mfs customer insights v14
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TRANSCRIPT
1
BANGLADESH: Consumer Insights – Is a transition to mobile wallets underway?
Gregory Chen & Pial Islam
6 February 2014
pi STRATEGY CONSULTING
2pi STRATEGY CONSULTING
Agenda Subhead
Background
Part I: Who are MFS customers?
Part II: What do MFS transactions look like?
Part III: Is there a transition towards wallets?
Part IV: How might regulators and businesses respond?
3
BackgroundMd Farhad Rahman, 2013 CGAP Photo Contest
4pi STRATEGY CONSULTING
Context
• Mobile banking in Bangladesh has already become quite a success story since its initiation in 2011. Currently, there are around 13 million registered users being served by about 190,000 agents transacting around BDT 6650 crore per month.
• The regulatory body, Bangladesh Bank, has approved 27 banks to operate as mobile financial service providers in the country. Of which 19 banks have been able to officially launch the service so far.
• In the current market, the top-3 players are: • Brac Bank’s bKash, • DBBL Mobile Banking and • Islami Bank’s mCash
bKash79.7%
DBBL Mobile Bank-
ing19.8%
mCash0.5%
Market Share in terms of Regis-tered Users
Source: Daily Newspaper, Websites.
5pi STRATEGY CONSULTING
Context: Usage patterns evolvingBangladesh Bank introduced new guidance promoting wallets use in September 2013
September October November December -
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Wallet to WalletOTC
23%
Person to Person Transfer Volumes (BDT Crore)*
24%26%
27%
* Estimates based on Bangladesh Bank MFS figures. OTC is comprised of all cash-in and cash-out transactions, subtracting any P2P, utility payment, salary disbursement, international remittance. P2P is all P2P (wallet to wallet) reported transactions.
6pi STRATEGY CONSULTING
MethodologySubhead
- Defining Research Question- Preparing Questionnaire- Testing Questionnaire- In-depth Interview - Identifying Major Hypothesis- Identifying implications
Sample Size:45
Output: A List of hypothesis
Sample size: 12
Tool: Interview Guide Tools: Yellow Book (a customized financial record tracker), Multiple round In-depth Interviews
Output: Personas + Insights
- Identifying respondents from stage-2 sample (and supplementing if necessary)- Record Financial transactions- Persona Design- Generating insights
Design Field Survey Validation Analysis
-Defining Research Question-Preparing Template for findings-Preparing Questionnaire-Testing Questionnaire-Selecting 3rd party surveyor
-Error Checking-Phone Validation
Sep/ Oct Nov/ Dec Dec / Jan
- Random plus targeted sampling- National level (randomly selected 4 divisions out of 7)- Detailed questionnaire- Interviews and observations at agent points
Stage-2Stage-1
Output: Stage-2 Report (Findings and validated hypothesis)
Stage-3
Sample size: 400 random + 79 targeted
• The entire study comprises of three stages:
7pi STRATEGY CONSULTING
MFS in Bangladesh
• Customers seem to have tailored their own ways of usage by leveraging the platform. Most people are transacting through mobile banking agents without using personal wallets which is actually OTC.
• Recent regulatory changes (PSD Circular Letter No. – 01/2013) strongly discourage OTC transactions and encourage wallet usage. According to the regulations:
• No Cash-out or P2P transaction can be done from user’s account before proper verification and approval of her KYC by relevant banks.
• Prior to doing any transaction agent has to be confirmed that the user, he is transacting with, has mobile banking accounts. Bangladesh Bank will closely observe this situation and If discrepancy found with any agent, his agent-ship will be cancelled immediately.
• The maximum amount a user can cash-in or cash-out is BDT 25,000 per day.
8pi STRATEGY CONSULTING
Definitions
• Three observed uses of mobile payments:1. Pure OTC
If neither sender nor the receiver has mobile banking account (or wallet), it will be classified as a Pure OTC transaction.
2. Partial OTC If either sender or the receiver has wallet it will be Partial OTC and
3. Pure WalletIf both sender and receiver
have wallet the transaction will be categorized as Pure Wallet.
SENDER
No Account
Account
No Account
RECEIVER
No Account
No Account
Account
AccountAccount
Pure OTC
Partial OTC
Pure Wallet
9pi STRATEGY CONSULTING
Sampling
• Sample Size: 480*
401Purposive Sampling Targeted Sampling
79
Randomly found at agent points, Post Office and Courier Service.
From the list provided by bKash and DBBL Mobile Banking and Snowball approach.
