I was in Dhaka at the end of last year, visiting one of our most successful customers – a bank – which has signed up more than 1 million new customers onto their mobile channel within 10 months of launch. In Bangladesh where 87% of the population is unbanked, this presents an enormous market opportunity for mobile financial services, and our customer has been widely credited for pioneering this initiative and marketing this solution to the correct market segment.
Many banks have missed this market segment, but there are now enough ‘proven’ implementations across Asia to substantiate the business case for banking the unbanked and underbanked, as the mobile channel dramatically reduces the cost of customer acquisition and customer service. In fact, most are these services are self-served on the mobile channel.
Most banks do not see the see business case, but it is there, like in the case of our successful bank customer. Put simply, if each of their 1 million customers performs one cash-in and one cash-out transaction per week, and assuming a typical transaction is US$25, that would be US$ 100 million transacted per month. Now, assuming the typical cost, or fee charged by the bank is 1%, this translates into an income of US$ 1 million per month for the bank, from this service alone.
What continues to amaze me is how creative banks and mobile operators are becoming. While being driven around – or rather being stuck in the infamous Dhaka traffic – I noticed that most of the traffic holdup stemmed from waiting for the Rickshaw pullers to get out of the way. Through casual conversation with my driver, I learnt that there are about 1 million rickshaw drivers in Dhaka alone, with each driver making about 300 DBT a day (or approximately US$4).
It is not just a sad story of low wages for hard labour, but it also turns out that these drivers are often targets for robbers. At this point, you may wonder what that has got to do with mobile banking. Well ideally, should these rickshaw drivers deposit half their daily takings (ie. US$2) during the day, even if they are unfortunately robbed, they do not lose their whole day’s wages.
This simple example and segment alone brings up another business case: US$ 2 million at 1% fee works out to be US$ 20,000 per day, or if you average 28 days in a month, it’s an additional income of US$ 560,000 per month for the bank!
Who would have thought that this little inconspicuous segment would represent such a good revenue stream for a bank? If you want to talk about making money and being creative, then there is a lot you can learn about mobile commerce by just sitting in traffic.