Business Strategy (MGT401)

Term Paper
Case Study on “bKash”

Submitted by
Sumaiya Mustary
BRACU ID: 17104064
BBS, Summer’21

Submitted to
Dr. Rafiuddin Ahmed
Associate Professor
Department of Marketing
Faculty of Business Studies

BRAC Business School

BRAC University
Date of Submission (September 15, 2021)
Company History: bKash | It’s that simple

Kamal Quadir and Iqbal Quadir launched bKash. When the two Quadir brothers decided to offer mobile
financial services to Bangladesh in the mid-2000s, it had already taken off in the Philippines, Kenya, and
other emerging economies. In 2008, the Quadir brothers began working with Sir Fazle Hasan Abed, the
founder of BRAC, in search of a local partner. They agreed to form a joint venture between Money in
Motion and BRAC Bank in 2010. bKash started its journey in Bangladesh in July 2011 with three basic
services: Cash In, Cash Out, and Send Money. More user-demanded services like airtime top-up, bills
payment, train-movie ticket purchase were introduced over its span. bKash is a mobile financial service
in Bangladesh working under the authority of Bangladesh Bank as a subsidiary of BRAC Bank
Limited. Now it has its own mobile application, it has been recognized as the best innovation at the
Financial Innovation Category in Bangladesh Innovation Award 2018 for its simplified and useful
features. The company's mission is to make life better by providing affordable and innovative services,
and to become the preferred financial service provider in all walks of life.

An Emerging Mobile App: bKash’s Innovative Move from People to

People

The customers of bKash use it as their financial account. They can deposit and withdraw the money
whenever they want. They can also get their salary, loan and remittance through this E-banking process.
bKash provide various services, such as, Opening Account, Cash-In, Send Money, Cash-Out, Payment to
Merchant, Buying Airtime, Payment bills, Salary disbursements. bKash has a proper pricing strategy of
their own. There are more than 80,000 agents all over the country of bKash. They are ready to provide
the services to the nearby customers 24/7. They have a helpline for customer care. bKash customer care
centers are located in Dhaka, Mymensingh, Sylhet, Chittagong, Khulna and Bogra. They do their branding
in their own way. Their branding strategy is always unique. They are growing in m-banking industry due
to their advertising skills. Currently, they are dominating the market in term of customers as well as
market share. Their marketing team always try to come up with innovative ideas to promote their
brand. Their promotional videos attract the target group successfully. They frequently create new TVCs
to promote the services. They also manage to showcase their brand in attractive large billboards on
roadside area with a clear message for all group of people. They provide posters at their agents’ shops.
They also promote their brand through wall paint advertisements. They also do branding by free stickers
on vehicles, boat branding, posters on the back of rickshaw which is visible to most of their target
audience.

The mobile finance industry is still new to the Bangladesh market. Today, bkash leads this market
with approximately 71% market share. DBBL Mobile Banking and bkash have a 24% market share.
In particular, bkash and DBBL mobile banking cover most of the markets. Trust Bank, Mercantile
Bank, Eastern Bank and other companies accounted for 5% of the total market share.

The user growth rate from March 2012 to March 2013 is as follows in Table-1.1:
 Table- 1.1: User Growth Rate of bKash

In 2011, BRAC Bank established a 51%-owned subsidiary named bKash, which combined the investment
of US Money in Motion. Bangladesh Bank has granted BRAC Bank and bKash a license to jointly operate
MFS business. The MFS guidelines clearly allow banks and their subsidiaries to conduct MFS business.
bKash started operations in July 2011, and their first MNO partner was Robi. In January, Grameen
Telephone (GP) launched the USSD channel on bKash and opened the service to GP users. BRAC Bank /
bKash services are provided through a fan platform originally developed in South Africa, which was later
taken over by Visa. bKash has agents in all regions of Bangladesh, aiming to become a large supplier of
MFS, which will benefit tens of millions of Bangladeshis in just a few years. bKash is cautious that this
service will not be profitable in the next 4-5 years. bKash also received a $10 million grant from the Bill
and Melinda Gates Foundation and technical assistance from Shore Bank International to help them
launch MFS services. bKash also cooperates with BRAC, in addition to receiving agents from Robi and
searching for agents directly, it can also identify and train new agents. From the perspective of bKash,
the biggest challenge is to reach a solid commercial agreement with MNO. Another challenge is to
motivate agents and customers to use the service more actively. bKash believes that building a business
requires more time, scale and awareness.

Strategy formulation: Business Analysis of bKash

As an incumbent in the industry, bKash has established a strong relationship with its suppliers and other
members of the supply chain. Ishtiaq Mahmood, Marleen Dieleman and Narmin Tartila stated that the
company can improve its products and services by leveraging the skills of its suppliers and supply chain
partners. The solutions and strategies of leadership and management helped bKash develop unique
solutions to enter uncovered markets. bKash obtained a wide range of patents and copyrights by
innovating and purchasing these rights from its creators. bKash has no diversified growth. It failed to
innovate technology and digitally transform products. Although bKash has integrated the technology
into the back-end process, it still cannot use the technology's capabilities in the front-end process. Your
record on environmental issues is not very encouraging. It is difficult to prevent startups from disrupting
the market at all other levels. The e-commerce business model can help bKash cooperate with local
suppliers and logistics providers in the international market. Globalization has created opportunities for
the international market. bKash is in a prime position to take advantage of these opportunities and gain
market share. In the past fifteen years, the market has grown rapidly. The influx of new customers has
also led to changes in consumer preferences and tastes. This brings two major challenges to bKash how
to retain loyal customers and how to cater to new customers. Since bKash can acquire customers at low
cost through social media and e-commerce, so can its competitors-local and international competitors.
bKash can use its strengths to create niche positioning in the market, work hard to reduce and eliminate
weaknesses to better compete with competitors, look for opportunities provided by industry structure,
regulations, and other developments in the external environment, and finally take preventive measures
and formulations strategies to respond to threats that can disrupt the business model of bKash.

