Muzibul Haque, a 75-year-old retired carpenter who lives in a remote village in Bangladesh’s southern district of Pirojpur, collects his old-age allowance on his mobile phone from the government, a development that was unthinkable even in recent past.
Previously, he had to travel 10 kilometers, spend a considerable amount of time and bear the travel cost to receive financial aid through a bank branch. Now everything seems magical as he gets the money on his mobile wallet and cashes out it from the roadside mobile money agent, who has a shop just beside his hut.
Haque is not alone.
There are millions of people in the biggest delta in the world, a fast-growing developing country, receive the government’s safety-net allowances through their mobile wallets. This transformation not only saves millions of working hours but also ensures transparency of the public money.
Nagad, the Digital Financial Service of Bangladesh Post Office, operated by a private body, is the change-maker of the government safety net disbursement process.
Nagad is now distributing four kinds of government allowances among 8.85 million elderlies, widows, destitute women, insolvent people with disabilities and physically challenged students. The government has set aside about $700 million (Tk 58.86 billion) in the budget for the 2020-21 fiscal year for the programmes. Of the sum, three-fourths will be channeled through Nagad.
Tanvir A Mishuk, the magical enthusiastic young Bangladeshi change-maker, the mastermind behind Nagad, led from the front to bring the platform to its current strong position in less than two years.
“Actually, my first target was to upgrade people’s lives to a digital space by changing their payment behavior. Then we moved on to ease the government payments,” said Mishuk, also considered as the disrupter in the growing nation, which has put a digital agenda at the heart of its development pursuit.
In its first move, using the Nagad platform in April last year, Prime Minister of Bangladesh Sheikh Hasina took the initiative to disburse government assistance among 1.7 million people, who lost jobs at the height of Covid-19 in the country. Thanks to this series of efforts, Nagad has become the automatic choice of the government looking to build a digital economy. Nagad showed the way how the government safety net allowances could be distributed in a timely manner, at the cheapest cost and transparently.
In the next phase, Nagad is entering into the livestock and dairy sector where it will distribute government assistance to 600,000 farmers under a sustainable coastal and marine fisheries project, involving $5.9 million (Tk 5 billion).
Throughout its journey, the venture disbursed some other supports as well, to the distressed women on different occasions. This platform allows people to pay utility bills without any extra charges. The innovation, some free and the rest inexpensive services have made Nagad the go-to carrier for the people.
The mobile financial industry started its journey in Bangladesh a decade ago, and the number of providers has been high. But the industry actually began to grow when Nagad entered into the market in March 2019. Only about 22 percent population had formal access to banking services before its entry. Thanks to the efforts of Nagad, about half of the population has access to financial services.
Mishuk said historically, people in this part of the world used to keep money under their pillow or into the paddy warehouse, so they never circulated in the formal economy.
“This was the point that pushed me to develop something that helps to change reshaping the common peoples’ payment behavior.”
One of the successful young entrepreneurs of the country who has been relentlessly working for years to ensure the massive financial inclusion in this part of the world, Mishuk gave credit to the technology. “Without technology, it would have been impossible, and I tried my best to use as much technology as possible in every step.”
His plan worked, and within this short period of time, Nagad has captured about one-third share of the mobile money market of Bangladesh and has become one of the fastest-growing digital financial service providers in the world.
With the help of Nagad, more than 30 million people have entered the digital payment world so far, where they are free to access financial services through the convenience of mobile devices. This huge population were traditionally unbanked and are now transacting more than $35 million a day using mobile devices using Nagad plaftform. The transaction volume is growing at double-digit every month.
Nagad, which means ‘Cash’ in the local language, currently controls about 30 percent market share and plans to raise it to at least 50 percent by this year marking the country’s 50th anniversary of independence.
“Our aim is to ensure the right of digital payment where anyone can pay with Nagad anytime and in any place,” said the entrepreneur.
The use of state-of-the-art technologies was the driving force behind Nagad’s phenomenal growth. Mishuk, the flagbearer of the evolving fintech industry in Bangladesh, said modern and sophisticated technologies have to be embraced to cater to the vast unbanked population.
