Bangladesh University of Professionals

Case Writing
Nagad: An Emerging Mobile Financial Service in Bangladesh
Turning into A Digital Bank

Submitted to:
Osman Goni
Assistan Professor
Bangladesh University of Professionals

Prepared by
Sirajum Monir Proteek
Roll no: 17251028 (BBA in Marketing)
Md. Tanvir Sadat
Roll no: 17251034 (BBA in Marketing)

19th September 2020

Nagad: An Emerging Mobile Financial Service in Bangladesh Turning into A Digital Bank

Abstract

This case is based on a digital financial service named ‘Nagad’ in Bangladesh that started
its journey one and a half years ago and now they are planning to transform their service
into a digital bank. The digital financial service in Bangladesh which is basically conducted
by mobile among large amount of people has been showing emerging performances. In the
meantime financial sectors with the engagement of unbanked and unprivileged poor people
in the rural areas was able to successfully capture the customers of rural and urban areas of
Bangladesh. This study shows how a service platform of Bangladesh Post Office secured
an honorable position within a very short period of time and managed to gather 3.5 corer
users, though the industry had many established competitors like bkash and Rocket. As the
world is getting used to the digital platform of financial sectors and digital banks are more
feasible now-a-days rather than traditional banks, ‘Nagad’ is highly focused to become a
digital bank through obtaining a license from Bangladesh Bank very soon.

Learning Outcome

i. Understanding briefly about Mobile Financial Service market.

ii. Identifying the prospects and opportunities of digital banking in Bangladesh.
iii. Defining the affordability and efficiency of Nagad’s marketing tactics.

Keywords

Nagad, Financial, Transfer, Mobile, Digital, Banking

1. Introduction

In the past few years, the growth of development of mobile financial service ecosystem in
Bangladesh was one of the world’s fastest one. As a result, we can see that the 2nd largest mobile
financial service provider company is operating in Bangladesh. The aim of starting the mobile

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financial service was to provide a fast, affordable, secure, convenient and nationwide service to
the people so that they can easily carry on their transaction in a least possible time maintaining a
very low cost and the availability of the service should be in consumers walking distance. Mobile
Financial Services (MFS) is an approach to offering financial services that combines banking with
mobile wireless networks which enables users to execute banking transactions. This means the
ability to make deposits, withdraw, and to send or receive funds from a mobile account (Md.
Golzare Nabi, 2012).

Mobile devices have become the heart of our daily lives by maintaining our regular communication
process. That is why MFS is also gradually becoming the inseparable part of day to day transaction.
In a developing country like Bangladesh where many of the people do not have formal bank
account there MFS is gaining popularity among the consumers because of its’ lite banking service
offering which is replacement of formal bank accounts. In many parts of the world mobile financial
service is widely used specially in rural and remote areas where banking structure is not established
properly. In African nations MFS has gained so much popularity that Kenya is ranked number one
in mobile banking with numbers of MFS provider like Equity Bank Kenya Limited’s Eazzy
banking application, The Co-operative Bank’s Mco-op cash application, Safaricom’s (part of the
Vodafone Group) m-Pesa, Zain’s ZAP, Tangerine, MobiKash, and Funtrench Limited. In Iran
MFS is also offered by various companies like Parsian, Tejarat, Pasargad Bank, Mellat, Saderat,
Sepah, Edbi, and Bankmelli. Like this there are a large number of companies which are working
across the world to provide MFS to the customer for example in Guatemala by Banco Industrial;
in Mexico by Omnilife, Bancomer and MPower; in Somalia by Hormuud Telecom’s ZAAD
service; in UK by Barclays Pingit and Paym. In the South Asian region, there is Easy Paisa in
Pakistan, Eko India Financial Services in India, Mobile Khata in Nepal and etc.

