Mercantile Bank, one of the country’s private commercial banks, has announced that it will set up a separate subsidiary company to run its MFS operations, reports the Daily Star. Mercantile has an active MFS service call MYCash that claims to have around 4.5 lakh users with over 60,000 agents across the country. The service now handles transaction worth of BDT 30 crore to BDT 40 crore a month. According to a 2015 report by the USAID, MYCash controls around 3% of MFS market share.
With the renewed plan, the company aims to bring in new management and experts to run the MFS subsidiary company which yet to receive regulatory permission.
Mobile financial service has seen a phenomenal growth in Bangladesh over the past years. Here is a snippet from a recent trend report we published on MFS:
Bangladesh has registered significant growth in adoption of Mobile Banking. This sector posted an average 60%+ growth in all major metric, recent data released by Bangladesh Bank shows.
In Terms of total and active mobile banking users, this sector has grown 77% and 83% respectively in YoY basis. As of December 2016, there were 41.08 million registered and 15.87 million active mobile banking user against 31.85 million (total user) and 13.22 million (active user) of December 2015.
This increase has also impacted overall volume of transaction and amount transacted. There is a 79% increase in total number of transactions and 67% more money was transacted on YoY basis.
However, there is room for further growth. According to the report:
Bangladesh has a mobile user base of 120.73 million as of October 2016 against which registered Mobile Banking user is 41.08 million (December 2016), meaning there is a huge scope of bringing more user under the net. Moreover, 60% of existing MFS users are inactive, which gives a strong case for MFS providers to launch reactivation campaign as reactivating existing customer costs less than bringing in new customer.
Bangladesh has 17 MFS players. bKash continues to lead the market with DBBL maintaining a distant second place. Although MFS has seen significant growth in P2P transactions over the past years, it largely failed to encourage business to business or person to business transactions where there is a huge room for growth. bKash is now trying to break into the space with Cashback offers and myriad partnerships. That said, there is scope for more serious players and innovative products and we have to wait to see how MyCash by Mercantile Bank goes about it.