Mobile Financial Services: Risks and Implications of Adoption in Bangladesh

Abstract

This study examines the state of adoption of mobile financial services in Bangladesh along with the risks and implications it brings. We explore the state of MFS in other countries and compare it to the situation in Bangladesh. Through this study we have found that the MFS market is oligopolistic in nature, with Bkash occupying the dominant position. We chose to focus on the three major providers Bkash, Nagad and Rocket. We found that MFS bring a provide an essential service to earners with families in remote areas. It also helps generate income for agents. We found that the MFS faces risks in the form of cyber risks, operational risk, regulatory risks and user risks. We recommended focusing on increasing technological literacy to help increase adoption rates. We also recommended more robust security features in the applications in order to prevent theft and hacking. We hope that MFS company will ensure that USSD will function properly in the event of an internet outage so people will be able to access their money. We also recommended that Bangladesh bank be more stringent in its governance of MFS to ensure security and prevent misuse of users’ money. These recommendations will ensure greater adoption of MFS and bring banking to the large unbanked population of Bangladesh.