In the current scenario of Bangladesh majority of the people specially in rural area is illiterate or
have a very poor academic knowledge. As a result, maintaining a formal bank account or procedure
seems tough for them. In conventional banking system you must have a little academic background
to understand the rules and formalities and to use the bank account for transaction. That is why in
rural areas many government banks have their branches but people seems less interested to open a
personal bank account for transaction. Besides that, transacting money in bank is also a slow
process. People now days transact a small amount of money in an emergency basis and in that

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case, MFS is a great solution for them. Specially the garments workers who lives in urban area,
but their family resides in rural area use MFS hugely for their transaction. Because it is easy to
maintain and their family is getting the money as quickly as they send it. MFS is also getting
popular in our country because now days people wants to transact in a cashless system. MFS is
giving them this opportunity of carrying the big amount of balance without any hassle and transact
anywhere whenever they want. That is why the market of mobile financial service in Bangladesh
is increasing day by day and getting lucrative for the bank and other financial companies.

2. Mobile Financial Service (MFS) Market in Bangladesh

The first mobile financial service was launched in 2011 in Bangladesh and since then there has
been a rapid growth in this mobile financial service sector (bKash: Revolutionizing Mobile
Financial, 2019). Bangladesh holds 8% of the total mobile money account globally which is quite
surprising for a developing country like Bangladesh and with the running time this sector has
developed itself as an essential part of people’s everyday life for money transactions. As a matter
of fact there are more than 10 service providers offering their services at present which includes
bkash (BRAC bank), Rocket (Dutch Bangla Bank), Ucash (UCBL), mCash (Islami Bank
Bangladesh Limited), T-cash (Trust Bank Limited), OK Banking (One Bank Limited), MYCash
(Mercantile bank limited), IFIC Mobile Banking (IFIC Bank Limited), iPay, Upay (United
Commercial Bank Limited) and Nagad (Bangladesh Postal service). An extensive survey done by
USAID reflected that more than 80% of MFS users agreed that the services are safe, easy, and
convenient, and 91% of MFS users and 88% of non-users agreed that “low transaction costs” is
the most important priority for customers (Parvej j, 2015).

Rocket was the first mobile financial service in Bangladesh which was launched by Dutch Bangla
Bank and offered facilities of banking by using a mobile phone. It is basically a banking process
that didn’t include any bank branches but provides affordable and efficient banking service which
allowed the customers to use services like cash-out, cash-in, payments of salary, merchant
payments, utility payments and allowance of the government. They were also able to withdraw
money from the ATM machine by using their mobile phone. The all out MFS market of
Bangladesh is being assessed as of sum 1500 crore BDT (bKash: Revolutionizing Mobile
Financial, 2019). At the early stages the only players of MFS were bkash, Rocket and Trust Bank

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Mobile money and among them bkash took a very short period of time to become the market leader
in this sector and captured 75% of the market share whereas Rocket captured 18% and rest was
captured by the others which was a very small portion. The development of the market has
generally benefited from residential settlements covering exchanges like cash in (42% of all out
exchanges), cash out (37%), and individual to individual (P2P) exchanges (19%). In the MFS
market providers charges a very nominal mount for individual to individual money transactions
but charges 1.5-1.85% for cash out services. Almost for all the providers, the procedure of opening
an account is free for all the customer by providing some authentic documents like National
Identification Card. Some customers’ needs to have an institutional bank account with the bank
they desire to take the service. Most of the MFS tries to get occupied with the multinational
organizations and share their revenues with them as it increases their uses at a large amount. All
the service providers have their distributors and agents around country, they also get a small
portion of revenue from these MFS providers as well. Other than person to person money
transactions these MFS are used for other essential transactions such as transferring foreign money
as a team with Western Association Cash by bKash, Surecash by Rupali Bank is utilized by
instruction board to circulate government grant among essential and optional understudies, DMP
utilizes the administration of UCash for their traffic rule infringement installments and so forth.
And recently Nagad is used as a subsidiary of the Bangladesh Post office. The safety, easy to use
and affordability of MFS makes it more attractive than a regular bank service and for all these
factors it occupied a major part of Bangladesh’s market.

