Ensuring Trust, Empowering Citizens
You served in the Bangladesh Army for 34 years. You also served as the Director General of National Security Intelligence (NSI), Special Security Force (SSF) and Government Think Tank – Bangladesh Institute of International and Strategic Studies (BIISS). Can you tell us a bit about your leadership style?
When you talk about leadership, it is actually a segmented kind of journey. One joins the military as a very young officer and encounters different leadership roles. As a young officer, one leads squads, platoons or at times, sporting teams into the competition. There one leads by setting examples to the subordinates so that they understand the capacity and the capability of their leader. This helps the subordinates who are trained to obey the lawful command of their leader to face challenges putting their lives on the line. Once the junior leader graduates to the mid-level, he would actually command units comprising 700 to 800 soldiers. At that point in time, one has to have complete knowledge and skills to command a cluster of sub-units. The Commanding Officer has to lead from the front and he is expected to be there with the soldiers in all operations. It takes huge moral strength and physical ability as well as courage to face life and death situations to achieve success. Finally, if found with all-round acumen, one ascends to very senior level in the position of Formation Commander. The Commander directs the forces under his command based on his wisdom which stems from long drawn on and off the field experiences. At that stage, one has to make vital decisions, ensure allocation of appropriate resources and meet the timelines to accomplish a mission. Therefore, at the level of senior command, one has to remain mission-oriented and ensure furthering the strategic objective of the supreme commander. As I look back, I feel that I had styled my leadership approach at different stages aligned with what I have explained in the foregoing.
How has the military background helped at your current undertaking?
Well, if you look at the corporate structure and its practices of the proper standard, you would find that a lot of things are actually done in military model – the decision making, resource allocation and goal determination, such as setting the KPI to be accomplished within stipulated time frame. When a goal is set, there is a team behind to complete it and deliver results just as is done in the military. The only difference you will find between the two cultures is that the military is pretty much autocratic and follow ‘top – down’ chain of command, while in the corporate culture, there is a mix of both centralized and decentralized approach allowing vertical and lateral inputs which are well considered if found valid. However, I am not saying that this is not permissible in the military because, in the decision-making process, there are many ways to provide inputs even by the subordinates and staff. Now, when you are setting up a new organization or a corporate body, there are certain functions and structures that you need to develop. As you progress with your business, you would face challenges and to address those you need to constitute new teams or departments. My experience of serving in very structured kind of setup helped me organizing the bKash compliance team which is vitally important for a financial services providing company. I would say that the experience of heading large establishments in the military complimented my contribution to bKash in a big way.
How much has bKash changed the rural landscape? How has it made banking understandable and accessible to the rural demography?
First of all, when you start a business targeting a particular segment of people, one of the most important things is to understand their need, in other words, their pain points. In Bangladesh, we have a well-flourished readymade garment industry which is labor intensive, by all counts. All the workers employed in this sector come from different parts of the country, who generally leave their families in their village homes. At the end of the month, as the workers receive their salary, they are faced with the challenge of sending money to their families instantly. Likewise, the rickshaw pullers and other low-income groups of people working in cities away from their families face similar challenges. To bail the common people out of their difficulties, bKash came up with a solution that money could be transacted between two bKash accounts in seconds. Obviously, the question arises on the use of digital money, either to convert into cash or make payments. While, making payment by bKash account for goods and services is free; one has to go to the agent point and convert the digital money into cash with system deducted fixed fee. Secondly, mobile banking being a new initiative, we needed to earn the trust of the people. We always bear in mind that we deal with hard earned money of our account holders. Hence, from the very beginning, a robust and secure technology platform was put into operation. The mechanism of flawless transaction under a convenient and affordable arrangement helped people to grow faith in our service. News of this efficient payment system spread through word-of-mouth and the credibility of bKash grew by leaps and bounds. Thirdly, as bKash set up a nationwide agent network bringing the service to the doorsteps of rural population, the uptake of account holders was fast and in great numbers. Finally, all employees of bKash remain committed to keeping the trust of the customers intact through uninterrupted and dedicated service. Efforts have been made to increase the range of services to create various use cases for bKash account holders. Convenience, affordability and reliance have helped maintaining a steady growth of bKash account holders.
Compared to other MFS, bKash is performing very well. What separates bKash from other companies in the industry?
bKash is a subsidiary of BRAC Bank with only one function to do, which is to provide mobile financial services. When the service is part of a bank, they consider it as one of the many banking products. In the case of bKash, MFS receives singular focus. Besides, when one wants to do well, one must have to have the right kind of resources, technology and manpower; most importantly, adequate investment and bKash has all of those ingredients. bKash started its journey with the partnership between BRAC Bank and Money in Motion LLC, a US-based company. A couple of years later IFC of the World Bank Group had invested in the company followed by Bill and Melinda Gates Foundation a year later. In 2018, bKash received the largest foreign investment in financial sector from Ant Financial, one of the concerns of Alibaba Group. So, bKash had the right kind of investment, emulated corporate good practices of the very renowned investors and employed best possible candidates suiting to the exact need of human resources of the company. You would be happy to know that bKash does not have a single foreign employee.
A recent newspaper report suggests that due to increased operational cost bKash is losing profits, do you consider this as a challenge?
No, not really. bKash is making a profit for the last few years, but it does not happen at the same scale as there could be additional expenditure incurred due to new investment in a particular year. For example, in 2018, bKash made an investment to increase the range of products and services. bKash commissioned its payment gateway allowing transaction settlement for purchases, utility bills, ridesharing, etc. Greater number of use cases would have more people to rely on our services and consequently increase our users. bKash now provides iBanking in partnership with seven banks. It requires significant investment to facilitate customer convenience. Therefore, in one particular year, when you make a lot of investment, your balance sheet may reflect lower profit or even be negative. bKash is constantly making a lot of investments to enhance and improve services for its customers. Once all the current initiatives are up and running, bKash in all probability would experience upscale revenue stream.