The political environment and other factors that affect bKash not only affect business costs, but also
affect long-term sustainability. Some political factors are-government systems, democracy and
institutions, the possibility of military coups, the possibility of armed conflict, the law and order of the
market, etc. The government has a deficit budget. The meaning of bKash is that it can increase the sales
of its products in the short term, but it also exposes bKash to the risk of currency and currency
depreciation in the medium term. Bangladesh has a high employment rate. bKash should assess the
country's Internet and mobile phone penetration levels in order to establish the required business
model based on local needs and realities. It should analyze the areas where technology can empower
partners in the supply chain. This can help companies increase transparency and make the supply chain
more flexible. Countries around the world are working hard to prepare to install 5G infrastructure. Many
times, companies enter the stage without the necessary infrastructure to support the technology-driven
model. Population development is one of the key factors in predicting economic demand. For example,
as the population of Bangladesh continues to grow, the demand for products mainly targeted at this
segment of the market will increase. The education level of the social partners affects the quality of
work and income levels. This will also have a long-term impact on the company. The gender composition
of the labor market is a good indicator of household disposable income, household priorities and related
needs. The role of environmental standards enforcement agencies is essential to protect standards. The
independence of the judiciary reflects the strength and credibility of state institutions. Transparency in
the judicial system and procedures is essential for fair and consistent decision-making by any company.
Before entering a new market, the company must assess which commercial laws apply and how they
differ from the domestic market.
 Table- 2.1: Growth of bKash in 5 years

Growth into the Future: Competition between bKash and The Rivals

According to the annual statement of BRAC Bank, bKash's parent company, the company has invested
more than Tk400 crore in product development and marketing activities in the past two years. During
this period, his net profit fell from Tk18.5 crores to Tk62.5 crores a sharp drop compared to the dizzying
heights of previous years. In 2019, total sales increased by 10.9% year-on-year to Tk2.416 crores. "We
will continue this investment in 2020, and the company will have to lose money this year," bKash CEO
Kamal Quadir told bKash Business Standards recently. The company is 20% owned by Chinese payment
giant Alipay and is capable of absorbing losses. Shamsuddin Haider said that since the outbreak of the
pandemic in March, bKash has lost Tk21 crore in remittance and withdrawal fees, and Tk27.50 crores
paid from the government’s Tk5,000 crores stimulus plan for textile workers, according to Dalim Said,
bKash's head of corporate communications and public relations. According to their statement, bKash
also acquired approximately 7 million new customers, bringing its balance sheet to 4.5 crore in June.
Looking at it from another perspective, Rocket, one of bKash's main competitors, gained 1.8 million new
customers during the reporting period. Nagad was ahead of bKash in attracting customers during the
pandemic: since March, 1.26 billion new accounts have been opened. The company has created more
than 1,400 direct employment opportunities, and its 226 active sales companies, 230,000 agents and
numerous agencies are built across the country, indirectly providing livelihoods for thousands of people.
After the journey of bKash in 2011, the International Finance Corporation (IFC) of the World Bank Group
and the Bill and Melinda Gates Foundation joined them through equity partnership in April 2013 and
April 2014, respectively. In April 2018, bKash also on boarded Ant Financial Group as a strategic partner.

bKash has enough features and connectivity to make it an attractive financial platform for both urban
and rural populations, and is likely to resist emerging threats from the upstart Nagad in the mobile
financial services sector of the Bangladesh post office.

Questions

1. How can ‘bKash’ apply BCG Matrix to their digital marketing strategies?
2. Do you think ‘Nagad’ has become a potential competitor of ‘bKash’? Why?
3. What steps can ‘bKash’ take to make their online business more distinctive?
Endnotes

1. Bkash.com. (2000). Company Profile | bKash. [online] Available at:

https://www.bkash.com/about/company-profile.
2. StuDocu. (n.d.). The Bkash Banking Company And Summary Of It’S Marketing Strategy. [online]
Available at: https://www.studocu.com/row/document/university-of-dhaka/fundamental-of-
marketing/the-bkash-banking-company-and-summary-of-its-marketing-strategy/1944525.
3. Anon, (n.d.). Comparative Analysis of bKash Limited - Assignment Point. [online] Available at:
https://www.assignmentpoint.com/business/management/comparative-analysis-of-bkash-
limited [Accessed 15 Sep. 2021].
4. Pro, E. (n.d.). MBA SWOT : bKash: Financial Technology Innovation for Emerging Markets SWOT
Analysis & Matrix. [online] EMBA Pro for Executive MBA Professionals. Available at:
https://embapro.com/frontpage/swotcase/20291-bkash-mfs [Accessed 15 Sep. 2021].
5. Pro, E. (n.d.). MBA HBR : bKash: Financial Technology Innovation for Emerging Markets Case
Study Solution & Analysis. [online] EMBA Pro for Executive MBA Professionals. Available at:
https://embapro.com/frontpage/casestudysolution/20291-bkash-mfs [Accessed 15 Sep. 2021].
6. The Business Standard. (2020). bKash had the foresight to invest on tech. Pandemic is now
bearing fruit. [online] Available at: https://www.tbsnews.net/economy/bkash-had-foresight-
invest-tech-pandemic-now-bearing-fruit-108694 [Accessed 15 Sep. 2021].