3. Emergence of Nagad

Nagad, a subsidiary of Bangladesh Post Office, started as a joint venture between Bangladesh Post
Office and Third Wave Technologies Limited (TWTL). The company is operating under the
authority of Bangladesh Post Office which is an attached department of the Ministry of Post and
Telecommunication-Bangladesh and operated by Third Wave Technologies Limited (TWTL).
(Nagad, 2020). The founder managing director of Nagad is Tanvir A Mishuk and it is the new
version of the Postal Cash Card and Electronic Money Transfer System (EMTS) which was
previously introduced by Bangladesh Post Office (Bangla News 24.com, 2018). Nagad was
launched on 11 November 2018 but Prime Minister Sheikh Hasina inaugurates its official

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operations on 26 March 2019 while celebrating the 48th Independence Day of the country (Dhaka
Tribune, 2019). Nagad headquarters located at Kemal Atatürk Avenue in Dhaka, Bangladesh.

Nagad is now planning on transforming into a digital bank within one and a half year of starting
their operation. This digital financial service platform became very popular and secure the second
position in the domestic MFS market within a very short period of time with around 3.5 crore users
and among them around 2 crores are active users. Nagad aimed for being the first digital bank in
the country's financial market which is saturated with 59 banks at present. The whole world is
focusing towards the digital banking day by day because the traditional branch banking is costly
and becoming less feasible day by day. So that is why Nagad is planning for turning itself into a
digital bank where all the banking services will provide through through digital channels, and
customers will need not to go to the branches anymore. As already there are around 10,000
branches of the Bangladesh Post Office is already established all over the country. So, if any
customers need any service in emergency, they can get that through that branches. After the one
year of operation Nagad applied for the license to the Bangladesh Bank but within this one year
Nagad enjoyed the advantage of higher transaction limits and took lower transaction charges from
the customer as it was out of the purview of the central bank. The platform was running under the
Postal Act which allow the consumers to make 10 transactions a day amounting to Tk 250,000 and
send Tk 50,000 in one transaction and the numbers will remain the same in case of money
withdrawal also, on the other hand the cash-in limit is Tk 15,000 and for withdrawal it is Tk 10,000
a day for the existing MFS providers like bKash, Rocket and UCash. (The Daily Star, 2018). This
advantage helped Nagad to gain 60 lakh customers within the seven months of starting its operation
and made it the second market leader by overtaking Rocket which is a digital wing of Dutch-
Bangla Bank. Besides that, during the COVID-19 lockdown government's announced Tk 5,000
crore wages and allowances for the low level workers, labourers and poor people. This money is
distributed through MFS and as result Nagad gain 1.26 crore fresh users in four months from
March to June. (The Business Standard, 2020) Also the required charge for COVID-19 test can
only be paid by Nagad which also help them to gain a significant number of customers during this
global pandemic. (Prothom Alo, 2020).

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4. Nagad Portfolio

i. Cash In
ii. Add money
iii. Send money
iv. Cash out
v. Mobile Recharge
vi. Sanchay
vii. Bill pay
viii. Payment
Nagad provides different kinds of service to their customers. But they have gained a special place
into the customers mind for their massive ‘Bill Payment’ options. Through Nagad a customer can
pay 24 different kinds of bills. We know how much hassle a customer has to face in case of bill
payments in Bangladesh but Nagad has solved that problem for their customers and made their
customers life hassle free. These are some payment options provided by Nagad.

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5. Nagad Mental Map

6. Business Model

Nagad provides instant and secure MFS across the country by allowing the customers to send,
receive or pay money with a very minimum effort and cost by the advanced mobile banking
technology available on anyone’s own smartphone anytime, anywhere. The transaction cycle is
very simple-

Distribution House Agents Customer

The cash and the virtual money is distributed to the authorized agents in every Thana or Upazila
from the distribution house. Customer contacts with the agents for their desired services like cash
in or out or make any kinds of payment. Every transaction is taken care of by the distribution house
executives after the end of every day.