Pure OTCPartial OTC Pure Wallet
Post Office
Courier Service
Pure Wallet
*Considering the tolerable error level (5%) where
• N is the total mobile financial service user which is 10,000,000 all over Bangladesh • n = required sample size • p is a certain proportion in universe. p=0.02 and q is (1-p) • z is the confidence level (for 95%, z = 1.96) • e is the tolerable error of estimates (which is at around 5%, as the lower error level provides better
representations)
10pi STRATEGY CONSULTING
Sampling (contd.)
• The survey covered four randomly selected divisions of the country (out of seven) which are:
– Dhaka, – Chittagong, – Barisal and– Rangpur.
• Equal split of urban, semi-urban and rural was kept to the extent possible.
11pi STRATEGY CONSULTING
Sampling (contd.)
• The survey was conducted during November and December 2013. The surveyors were undergrad students who participated in multiple briefing sessions before going to field.
• Interview guide comprised of 60 close-ended questions and each interview lasted for more than 30 minutes. Separate Cue Cards have been used to test numeracy and English proficiency level of the beneficiaries before recording it.
• Respondents in Purposive Sampling were randomly selected and interviewed at different agent points.
• Respondents in Targeted sampling were selected from active wallet users list provided by bKash and DBBL Mobile banking. They were communicated over phone and later, interviewed face to face at their convenience. Rest of the sample were found through snowball approach starting from the list.
• Before going to the analysis table, data was back-checked rigorously. For any slightest discrepancy the entire data set of the specific respondent was eliminated. Eventually, the field survey extended to a second phase to get the sizable sample size which was also followed by similar validation phase.
12pi STRATEGY CONSULTING
Demographic Highlight
48%
20%
32%
Urban-Rural Split
Urban Semi-Urban Rural
81%
19%
Gender Split
Male Female
47%53%
Sender-Receiver Split (Overall)
Sender Receiver
39%61%
Sender-Receiver Split (Rural)People in rural areas are mostly
receivers.
Sender Receiver
Illiter
ate
Up to c
lass 5
Up to c
lass 8
Up to S
SC
Up to H
SC
Vocati
onal/
Diplom
a
Bache
lors
Master
s or a
bove
4%9%
12%
20%
29%
4%
15%
7%
Education Split
15 to 25 years 26 to 35 years Above 35 years
53%
37%
11%
Age Group
13pi STRATEGY CONSULTING
Demographic Highlight (contd.)
Student
Servic
e holder
Small tra
der
House
wife
Shopk
eeper
s
Petty t
rade
r
Labo
rer
Driver
/CNG D
river
Unemploy
ed
Self-e
mploye
d
Farm
er
32%27%
11% 9% 6% 5% 3% 3% 2% 1% 1%
Profession Split
Monthly Income Monthly Expense
8007
6458
Average Income and Expenses (Reported)
Am
ount
in B
DT
Monthly Expense
42%
11%
12%
5%
12%
7%
11%Food
Clothing
Education
Medicine
Rent
Utilities
Others
National Average
Poverty Line
14pi STRATEGY CONSULTING
Demographic Highlight (contd.)
9%
91%
Outstanding Loan
Have Outstanding LoanDon't have Outstanding Loan
(Average amount of loan outstanding is BDT 91,768)
35%
65%
Do you have Bank account?
Yes No
30%
12%
58%
Which bank?
DBBL Islami Others
15GMB Akash, 2011 CGAP Photo Contest
Part I: Who are MFS customers?
16pi STRATEGY CONSULTING
Who?Subhead
• Pure Wallet Users have higher individual income compared to others. Whereas, Pure OTC have the least.
Courier (n=20)
Post Office (n=20)
Pure OTC (n=208)
Partial OTC (n=143)
Pure Wallet (n=89)
Sample (n=480)
9650
8475
7093
8381
10642
8007
Average Monthly Income
Am
ount
in B
DT
National Average
Poverty Line
17pi STRATEGY CONSULTING
Who? (contd.)
• Mobile banking users are slightly younger group of people.
Courier Service (n=20)
PO (n=20) Pure OTC (n=208)
Partial OTC (n=143)
Pure Wallet (n=89)
Total Sample (n=480)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
15 to 25 years 26 to 31 years Above 35 years
18pi STRATEGY CONSULTING
Who? (Contd.)
• Majority (90%) uses feature phones with color display. • Prevalence of Smart phone in this group is around 6%. • Average price: Smart phone 16421, Monochrome 1345, Feature
Phone With Color Display 3770.
