Bangladesh initiated to digitalize the country by 2021 for which various aspects of ICT are being introduced and developed since a decade and mobile financial services began were introduced in March of 2010. 20 banks were approved by the Bangladesh Bank to provide mobile banking service of which 18 are currently providing services such as e-wallet or electronic wallet.
What is an E-Wallet System? It is a mobile banking system where financial transactions can be done by an invisible wallet which does not need to be carried. We have all presumably confronted a situation when our wallet has been out of cash or have run out of sufficient money while in an urgency to pay for a product or a service. E-Wallet is a service which solves this problem. It is a simple, secure and swift operation where a new e-wallet user would need to open an account on the service provider platform, then download the app on their smartphone start the E-Wallet service.
However, the argument is “Will E-Wallet capture a dominant position in Bangladesh market?” Our country is still developing and is still behind the developed nations in terms of technological innovation and application. There are three major issues which needs to be addressed in order to settle mobile banking in Bangladesh.
According to BTRC, the total mobile phone subscribers has reached 155.81 million in September 2018 of which assuming each person on average owns 2 sims, then total number of owners subscribers would be 77.905 million people from which number of the sim users is assumed to be higher and potentially covering around 103 million people.
According to Bangladesh Bank source the total number of registered clients for MFS have reached 66.742 million which shows a coverage of 64.7% of mobile phone users as of September 2018 whereas in September 2017, last year, the percentage was 54.7%. This is a good growth showing 10% jump in a year, however, while the number of mobile sim users is increasing it does not cover over 90% of the total mobile phone users. This reflects a preference by many to conduct financial transactions in cash.
One of the main reasons for the gap is that technological requirements is still a challenge. Everyone does not have the capability of acquiring a smart phone to operate e-wallet and internet connection to use this service. This restricts downloading the app required for the e-wallet on their devices and operating the service. On top, there are people who are technologically challenged thus avoiding this system for their perceived complexities. In the country, the younger generation within age range of 15 to 30 seem mostly comfortable with gadgets where the remaining senior generation prefer the old traditional cash based transaction method.
Moreover, the transaction is done electronically which makes the user feel insecure about their money so they prefer physical cash transaction which seems more safe to them compared to the electronic one. In 2014, based on a survey done by Kaspersky and B2B international, it is shown that almost 49% of people feel insecure to use mobile transaction system worldwide. Some people even prefer to put an end to the use of electronic money transactions. Users have the fear of getting defrauded while also fearing mishandling of their sensitive personal information as evident from recent stories about Pathao collecting personal user data.
Some avoid MFS as they are not familiar with the electronic transaction system. After starting the E-wallet system, some of such unaware people had queries such as – “How to use it?”, “Is it a realistic process?”, “Will it ensure secure transactions?” and so on. These questions are yet not clear to some of such unaware people which is still keeping them in confusion.
Though setting suitable environment for E-Wallet system in Bangladesh is a challenge, yet it is not unachievable. In fact, this system is already creating a space in the ICT sector. Many companies are offering mobile banking system and the banks are adding this service to their customer in order to become more divergent in the competitive market.
Bangladesh has introduced their journey with E-Wallet system by bKash which is a subsidiary of BRAC Bank in 2011. Recently iPay – cashless payment system has launched which is the first online payment system in Bangladesh. Even Dutch-Bangla Bank has NexusPay and Rocket service for providing the E-Wallet service. Currently, some other companies are providing mobile banking services like Upay, Gpay, Easy.com.bd and Dmoney.
The usage of technology is booming so does the ICT sector which eventually is helping the E-Wallet platform to grow more. According to the Zion Market Research, the compound annual growth rate (CAGR) for e-wallet is expected to grow of 32% worldwide by 2022. Recently, over 2 million people are using E-Wallet service for their daily transaction worldwide. Our neighbor India is also looking forward to grow at 150% in the upcoming few years. From the above statistics, we can also see that there is a threefold jump of number of e-wallet users to over 66 lacs from 2014 to 2018, and based on the projection will reach 80 lacs by 2020. Hence, seeing the growth it is only expected that e-wallet will become more popular in the country yet truly reaching a cash-less e-wallet banking system remains a challenge given there are still some who are skeptical.
Authors biography: Kamal Hossain is a Senior Lecturer of ebusiness and MIS at BRAC Business School, BRAC University. He can be reached through email – firstname.lastname@example.org. Zarin Tasnim Dihan is the Research Assistant and students of BRAC Business School