The Nagad interface is very easy and simple to use. You can just dial the USSD code *167# or
access the mobile application to get the service. Nagad offers various services like cash in and out,
add money, send money, mobile recharge, sanchay, bill pay, payment etc. In short, Cash In means
to deposit money into your Nagad account, send money means transferring money to other Nagad
account, mobile recharge means you recharge your mobile balance, payment allows payment to
any merchant who accepts Nagad payment and cash Out means withdrawing cash anytime from
agents if sufficient balance is available in your account. Agents gets commission for every
transaction they made, and the consumers have to pay charge every time the use the cash out
service from their account or transect money from one Nagad account to another. You just need
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your National ID Card/ Driving License/ Passport to open your account into Nagad though the
application. Besides that, every Robi or Airtel subscriber can create their account in their own
mobile number just dialing a simple code. For being the authorized Nagad agent, you must have
a physical or fixed shop in a specific place within the area covered by the Distribution House (DH)
along with valid trade license and other necessary documents.

7. Competitors

i. Bkash

The leading postion of mobile financial service of Bangladesh is held by Bkash,

which is a joint venture company of BRAC bank launched in 2011. It is leading the
market with 65% of the total market share. From the beginning bkash started to
collaberate with different orgainizations and gather customer from each sectors.
They have stakeholders and partners from every telecommunication service
providers of bangladesh. As it was one of the early leader of the market , now they
are serving 98% of mobile users by taking access to their mobile devices snd
providing its service.

ii. Rocket
Rocket also started their journey in 2011 with bkash. Dutch Bangla Bank
introduced their mobile banking service through Rocket. And form the beginning
they tried to establied their image as not only a service provider for low income
people but also provides service to upper class people through Rocket. They were
the pioneer of mobile bankig service in Bangladesh. Along with bkash, Rocket was
able to gether a huge portion of customers by opeing thousand of mobile bankig
accounts and their volume of trasactions were also high.

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 iii. Upay
United Commercial Bank (UCB) introduces an mobile based app in 2017 to provide
digital secured payment solution to their customers. They launched this app both
for their consumers and corporate customers. They establish their slogan “Digital
Bangladesh” by launching this app. In their app they uses Block-chain and Quick
respose code known as QR code which is very reliable for this kind of transactions.
Form the beginning their one of the main objective was to utilize both Android and
Apple based mobile devices for their mobile service.

iv. iPay
iPay started their journey in 2015 as it was founded by Mr. Zakaria Swapan. It is
an electronic wallet that provides seamless payment systems for people’s day to
day life without any charges. Through this ipay E-wallet any kind money related
transaction can be done at any time with mobile or computer having an internet
connection. In Bangladesh 57 commercial banks are connected with ipay and it
gained popularity in a very short period of time.

8. Competitive Advantage of Nagad

With nearly 156.19 million population growing at 1.05% (July 2016 est.) and a total area of
148,460 square kilometers ( CIA Facts book, 2016), Bangladesh is a densely populated country.
In this digital era 68% of the people of Bangladesh uses mobile phones whereas only 15% are
connected to formal traditional banking system. These phones are not only useable for
communications but also can be used for performing different kinds of sophisticated task. Many
organizations thought about this concept and utilize it for mobile financial service and Nagad is
one of them.