The young change-maker had also thought of doing something for this huge population who did not have access to banking. They even did not have knowledge about banking. Mishuk wanted to bring all of them under the regular financial channel and has opened the door for the people to open an account in the easiest way possible using a mobile application.
It was done through the introduction of digital KYC (know your customer) registration in the country, an innovation that has been applauded around the globe.
When he developed the process for the citizens, he faced huge criticism from other carriers who for years had relied on paper-based KYC. But within a few months, the process got popularity and the operators who had opposed started to embrace it. Thanks to Mishuk’s future-driven planning, most banks are now using the process to open accounts. In the past, it took a week for a customer to open an account after filling up a 10-page form.
“I counted that as a massive win against the wind,” Mishuk added.
He did not stop there. He also noticed that a huge number of people do not have smartphones, and they remain out of the innovation. So, he came up with a new facility in partnership with the mobile phone carriers, allowing a basic phone user to avail the same facility when it comes to account opening, thus playing his part to deepen equality in the segment.
Using his innovation, any Bangladeshi who has a mobile phone can open the mobile financial service account in just a few seconds. They can do so just by dialing *167#. Nagad also innovated a service for the people who do not have any mobile financial service account, but they still can enjoy the banking service anytime.
Now anyone can easily pay bills and send money to anyone living in the remotest corner of the country, thus saving time and money. For them, it is just cakewalk.
The easy access to the financial service is disrupting the existing market and helping the financial industry to boom. According to the report of the Bangladesh Bank, the banking regulator of the country, $60 billion (Tk 5.05 trillion) were transacted through mobile wallets in the first eleven months of 2020 despite the crisis brought on by the coronavirus pandemic. The industry has immense potential to grow.
During the pandemic, when everything came to a halt, Nagad emerged as the lifeline for the business entities in Bangladesh. They have managed to transfer money from their banking account using Visa and Mastercard. Nagad allowed people to pay the fees for Covid-19 tests and promoted online payments, e-commerce and utility bill payments.
“We have sown the seed to solve some of the challenges of the people, and that’s why we got massive business scales,” said Mishuk, a business graduate.
He thinks that the people who are doing business without thinking about customers’ needs may become successful for a short period, but the success will not last in the long run. His philosophy was to solve as many problems as possible.
Before the launch of Nagad, mobile financial service was still available in the market, but the service was costly as carriers used to charge Tk 20 (about 24 cents) for cash-out of every Tk 1,000 ($11.76). But Nagad cut the charge to half, and now it is easy for everyone to transact money. Nagad also made sending money free while other carriers are charging for the service.
“I want to push for a hassle-free and smooth payment procedure in the country by giving them the easy procedure,” said the enthusiastic change-maker.
Nagad has played an incredible role in digitalizing the century-old post office as it has partnered with the oldest government office in the region. In 2018, Third Wave Technologies Limited, a technology venture of Mishuk, partnered with Bangladesh Post Office and opened up a new horizon for the payment system.
From the very beginning, Nagad has realized the need of the industry and has started opening its wings to serve the users. Mishuk explains: “My quest for a solution to the problems led me to the Bangladesh Post Office. I realized the postal department has the most extensive logistics network in the country, and they have been working with payments for more than 200 years. We approached them with our idea. They responded positively as they had eagerly wanted to do something digitally. We decided to team up with them to provide the most extensive payment and logistics solution in this region.”
After gaining the government’s trust and respect, the platform also won a number of international honors form different reputed organizations in the last one year for driving financial inclusion using technology. In November, the World Information Technology and Services Alliance (WITSA) awarded it with the WITSA Global ICT Excellence Award 2020 as the first Bangladeshi MFS for its role in promoting financial inclusion. In October, Inclusive Fintech 50, a group of global organizations founded by the MetLife Foundation and Visa, selected Nagad as the best fintech startup for 2020.
Seeing this massive success, the postal departments of nine member countries of the Asia Pacific Postal Union showed interests to replicate the business model of Nagad to inject life into their dying post offices.
