Nagad wants to go big in MFS

Nagad, the digital financial services arm of the Bangladesh Post Office, wants to go big in the country’s Mobile Financial Services (MFS) arena as it is pursuing various initiatives to increase its market share through providing improved and innovative services to its clients.

“The current market share of Nagad in the MFS is around 32-25 percent and it’s pursing various initiatives to ensure product variations and bring innovations into its various products and services,” said Rahel Ahmed, chief executive officer (CEO) of Nagad while talking to a group of journalists at a city hotel today.

Managing Director of Nagad Tanvir A Mishuk, Executive Director of Third Wave Technologies Limited Md Shafayet Alam, its Director Md Niaz Morshed Elite, and Additional General Manager of Bangladesh Post Office Md Zakir Hasan Nur also spoke on the occasion. Formally launched on March 26, 2019, the operator has become the second-largest player in the market in just two years with Brac Bank’s bKash leading from the front.

According to Nagad officials, on an average daily transactions of the operator witnessed a quantum jump over the last few months as the MFS provider managed to win the hearts of millions of customers by offering lower transaction charges and an easy customer on-boarding process.

The average daily transaction of Nagad now stood at around TK 400 crore which was around TK 150 crore in November last year. On the other hand, the number of Nagad account holders also stood at 3.75 crore which was around two crore in November last.

Speaking about its future operations plan, Rahel said Nagad is trying to further increase its countrywide agents as well as to develop a digital ecosystem.

Nagad managing director Tanvir A Mishuk said that they are no more behind of their target adding that the current active agents of Nagad is around 1,55,000.

Answering to a question, he said Nagad got three more months to win full license from the Bangladesh Bank subject to fulfillment of the conditions of the central bank to become a full-fledged mobile financial services provider.

The Department of Posts applied to the Bangladesh Bank for an extension to Nagad’s temporary approval, which expired on March 15 while the validity of the interim license for Nagad, a joint venture between the Bangladesh Post Office and Third Wave Technologies, has been extended to June 30 this year.

Tanvir said Nagad is now running its operations on a revenue sharing model with the Bangladesh Post Office while it has been continuing its operations fulfilling all the requirements and conditions of the central bank.

He told another questioner that there has been some procedural delay in further expanding its operations as Nagad has to get the vetting from the Ministry of Law as well as necessary approval from the Ministry of Finance.

“We need to have foreign partner to further expand our operations, but before that we need to get approval (from the concerned authorities).” he added.

The operator has already completed primary discussions even the due diligence has done to move on for the further procedure to ink deal with some top giant technology companies of the world.

Replying to another question, Tanvir hinted that the current estimated valuation of Nagad would be around one billion dollar.

According to Nagad, as much as 95 percent of the accounts opened were by dialing *167# from the mobile phone and setting a personal identification number.

Nagad is a joint-venture entity of the Bangladesh Post Office and Third Wave Technologies Limited in which the BPO holds 51 per cent and TWT 49 per cent stake.

Nagad is running its operations through fixing the cash-out charge to as low as TK 9.99 per thousand whereas the other MFS operators kept their cash-out charge remained unchanged at TK 18.5 per thousand.

For instance, Nagad allows customers to receive money from all MasterCard and VISA cards free of charge. Despite this Nagad is making profits even though it is offering the service free of charge to the customers.

Mobile financial services (MFS) were first introduced in Bangladesh when Dutch-Bangla Bank launched an application in March 2011 which was later rebranded as Rocket.

Market leader bKash, a subsidiary of Brac Bank, launched later the same year.

The Mobile Financial Services (MFS) industry has been in the country for 12 years, but the market is still monopolistic due to its high commission structure.

The postal department owns a 51 percent stake in the company and the rest is owned by Third Wave Technologies, a private entity.