The use of bKash, the leading mobile financial service provider in Bangladesh, has given a boost to the income of households, empowered women and reduced the impact of risks during times of uncertainty, according to a study of the Bangladesh Institute of Development Studies (BIDS).
The BIDS carried out a nationwide survey titled "Impact of Mobile Financial Services in Bangladesh-The case of bKash", where the findings were discovered.
The main objective of the study was to assess the impact of the MFS operator at the household level.
The report credited four factors for the success of the MFS operator -- quality investment, technology, distribution network, and compliance.
The study found that non-agricultural and non-farm incomes at the household level have increased thanks to bKash.
For example, an increase of 15.2 per cent in the non-agricultural income of the family can be attributed to the use of bKash, creating a positive impact on the consumption level.
Domestic remittances to households that used bKash were up by 60 per cent and per capita income went up by 28 per cent.
There was a rise in the use of bKash during natural disasters, especially during floods.
During natural calamities, non-bKash users saw their remittance decrease by 61 per cent and per capita earnings decline by 17 per cent.
Cash-in rose 33 per cent while cash-out increased by 30 per cent during floods, highlighting the impact of the MFS service providers, especially bKash, to withstand the challenges.
bKash has revolutionised the economic capability of money transfer or bill payment by reducing the cost of the transaction using mobile technology, the report said.
The customer's net benefit from using bKash's services is 4 per cent.
The figure was calculated by deducting the cost of the cash-out charge of 1.8 per cent from the 5.8 per cent increase in income.
Due to a lack of baseline information, various variables were used in the study. Samples that represented the entire country were selected, and a field-level survey was conducted in 2018.
In 2018, the BIDS conducted a field-level survey in 180 villages of the eight divisions of the country.
Most of the survey samples were from the villages, and all these villages had mobile phones and a high-speed 3G network.
The BIDS report shows that the MFS sector can influence the well-being of families in a variety of ways.
It can assist in transferring funds through rapid, secure and efficient money transfer, which has a positive impact on income, expenditure and other household well-being factors.
By making money transfers fast and reliable in times of need, bKash is standing beside the people.
The cost of remittances sent through services such as bKash is low compared to other conventional ways, including sending money through courier services and friends and families.
One of the reasons for families that use bKash have higher expenditure could be due to higher non-agricultural income and higher expenditure on non-food products compared to the other groups.
If the amount of money received through bKash increases by 10 per cent, then income excluding food-related sources may rise by 0.5 per cent, and per capita income may increase by 0.3 per cent.
The survey selected 246 transactions from different samples to assess the impact of bKash on educational expenditures.
Money was sent to students in other regions through these transactions. Of these, 54 per cent of transactions were made through bKash and 40 per cent directly through other people.
It was found that households that use bKash spend more money on education compared to the households that use other MFS and the non-MFS using households.
The average annual expenditure on education by the households using bKash is Tk 8,392 in contrast to Tk 4,102 in case of the households using other operators.
Households using bKash spend an average of Tk 1,658 per year on medical treatments, up from Tk 1,138 spent by non-bKash users annually.
Using bKash has had a significant impact on women's ownership of resources as well.
Women who use bKash are 20 per cent ahead of women who do not use bKash when it comes to the ownership of financial assets.
Women's ownership of wealth has increased by 14 per cent, and their participation in income-generating activities was up 9 per cent.
A 10 per cent increase in the amount transacted through bKash expands women's wealth by 2.1 per cent and their participation in income-generating activities by 1.1 per cent.
Internationally, financial inclusion is measured on the basis of having an account with a financial institution or an MFS institution by people of 18 years of age or older.
According to the BIDS survey, 75.9 per cent of households have accounts with banks, microfinance institutions (MFIs), or MFS operations.
MFS is ahead of banks, both at the individual and household level, in terms of financial inclusion, due to the role played by bKash.
The rate of having MFS accounts compared to having bank accounts are much higher among the underprivileged class and women.
According to the survey, 11.1 per cent of households have MFS accounts, 9.9 per cent have bank accounts and 22.5 per cent have an account with MFIs.
Data on financial inclusion at the individual level shows that 30.9 per cent of adults in rural Bangladesh have an account with a financial service provider.
In case of MFS, the rate is 6.7 per cent. An 11.8 per cent have an account with an MFI. Only 5.9 per cent of people have bank accounts.
Even though 98 per cent of households in Bangladesh have at least one mobile phone, 38.4 per cent of households have an MFS account. Of those, 24 per cent of families have bKash accounts.
Of the households that have mobile phones, 68 per cent have at least one MFS account. Of them, 50.6 per cent are bKash users.
It has been found that households that have a mobile phone have a much higher rate of using the MFS services than the rate of MFS accounts.
According to the survey, more than 14 per cent of the people in rural Bangladesh use bKash for receiving and sending money.
A large part of the money is spent on education and household. Of the recipients, 74 per cent said they spend the money on consumption.
Mobile financial services have a bright future in Bangladesh, according to the report.
The rapid expansion of new market and familiarity with using money transfer services points to the immense growth potential for the organisations such as bKash.
In order to encourage more users, especially to having more merchants onboard, incentives for merchants are required.