Total Sample (n=480)0%
10%20%30%40%50%60%70%80%90%
100%
Smart PhoneFeature Phone with Monochrome DisplayFeature Phone with color display
16421
13453770
Average Price of the handset (Reported)
Am
ount
in B
DT
19pi STRATEGY CONSULTING
Who? (Contd.)
• About 50% respondents have multiple SIMs. However, the percentage is less than 40% for pure OTC users.
• Pure OTC users have 2 handsets in household. Whereas, the number is 3 for Pure Wallet users.
Courier Service (n=20)
PO (n=20) Pure OTC (n=208)
Partial OTC (n=143)
Pure Wallet (n=89)
Total Sample (n=480)
0%10%20%30%40%50%60%70%80%90%
100%
One Two Three More than three
20pi STRATEGY CONSULTING
Who? (Contd.)
• Pure Wallet users have had more schooling comparing to other groups of mobile banking users.
Courier Service (n=20)
PO (n=20) Pure OTC (n=208)
Partial OTC (n=143)
Pure Wallet (n=89)
Total Sample (n=480)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Upto Grade-10 More than Grade-10
21pi STRATEGY CONSULTING
Who? (Contd.)
• Pure Wallet Users can read in English better than others.
Courier Service (n=20)
PO (n=20) Pure OTC (n=208)
Partial OTC (n=143)
Pure Wallet (n=89)
Total Sample (n=480)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
22
Part II: What do MFS transactions look like?
Mohammad Moniruzzaman, 2009 CGAP Photo Contest
23pi STRATEGY CONSULTING
Transactions
• Average Ticket Size of the mobile banking transactions is BDT 3,370 which is much lower than other platforms.
• Ticket size of courier service transactions are five times than mobile banking. 16775
5045 3369.35227272727
3088.57291666667
Am
ount
in B
DT
24pi STRATEGY CONSULTING
Transactions (contd.)
• Majority of the users prefer using only one mode to transfer money.
• However, certain segments of transactions (Partial OTC, Post Office, Courier) show a higher inclination towards multiple modes.
1%
24%
75%
Use Three modes Use Two modesUse single mode
Courie
r Serv
ice (n
=20)
PO (n=2
0)
Pure O
TC (n=2
08)
Partial
OTC (n
=143
)
Pure W
allet
(n=89
)
Total S
ample
(n=4
80)
0%
20%
40%
60%
80%
100%
Use 3 Modes Use 2 Modes Use Single Mode
25pi STRATEGY CONSULTING
Transactions (contd.)
• More than 10% Pure OTC users also use other platforms to transfer money. Of them, a large portion (53%) prefer to use courier service.
• More than 30% Partial OTC users also use other platforms to transfer money. Of them, a significant portion (60%) do pure OTC.
29%
18%
54%
Pure OTC users who prefer multiple modes of transfer(n=27)
Partial OTC Pure Wallet PO Courier Service
59%16%
12%
12%
Partial OTC users who prefer multiple modes of transfer (n=49)
Pure OTC Pure Wallet PO Courier Service
26pi STRATEGY CONSULTING
Users of different modes have different types of transaction needs
• Total amount of transactions in the last three months done by a user was through Partial OTC .
• Whereas, the number is the least for Pure Wallet transaction.
Pure OTC (n=208) Partial OTC (n=143) Pure Wallet (n=89)
9500
17273
8807
Ave
rage
Am
ount
Tra
nsfe
rred
in
last
thre
e m
onth
s
27pi STRATEGY CONSULTING
Overall picture of wallet uptake
• 37% users have mobile banking account or wallet.
• 18% are doing pure wallet transactions. Therefore, OTC in the market is 82%.
Use Wallet (n=89)
Have Wallets (n=179)
Sample Size (n=480)
This slide is problematic!
28pi STRATEGY CONSULTING
Why They Don’t Open Wallets?
• Around 63% respondents don’t have wallet. They said they never felt the need of having one.
• A few (9%) said the process of opening a wallet is time consuming.
I don't require it It seems complex to me
Does not know how to open an account
Its time consuming0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
29pi STRATEGY CONSULTING
Trust Issues
• People trust Pure Wallet most which follows by Pure OTC.
Pure Wallet Pure OTC Partial OTC Post Office Courier Service
0%
10%
20%
30%
40%
50%
60%
30pi STRATEGY CONSULTING
Consumer Protection
• Pure OTC users said they paid extra charges. • Even, pure wallet users said they sometimes have to pay extra charge.