Though there were lots of competitors already existed in this MFS market Nagad stepped into it
and secured the second position within one and a half year. In Bangladesh a huge amount of people
used the post office for the transaction of money. Nagad was able to capture a large amount of

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consumers as it was already collaborated with Bangladesh Postal service. After creating Nagad
they transform those transactions digitally. Bangladesh Post Office is run by the government of
Bangladesh and as Nagad started working with it as a subsidiary it gained a positive image from
the customers as a trustworthy and reliable MFS. As they were working as a subsidiary of the
government during the Corona Virus pandemic they gain 1.26 corer fresh subscribers within four
months and provided wages and allowance under the government’s Tk5000 corer Corona Virus
stimulus package. A user of Nagad could transact Tk 2.5 lack a day which gave them advantage
from all the other MFS providers as their users can only transact Tk 30,000 per day. So ultimate
goal of Nagad is to be the number one Mobile Financial Service provider in Bangladesh. They also
have applied for a license from the telecom minister to become the first digital bank in the country.

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9. Nagad SWOT Analysis

As Nagad is the newcomer in the market and already there are some established competitors Nagad
is going to face some threats, but as Nagad is a subsidiary of Bangladesh post office which is a
government organization Nagad is getingt plenty of opportunities also. These opportunities will
help them to gain customers trust easily. Besides Nagad also have other strengths, opportunities,
threats and weakness. Described below:

Strengths Opportunities
i. Positive Brand Image- Parent i. Transforming into a digital bank.
Company Bangladesh Post Office. ii. Introduce Diversification.
ii. Second position in the domestic iii. Being a market leader.
MFS. iv. Emerging growth in DFS.
iii. No extra establishment cost.
iv. Wide range of payment options.
v. Highest transaction provider.
vi. Acquired large number of customers.

Weakness Threats
i. Customers unable to understand the i. Government’s sudden change in
concept. regulations.
ii. High agent commission. ii. Corruption within the company or from
government’s side.
iii. Established Competitors.

10. Marketing strategy

As MFS market is already established and there are several strong competitors in the market that
is why the main marketing strategy of Nagad is to acquiring customer also generate new customer.
For generating new customer Nagad targeted the lower end people of the country who have a very

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little knowledge about traditional banking and transact small amount of money. To reach that tire
of the customer they started promotion in those channels which are shown in the tea stalls or other
road side shops for Bangla movies like My TV, Mohona TV etc and where lower level customers
sit for having snacks or have a cup of tea. Besides that, to acquire more customer and give a push
to the total industry Nagad focuses on product innovation by introducing different digital service
and make the account opening easier and quicker. Nagad also used different integrated marketing
communication program for creating a place into customers mind like-

i. Media Advertising: Nagad excessively use media advertising in different form. For
example- TV commercials, Print media (Newspaper), and Radio
ii. Direct Response Advertising: Nagad also execute different direct response marketing
like Telemarketing and SMS Marketing.
iii. Online Advertising: Nagad use different online advertising and E-Marketing to build
a strong relation with their customers in a regular anf low cost personalized
communication process. Nagad is doing E- marketing in their website and Social media
like Facebook Instagram etc.
iv. Point-of-Purchase Advertising: Nagad use different branding item in their agent point
which makes them familiar to the customer and increase their brand image. They use
posters, pointer, festoon and sticker in their agent shop which are more attractive than
their competitors.

11. Nagad’s marketing mix

Nagads product, price, place and promotions create an appropriate marketing mix for their
customers. To capture the target market Nagad offers and follows different attractive products and
uses unique marketing campaigns.

i. Product: Nagad initially started their journey with services that was also provided by other
mobile financial services, but as they were collaborated with the Bangladesh Post office
they were also full filling the day to day needs of a lot people. They become popular with
their massive “Bill Payment” services in the whole country. Their service was affordable
to the lower income people with their free account opening with NID and deposit systems.

