities refer to favorable external factors that could give an organization a competitive
advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a
new market, increasing sales and market share.

Threats
Threats refer to factors that have the potential to harm an organization. For example, a drought is
a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other
common threats include things like rising costs for materials, increasing competition, tight labor
supply and so on.

SWOT Analysis of Nagad

The following is a SWOT analysis of Nagad:

Strengths of Nagad-Internal Factors

 Nagad is backed up by the government which allows them lesser regulatory restrictions
in contrast to the private sector players.
 Nagad enjoys higher transaction limit as it does not fall under the reach of the central
bank thanks to the postal act, which has empowered the postal department to
independently provide financial services.
  It will be able to provide faster services than its competition through various digital
channels and digital systems like digital apps, mobile phones, ATM, POS terminals, NFC
enabled devices, electronically enabled cards, biometric devices and tablets.
 Unique advertisement and marketing strategies

Weakness of Nagad- Internal Factors

 Lack of awareness about the new channel among the mobile users.
 Significantly fewer agents and merchants compared to rival Bkash.
 Online shopping is gaining popularity in Bangladeshi market but Nagad does not provide
any kind of transaction service for online shoppers and it is a big weakness for the
company.

Opportunities of Nagad-External Factors

 High growth of SME and online businesses.

 Customers, especially entrepreneurs who actively use mobile banking services find daily
transaction limit of Tk 15,000 and withdraw limit of Tk 10,000 from existing providers
like bKash, Rocket and UCash a constraining factor.
 Rapid increase in the mobile user base and acceptance of the mobile technology even in
rural areas makes a bigger market available for mobile banking to expand.
 Starting its service on a trial basis in September in all the districts headquarters, Nagad
has already accumulated 7 lakh active customers.

Threats of Nagad-External Factors

 Increasing possibilities of money laundering and terrorist financing from higher

transaction limit.
 Significant market share captured by Bkash.
 Heavy advertising and promotional activities of Bkash make it very difficult to penetrate
the market.
 Switching cost of mobile banking users from one platform to other is high.
Nagad, the fastest-growing mobile financial service of this kind in the world, has also gone past
Tk 400 crore mark of the daily transaction in just two years of its launching. Nagad has earned
kudos by digitalizing the disbursement of various government allowances, stipends and financial
assistance during the coronavirus pandemic. Digitalization has made it easy to deliver the benefit
to the beneficiaries, ensured transparency, and saved the government money. Nagad crossed the
landmark of one crore customers in just 10 months after Prime Minister Sheikh Hasina
inaugurated the service on March 26, 2019.