Lost Fund for Technical Errors
Lost fund for fraud trick or misappropriatioin
Paid extra charges Had money sent but not delivered
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pure OTC Partial OTC Pure Wallet Post Office Courier Service
31pi STRATEGY CONSULTING
Transfer between Economic Household Members is Significant
• Nearly 85% transactions are made between the members of same economic household.
Courie
r (n=2
0)
PO (n=2
0)
Pure O
TC (n=2
08)
Partial
OTC (n
=143
)
Pure W
allet
(n=89
)
Sample
(n=4
80)
0%20%40%60%80%
100%120% 100%
75%86% 81% 90% 84%
Percentage of Transaction between the same Economic Household
32
Part III: Is there a transition to wallets underway?
Bir Azam, 2013 CGAP Photo Contest
33pi STRATEGY CONSULTING
Transition to Pure Wallet
More than 3 months before
0 to 3 Months before Current
Pure OTC
Partial OTC
Pure Wallet
Courier
PO
89
6048
11 14
11 8
7
12 7
32
5
2
21
Not fully done yet.
34pi STRATEGY CONSULTING
Wallet vs. Non Wallet
• ?? (Still a good portion who have wallets are not doing pure wallet transaction)
63%
2%
16%
19%
1%
Pure OTC Partial OTC Pure Wallet Courier
Don’t have wallet
Have wallet
35pi STRATEGY CONSULTING
Wallet vs. Non Wallet
• Average individual income per month of wallet owners seems to be higher than those who don’t have wallets.
• Higher income groups are more inclined to open wallets.
Have Wallets Don't habe wallets Total Sample
9077
73718007
Average Monthly Income
Am
ount
in B
DT Average National
Income (BDT)
Poverty Line
36pi STRATEGY CONSULTING
Wallet vs. Non Wallet (contd.)
• 35% of the sample have formal bank accounts. This percentage is much higher (45%) for wallet owners and lower (29%) for the rest .
• People who already have formal bank accounts are more inclined to have a mobile banking wallet.
Have Wallet Don't have wallet0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Have Bank Accounts
Have Bank Accounts
37pi STRATEGY CONSULTING
Wallet vs. Non Wallet (contd.)
• Whereas, a large portion (70%) of wallet owners have completed formal schooling at least up to HSC (Grade 12) or more.
• Wallet uptake comes with higher education and related awareness.
Have Wallet Don't have Wallet0%
10%
20%
30%
40%
50%
60%
70%
80%
Education Level at least Grade-12
38pi STRATEGY CONSULTING
Wallet vs. Non Wallet (contd.)
• A slightly better percentage (56%) of the youngest age group has been observed in wallet owners.
• Are the young people more inclined to have wallets?
56%36%
8%
15 to 25 years 26 to 35 years More than 35 years
39pi STRATEGY CONSULTING
Doing Pure OTC is instant, cost effective and easy
• More than 90% respondents prefer pure OTC because it is instant. More than 60% said it is easy and cost effective.
• Pure Wallet users also believe their transaction happens instantly. However, a good portion thinks it is trustworthy.
Instant transfer
Trustworthy
Cost effectiveEasy procedure
High availiblility of agents
0%20%40%60%80%100%
Reasons of current Pure OTC transfer (n = 208)
It is instant
It is cost effective
It’s trustworthyEasy procedure
Saving facility
0%
50%
100%
40pi STRATEGY CONSULTING
Agents influence wallet uptake
• Agents have significant impact on opening new wallets.
• 40% of the respondents agreed that the agent influenced them to open an mobile banking account
• 48% of the respondents disagreed that agents discouraged them to open a mobile banking account.
11%
29%
39%
15%
6%
Agents influenced me in opening in Mobile banking account
Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
8%
7%
37%23%
25%
Agents discouraged me to open a mobile banking account
Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
41
Part IV: How might regulators and businesses respond?
Sumon Yusuf, 2013 CGAP Photo Contest
42pi STRATEGY CONSULTING
Content Slide HeaderSubhead
Content• Content
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Review Slide
• Content
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48
Text
Picture SlideSubhead
Forhad Kamaly, 2013 CGAP Photo Contest
49
Text
Picture SlideSubhead
Mohammad Moniruzzaman, 2009 CGAP Photo Contest
50
Text
Picture SlideSubhead
KM Asad, 2013 CGAP Photo Contest
Advancing financial inclusion to improve the lives of the poor
www.cgap.org