The lack of interoperability between the rival MFS (mobile financial service) providers is holding back the equitable growth of the sector. This non-availability of much needed interoperability in the MFS sector is against competition and thereby against the business.
Shamim A. Zahedy
Panelists these days at webinars in charged-up voices pitch for exponential growth of mobile banking services and catch the sight of cashless society in a little while in Bangladesh amidst the novel coronavirus-induced lockdown. They think the MFS (mobile financial services) growth hinges on only the number of people embracing it, but they are barking up the wrong tree.
With physical businesses coming to a halt, physical transaction of money has also come to a standstill, giving a boost to the digital money transaction anew.
Despite the scope to bring more people especially the communities in the rural areas under the financial services and to run the economy and business under any circumstances, mobile financial services are held back by a lack of one big policy direction: ‘interoperability’.
Lack of interoperability means customers of one particular MFS provider are not allowed to send money or receive money from rival MFS providers. The transaction has to be performed between users of the same network.
If the interoperability between the MFSs is allowed, a bKash user will be able to transfer money from bKash wallet to Rocket wallet. It is so simple.
Just imagine, commercial scheduled banks such as Sonali Bank, National Bank, Standard Chartered Bank are not practising interoperability. Also envision, mobile phone operators are not interoperable. One cannot transfer money from one bank to another or one cannot set up a call from one mobile phone network to another.
Consequently, the lack of interoperability between the rival MFS providers is holding back the equitable growth of the sector. This non-availability of interoperability in the MFS sector is against competition and thereby against the business.
The otherwise very convenient mobile phone wallet is absolutely a nice way of paying shopping bills, utility bills and even school fees. But one has to maintain different accounts with different brands as all merchants, utility services providers and schools do not have “agreements” with all MFS brands. But, what is worse than maintaining different accounts is the lack of facility of transferring money from one MFS brand to another.
Since MFS is a new business in Bangladesh, it is unfortunately assumed the regulators will take time to understand the nature of the business before the situation goes out of hand. ‘A stitch in time saves nine’ will not be applicable here.
And market players for obvious reasons will not co-operate with one another. Usually, the big and dominant players will stand in the way of interoperability for their commercial gains. Here comes the role of regulators.
In Bangladesh, two MFS providers enjoy over 97 percent market share while rest of 14 out of 16 MFS companies enjoy only 3 percent altogether as of 2019 data, in an example of how unequally the market is growing.
bKash, backed by BRAC Bank the largest MFS operator in Bangladesh, enjoys around 80 percent of the MFS market while Rocket, the MFS of Dutch Bangla Bank Ltd, now enjoys the second highest market share with approximately 17 percent of the market.
According to media reports, the regulator, the central bank, was supposed to ensure interoperability between banks and MFSs, meaning MFS accountholders and their bank accounts will be connected for money transfer by December 2019 while MFS to MFS by June 2020.
Obviously these were mere assurances stuck in red tapes. Here in Bangladesh, bulky referees take a long time to reach the running track and by the time they go close, players touch the finish line.
How? Take the glaring example of introducing the much-awaited MNP (mobile number portability), a service that enables mobile phone users to switch to a different operator without changing their phone numbers.
The MNP service is designed to infuse fair competition between operators for an equitable growth of business and ensure a level-playing field for all operators.
But only in October 2018 Bangladesh became the 72nd country in the world to start the long overdue MNP service, although the BTRC, the regulator, took the initiative way back in 2009 and it was discussed by the parliamentary standing committee on telecommunication several times. Singapore, however, was the pioneer in introducing MNP in 1997.
The goal of MNP was to force operators to worship their customers!
In the span of nine years from 2009 to 2018, a lot of water flowed through the Buriganga, so many changes went off in the fast changing telecoms industry, but the regulator in Dhaka seemed to be undisturbed.
Naturally, Infozillion Teletech BD Ltd, the MNP operator, struggles hard to keep its head above the water despite the fact that it is the lone service provider in the market of 165 million mobile phone subscribers.
‘Poor’ Infozillion keeps witnessing slump in business because low turnout of service seekers.
In the process of delaying the implementation of MNP service, customers in Bangladesh market are used to carrying multiple SIM cards at subsidised rates of different operators to reap benefit from every operator’s ‘package offers’.
Finally, the telecoms regulator had to move in 2019 to impose restrictions on Grameenphone, or GP, for holding more than 40 per cent of market share to create a level playing field and competition in telecoms industry.
Had the regulator introduced the MNP service back in 2009, perhaps it would not have needed to invoke the SMP (significant market power) business restrictions against GP.
Being the largest operator, GP holds around 45.8 per cent market share followed by Robi, enjoying 30 per cent market share. Banglalink has a 22 per cent market share while state-run Teletalk accounts for just 2.5 per cent of the market.
In a recent development, agent banking, a relatively new phenomenon in Bangladesh, is also facing similar interoperability dearth.
Agent Banking provides limited scale banking and financial services to unbanked people through engaged agents of commercial banks under a valid agency agreement. It is the owner of an outlet who conducts banking transactions on behalf of a bank.
Indeed, it is a novel way to ensure financial inclusion in Bangladesh. Following the central bank’s guidelines in 2013 so far 21 scheduled commercial banks have commenced agent banking services.
However, experts and stakeholders have already called for introduction of interoperability in agent banking before the disproportion growth of the sector.
Who knows when will the regulator act?
Bangladesh has a competition commission, an independent body which was formed upon the enactment of Bangladesh Competition Act 2012, to initiate healthy competition in business sectors. Until now, there has been no visible action from Bangladesh Competition Commission.
The writer is the Executive Editor of The Independent. E-Mail: firstname.lastname@example.org
First printed : 23 May, 2020 08:46:46 PM