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 As it was also used for government services people easily established their trust in their
service and started to use it.
ii. Price: The price of Nagad for any kind of transaction is very reasonable for their targeted
customers. There is no charge required for any cash in service or for opening an account
but for cash out transaction a customer will be charged 1.60% through the app and 1.75%
through USSD if the amount is Tk10,000 or more than that. If it is less than Tk10,000 the
charge will be 1.75% through app and 1.85% through USSD.
iii. Place: As Nagad is venture of Bangladesh Post Office they don’t need any kind of
establishment cost for their physical infrastructure. Nagad will be using Bangladesh Post
office’s 10,000 branches all over the country for providing their services. Customer can go
to these branches if they face any kind of emergency. Also they uses airtime recharge
agents which is available to the customers in every remote area. So Nagad is available
pretty mush everywhere in Bangladesh.
iv. Promotion: Nagad tried to promote their service among lower end customers who face
difficulties in money transaction through banking services. As they started their journey
60% of the population were out of this financial service so they tried to promote their
services through Television using channels like ‘My TV’, ‘Mohona Tv’ basically the
channels people used to watch in tea stalls.

12. Setbacks and Challenges of Nagad

Through the journey of Nagad, so far it has been satisfying as it has already concur the second
position in the MFS market but it’s still in developing stage and they have to go a long path to
build and sustain their business.

First, they need to build more stable and reliable technological platform to avoid fraudulent
activities. For that first they need to educate their customers to use their own account or mobile
app for money transactions rather than agents’ account.

One of the major challenges for Nagad’s customers is that most of the people have a wrong
perception that for using the account themselves they need to know English or they need to be
highly skilled in mobile technology.

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Sometime people may send money to a wrong number from mobile phone and there is no way to
recover that money in Nagad.

In traditional banking transactions there is no money charged for transactions but in Nagad a
certain percentage of money is charged for transactions. This may discourage consumers to use
mobile money transactions of Nagad specially the lower-class people.

Though there are many recharging points located in different places of Bangladesh for
telecommunications but the number of agents of Nagad is still insufficient compared to its
competitor bkash. Also, most of the agents do not want to provide financial services to the
customers as it’s quite risky to handle it. Such as if the agent mistakenly send money to a wrong
number then he needs to pay the customer for his mistake.

In traditional baking customer withdraw their money from bank or ATM booth, here both are
secured place for the customers. But for Nagad most of the agent’s shop are openly placed so the
customer can get robbed while withdrawing the money so it is risky than traditional banking.

The most important challenge is to handle the fraudulent cases occurring through MFS. As Nagad
is one of the top mobile financial services in Bangladesh scammers use it to fraud people. They
send fake transaction messages to people and ask them to return their money, less educated people
often fall for this and send money without verifications. Also, they make fake phone calls by
pretending a ‘Helpline Service Provider’ and ask them their personal information about their
account to hack it. Though it is a complicated task to tackle but Nagad have to educate their
customers about these fraud situations through different promotion methods and they need to take
proper actions to capture the frauds and recover victim’s money.

13. Moving Forward

Nagad’s growth in this one and a half year is remarkable and they want to grow more and become
the leader in this MFS market. Though a large portion of their customer base consists of lower
income people but they are also thinking how to attract more urban area consumers. They want to
change the MFS market by becoming the first licensed digital bank of Bangladesh. Their service
helps their consumers to manage their transactions in an easy way and every day they are working

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hard to develop their technological platform to make that service more reliable, secure and hassle
free. Nagad always appreciate its competitors for bringing something different to the market. As a
matter of fact Nagad always tries to push the total MFS industry by introducing and providing new
services to their consumers. Above all making new customers is always their main concern.

14. Conclusion

In a developing country like Bangladesh mobile financial services can play huge role for its social-
economic development and Nagad is a key player in this MFS market. Their customer accusation
strategy has taken them to the top of the market and now the big challenge for Nagad is to sustain
their business and customers and reach the leading position by providing more quality and secured
service than its competitors.

