Tanvir A Mishuk, a dynamic fintech entrepreneur, has pioneered a transformation in the country’s mobile financial sector, successfully integrating around 90 million individuals into the fold of financial inclusion through innovative approaches.
Now, he is poised to introduce a groundbreaking initiative – Nagad Digital Bank – to emerge as a complete financial solution and extend financial connectivity to more and more underserved people. Tanvir is undeniably credited as the pioneer in advocating for the concept of a digital bank over the last three years – a vision that is on the brink of becoming a reality.
In an exclusive interview with The Business Post, Tanvir, executive chairman and CEO of Nagad Ltd, offered insights into his visionary approach to reshaping the financial landscape through a revamped banking system. This endeavour has already generated widespread anticipation across the nation.
Mobile Financing Services (MFS) is like a miracle for the people. However, a big number of people are still outside of such services. What are your initiatives towards them?
Mobile financial services have rewritten the rules, with Nagad leading the charge in financial inclusion and pushing Bangladesh towards a cashless society.
When Nagad made a foray into the MFS market, a large number of people had remained excluded from financial inclusion. Only 30 per cent had access to financial services. With our customer-friendly innovations, diversified products and services, we have increased financial inclusion to 50 per cent. Our introduction of the country’s first electronic Know Your Customer (e-KYC) is helping customers open MFS accounts within less than a minute by taking a photo of their national identity card and a selfie. This innovation changed the dynamics of the country’s overall financial position.
Other MFS providers, banks and non-bank financial institutions are also taking benefits of this innovation, which has lowered their costs of doing business and also led to financial inclusion of more and more unbanked people.
To speed up financial inclusion, Nagad introduced another innovation where anyone can open an account by dialling *167# from any basic phone, which has also ensured a massive financial connectivity from cities to remotest parts of the country.
Nevertheless, half of the country’s population has remained out of financial inclusion. Against this backdrop, Nagad is now shifting into a super app that allows customers to have a go-to place for whatever they need. A super app in our country has the potential to bridge the digital divide. Many people in Bangladesh still lack access to basic digital services, such as banking, transportation, and e-commerce. Nagad’s super app will offer such services in a user-friendly and accessible way, helping to bring more people into the digital economy and improve their quality of life.
Besides, the super app can further help to drive innovation and entrepreneurship in Bangladesh. Moreover, Nagad has continued to innovate new products and services tailored to changing needs of customers. What is more, by providing a platform for small businesses and service providers to connect with customers, Nagad is looking to create new opportunities and expand the reach of existing businesses.
How is Nagad contributing to Bangladesh’s MFS scenario? How does it plan to attract new customers?
Nagad’s easy onboarding of customers coupled with diversified products and services at affordable costs and simplified transaction processes is contributing to the ongoing robust growth of the MFS industry, helping transactions get going in keeping with customers’ needs and thus changing the dynamics of the country’s financial ecosystem.
With each passing day, new customers are joining Nagad, which offers convenience, comfort, and safety while providing services at the lowest costs. To onboard new customers and keep them active in transactions, we also regularly dangle different offers under different campaigns. On the occasion of Eid this year we have launched the country’s biggest campaign, giving an opportunity for its users to win dream plots in Dhaka. Last year Nagad’s BMW mega campaign generated a significant buzz within the country.
Ahead of every Eid, people keep their trust in Nagad when it comes to any financial transactions, thanks to the cost-efficiency we offer. Be it online and offline shopping or sending money to family members in village homes or Eid gifts, Nagad is the first choice for all, especially limited-income people. During this festival every year, Nagad experiences around a 50 per cent surge in non-cash transactions compared with the figures in the rest of the year.
To improve customer experience and offer many more much-needed services for customers, Nagad is going to launch a digital bank soon. In this way, customer acquisition will get a big boost.
What is Nagad’s customer base and its daily transaction amount? What is the growth trend?
All disruptive innovations and customer-centric services have helped Nagad earn an enviable success – the MFS operator has come out as the fastest-growing company within a short time and acquired a customer base of more than 90 million, while its daily transactions now average Tk 1,300 crore.
MFS transaction fees are higher in Bangladesh than in other countries. How can we minimise the fee?
In its early days, the MFS market ran into a monopolistic situation as one operator held 95 per cent market share, and competition from other operators at that time was seriously missing in the market. The operator charges customers 1.85 per cent per Tk 1,000 for cash-out transactions.
However, customers did not have alternative cheaper options as other MFS carriers could hardly make any impact with their low outreach and minimal products and services that were not so effective to benefit users. That is why MFS service receivers were limited mainly to solvent people as it was very difficult for limited-income people to bear such a high cash transfer cost.
Breaking this monopoly was one of the goals that we set after having entered the market as a problem-solver. It took no time for Nagad to gain a strong foothold in the market because there was a large section still underserved.
We successfully broke the market monopoly with our customer-oriented innovations. Since our entry into the market, we came up with a competitive cash-out charge. We now charge Tk 12.49, including VAT, for cashing out Tk 1,000 each.
We need to introduce interoperability among MFS providers to make sure they lower their fees and charge at a competitive rate against transactions. Interoperable digital transaction system will allow customers to transfer funds between accounts with the same MFS provider or another MFS provider. It will be a game-changing initiative if it gets the go-ahead.
Recently, the regulatory body approved the ‘Digital Banking’ license for Nagad. What’s your next move?
Nagad has continued its relentless efforts to reach out to people of all classes with various products and services. But we have limitations, we cannot provide all services on our platform. Likewise, it is not possible for banks to take their services to every nook and corner owing to high costs of operating a bank branch with required manpower. In this case, an MFS like Nagad has the upper hand with its outreach to even the remotest pockets of our country.
To go the next mile, it is the need of the hour for us to step up with a blend of mobile money and banking services. In fact, we need to ascend with the next wave in banking, which will scale the entire bank down to the size of a smartphone and promise the comfort of having each and every banking service at our fingertips. That is the era of digital banking, and we will soon move into it.
Digital banking will make the lives of customers easier by allowing them access to banking services from anywhere at any time. In terms of costs, it is easily understandable that digital banks have lower operating expenses than traditional ones as they do not have physical infrastructure but rather rely more heavily on technology to provide customers with a plethora of services. So this translates into lower charges and interest rates for customers.
After launching Nagad Digital Bank, we will introduce single-digit and collateral-free loans for small informal businesses which now take loans from moneylenders even at 40 per cent interest rate per day. Thus, we will motivate them to come under financial inclusion, thus putting their money into the formal channel.
To assess one’s creditworthiness, Nagad has created an AI-based credit rating system that will analyse all transactions-related data available on public domains using one’s NID and mobile number. The system will determine if giving a loan to a particular individual is safe or not.
Bangladesh Bank had okayed micro merchant regulation. Is Nagad working to this end?
We have not had much response from micro and small traders as they hardly showed any interest in opening merchant accounts with us owing to various complexities and challenges. Nevertheless, we hope that we will be able to onboard a big number of them once we launch the digital bank.