The monthly maximum cash-in limit was slashed to Tk. 100,000 from Tk.150,000 and the maximum monthly limit on cash-out was brought down to Tk. 50,000 from Tk.150,000. How has it impacted the overall volume of MFS transactions?
Actually, this was a regulatory decision. Having considered a few issues, the regulator had decided to limit the volume and frequency of MFS transactions. Obviously, when people enjoy a service with set standards for a period of several years, they get into a regular habit. When the revised limits were imposed, it had an impact on the customer experience as they were accustomed to the previous limits. However, we as a nation are very adaptive to changes and people gradually adjusted to the new transaction limits. For example, instead of having one bKash account for the head of the family, now the other adult members also have a respective bKash account to meet their regular financial activities. Now, we know that over the years, the wage of common workers has increased, our per capita income has gone past the US $ 1900 and considering the average inflation rate over last seven-eight years, the cost of living has gone up. Therefore, taking all of the economic updates into consideration, I believe that soon the transaction limits would be re-evaluated and enhanced by the regulator.
How is bKash taking care of the Cyber Security aspect of mobile banking?
You see while conducting a training session on Anti-Money Laundering and Combating Terrorist Financing for our employees and channel partners, we make one thing very clear that security in all respect must be of the highest standard. We facilitate millions of transactions of our customers per day involving their hard earned money; so we have to be absolutely sure about the security of our technology platform. From my experience of working in two national organizations related to security and intelligence, I would say that security should be of the highest standard, if not foolproof. bKash has a robust cyber security structure. We are currently partnered with Huawei, an internationally reputed company providing state of the art technology solutions to bKash. By the grace of Almighty Allah, we have not faced any incident relating to cyber security till date. bKash has all required international certifications. Besides, we conduct technology audit and have layers of checks and redundancy to ensure security and safety of our systems.
As the number of MFS provider increases by the day, do you believe we have a proper policy set in place to ensure robust growth of the industry?
It has been almost a year now, Bangladesh Bank has circulated ‘Bangladesh MFS Regulations, 2018’ which outline details of ecosystem and functions of mobile banking. Similarly, Bangladesh Financial Intelligence Unit (BFIU) had also issued ‘Circular 20’, related to ‘Anti Money Laundering and Combatting the Financing of Terrorism (AML&CFT) guidelines for MFS’ in 2017. Both of these regulatory documents provide clear guiding principles for the business operation of all the MFS providers in the market in a compliant manner. Without the strict financial discipline, the entire mobile banking system will crumble. Therefore, financial service provided through digital devices including mobile phones (DFS/MFS) must be licensed and regulated to reduce and eliminate the chances of money laundering and terrorist financing. It is not only a national affair, but we also come under the jurisdiction of international watchdogs like the Financial Action Task Force (FATF). Bangladesh is a member country of both FATF and Asia Pacific Group (APG). BFIU also is a member of Egmont Group. Hence, we have certain membership obligations to ensure compliant business practices. Or else, there will be breaches and we will be under serious scrutiny and remain accountable for deviating from prescribed guidelines. Therefore, it is very important that all DFS/MFS providers remain compliant and maintain the business discipline to ensure the safety and security of the money of people.
Recently, we are seeing you doing collaborations with other banks. Are there more in the future?
We currently have a partnership with 16 banks for our cash management. Bangladesh Bank approved this arrangement, which has eased the settlement of fund by the agents and the distributors with the nearest available bank branch. Besides, bKash has recently introduced iBanking in partnership with seven banks. We are experiencing good traction which is suggestive of a possible partnership with more banks. In fact, bKash is open to any bank willing to engage in such a partnership.
You have mentioned about a couple of stellar investments that bKash has received over the years, other than the financial part, how has it changed bKash as a corporation?
Firstly, all the investors have their representative on the board of directors of bKash. Every three months, the board holds a meeting to evaluate the immediate past and current performances and sets future strategies. One thing bKash founder and the CEO, Kamal Quadir conveys on behalf of the investors to everyone in the company is – none of the bKash investors are looking for profit immediately. It is obviously very reassuring to know that the investors are emphasizing on the quality of service that bKash provides, making sure of a sustainable positive impact on society. Their primary goal is to achieve financial inclusion and emancipation of the people of the lower segment of the pyramid. Financial services to the unbanked are what they focus in a larger context. Secondly, they come with the best practices of their respective organizations, helping bKash to emulate such architecture and construct its solid organizational structure. All these are indirect input that bKash capitalizes on. But, if we talk about direct assistance, Ant Financial of Alibaba Group being a huge organization with high technological advancement is in a position to support bKash in its adoption of new technology. To have a technologically advanced partner, who is willing to share, the outcome could be very beneficial for the purpose of business growth. Alibaba Group also has an in-depth market experience; they deal with billions of stakeholders. Their insights about their own and international market can be remodeled to suit the need of our market and effectively adapted. Together with the market insights and advanced technology, such partnership is helping bKash to a great extent.
Last question, what is the future of bKash?
bKash would like to become part of the everyday life of the people in Bangladesh. From sunrise to the time people go to sleep, bKash must be able to offer people solutions to all financial dealings without any hassle. At the same time, we would like to ensure a sustainable and favorable impact on society, both for rural and urban Bangladesh.