Discussion Questions

1. How Nagad can capture more urban area customers? What kind of promotional strategies they
can implement?

2. What kind of actions should Nagad take to prevent fraudulent activities and become more
reliable MFS?

3. What kind of benefits Nagad will get if they become the first licensed Digital bank of
Bangladesh?

References

1. CIA Facts book. (2016). CIA Facts File. The World Fact Book, South Asia: Bangladesh.
2. Bangla News 24.com. (2018, October 11). National: Bangla News 24.com. Retrieved
from Bangla News 24.com web site:
https://www.banglanews24.com/english/national/news/bd/71490.details
3. bKash: Revolutionizing Mobile Financial (2019).

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4. Dhaka Tribune. (2019, March 26). Bangladesh: Dhaka Tribune. Retrieved from Dhaka
Tribune Web site: https://www.dhakatribune.com/bangladesh/dhaka/2019/03/26/pm-
opens-digital-financial-service-nagad
5. Md. Golzare Nabi, M. S.‐E.‐F. (2012). Mobile Financial Services in Bangladesh:An
Overview of Market Development1. Dhaka: Bangladesh Bank.
6. Nagad. (2020, September 19). Retrieved from Nagad Web site:
https://nagad.com.bd/about-us/
7. Parvej j, A. a. (2015). Mobile Financial Services in. United States Agency for
International Development.
8. Parvej, A. a. (2015, april). Mobile Financial Services in Bangladesh. United States
Agency for International Development (USAID).

9. Prothom Alo. (2020, September 18). বিজ্ঞাপন িার্তা: Prothom alo. Retrieved from
Prothom Alo Web site:
https://www.prothomalo.com/business/%E0%A6%95%E0%A6%B0%E0%A7%8B%E0
%A6%A8%E0%A6%BE-
%E0%A6%9F%E0%A7%87%E0%A6%B8%E0%A7%8D%E0%A6%9F%E0%A7%87
%E0%A6%B0-%E0%A6%AB%E0%A6%BF-
%E0%A6%AA%E0%A7%8D%E0%A6%B0%E0%A6%A6%E0%A6%BE%E0%A6%
A8-%E0%A6%8F%E0%A6%95%E0%A6%AE%E0%A6%B
10. The Business Standard. (2020, August 24). Banking: The Business Standard. Retrieved
from The Business Standard Web site: https://tbsnews.net/economy/banking/nagad-
looks-turn-digital-bank-
123334?fbclid=IwAR04aYVtOnmmxi6WtBO3J9BX4esjkCFewAkletzHToK569DZdch
MBcBdnu0
11. The Daily Star. (2018, October 22). Business: The Daily Star. Retrieved from The Daily
Star Web site: https://www.thedailystar.net/business/news/nagad-make-mfs-sector-
lopsided-1650133

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 Teaching Notes

Suggested answers of the questions

1. Answer: To capture the urban customers Nagad can merge with different clothing and shoe
brands, electronic companies and other organizations. As a promotional strategy they can offer
discounts. There are plenty of occasions take place in Bangladesh every year and people do
shopping a lot. So if Nagad merge with all those brands and offer their customers discounts for
making payments through their Nagad account they can easily capture the urban customers. Also
they can run a campaign for their premium customers throughout the year. For example under this
campaign the customers will get discounts in various places like restaurants, shopping malls etc.

2. Answer: As Nagad has a huge portion of lower end customers, the first thing they should do is
to arrange different educational campaigns for them. Make them aware and prepare for those
situations. Teach them what information’s to share and not to, they can make leaflets containing
information’s regarding this and provide everywhere to everyone. Secondly they can develop their
technology in a way that there will be an automated OTP for each SIM card and they can’t use that
OTP if the SIM card is not available in that device.

3. Answer: If Nagad gets the license from Bangladesh Bank they will be the first digital bank in
Bangladesh so they will get the first mover advantage in this industry. They will not have any
competitors so they can dominate the market as well. Customer accusation will be easier as
consumers always trust a government licensed organization. As there will be no physical
infrastructure required like traditional banks, they can reduce the account maintenance charge for
their consumers.

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