Background:
When revolutionary technological and financial innovations of the 21st Century are finally listed, mobile money services will rank at the very top of that list and rightfully so. In areas where formal financial services were hitherto unheard of, mobile money platforms combined technological and financial innovation to revolutionise the markets in a way unlike any market has experienced before. The Mpesa service in Kenya and the bKash service in Bangladesh are shining examples of the great story that is still being written.
Mpesa is a mobile money transfer system operated by Kenya’s (population 44.35m) largest telecom operator, Safaricom Limited. Launched in 2007, the service has grown in leaps and bounds from a simple money transfer tool with an initial target market of about 350,000 customers to a giant platform serving over 20 million customers as at December 2015.
bKash, on the other hand, was launched in July 2011 as a subsidiary of the BRAC Bank in Bangladesh (population 156.6m), which was run entirely independently to provide money transfer services. By the end of December 2013, bKash had grown to over 11 million subscribers, all within 30 months from its launch.
Approach:
Mpesa and bKash share one striking characteristic; they were both started in an environment where little existed in the way of a regulatory framework, by operating independently of banks. But that’s where the similarity ends. Whereas Mpesa was launched as a product owned by a telecommunications network company to leverage the strength of network subscriptions, bKash started as a mobile transfer platform operated as a subsidiary of a bank but run independently from the bank.
The strength of Mpesa’s approach has been in the readily available market access of Safaricom existing network subscribers. bKash, on the other hand, has approached the market from a position of independence from any mobile network provider, which has considerably widened its reach by not being limited to a single mobile network.
Results:
Issues arising:
As with every great innovation, issues have arisen in the course of the spread of the use of mobile money services. First, Mpesa and bKash enjoy a majority market share in their respective countries. Both services have been accused of abusing this market strength to charge exorbitant fees to their clients. Secondly, the general populace is yet to understand the intricate workings of each of these platforms which have expanded significantly from simple money transfer platforms to incorporating functions such as savings, small loans, payments of bills, e-payment services among others and with due time, international remittance.
There is an urgent need to educate the general populace of the role played by all stakeholders in the sector to avoid misunderstandings, which are more often than not, directed at agents providing services to the customers, as opposed to the related company which is best suited to handle any issues.
One great disappointment with the Mpesa story is its failure to replicate the same level of success experienced in Kenya when applied in other countries. While bKash allows international remittances, it is also yet to export its success beyond the boundaries of Bangladesh. This had raised serious questions about the viability of both mobile money models, given that their performance is not predictable even when applied in countries with similar demographics and market dynamics, as is the case of Mpesa’s failure to gain traction in Kenya’s neighbour, Tanzania.One great disappointment with the Mpesa story is its failure to replicate the same level of success experienced in Kenya when applied in other countries. While bKash allows international remittances, it is also yet to export its success beyond the boundaries of Bangladesh. This had raised serious questions about the viability of both mobile money models, given that their performance is not predictable even when applied in countries with similar demographics and market dynamics, as is the case of Mpesa’s failure to gain traction in Kenya’s neighbour, Tanzania.
Summary:
Although this is a short review of the Mpesa and bKash mobile money platforms, it is clear that mobile money services are with us to stay. It is up to companies like ours to keep improving our platforms by addressing the various weaknesses existing to develop a seamless platform that would serve subscribers with better efficacy, especially with the operational costs involved. Maybe it’s time the world considered a regulatory framework for mobile money services, to protect customers in a more comprehensive way without hindering innovation. This may just be the missing link that has blocked the replication of the success of Mpesa in Kenya and bKash in Bangladesh when applied in other countries.
