When loss brings strength for bKash

A massive investment in technological development in the last three years finally brought good results for bKash as it retained strong dominance by gaining nearly 85% of the total active customers of the mobile financial services (MFS) market in 2020.

However, it had to compromise profit to achieve this strong customer base. 

Despite being the largest MFS provider, bKash continued to incur losses for the last two consecutive years.

At the end of last year, it faced losses of Tk81 crore, 30% higher than the previous year.

This huge loss was part of the plan of the company's strategic investment. 

"This rise in loss can be attributed to the increase in agent and distributor commissions, commercial outlays, and technology expenses to support the early investment and growth stage of the company," according to the annual statement of Brac Bank, the parent company of bKash.

However, a consistent rise in the number of active customers and revenue due to these concerted investments is expected to yield higher returns in the forthcoming years, said the annual statement.

bKash registered 23.6% growth in active customers (defined as those who made at least one transaction in the past 90 days) in the last one year, taking the total number to 2.76 crore at the end of December 2020.

When the overall MFS industry experienced a decline in the number of customers, bKash gained 53 lakh new active customers in the last one year, reflecting strong resilience. 

The total active accounts of the MFS industry declined by nearly 7% to 3.23 crore at the end of December last year, according to the Bangladesh Bank data.  

Not only in customer base, bKash also achieved remarkable growth in other indicators, such as agent network, transactions, floating balance, and assets. 

Describing the journey during the pandemic year, the Brac Bank annual statement said 2020 had marked significant milestones for bKash's growth trajectory in new product development, technological progress, and widened access to largescale sectors, including readymade garments and government payments.

"The company surpassed its business goals and continues to make solid progress and thrive in a competitive environment."

bKash saw its highest profit of Tk48.8 crore in 2017. From next year, it started strategic investment after Alipay, a China-based tech giant of Alibaba Group, joined hands with the company in 2018 by making a significant investment.

It was a conscious decision to make losses as part of the strategic investment plan, said Kamal Quadir, chief executive officer of bKash.

He said bKash had achieved a strong customer base by introducing new products and services for financial transactions. 

Since the beginning of the company, shareholders of bKash had not taken any dividend. Rather, they reinvested profit, he said.

It was because shareholders wanted to grow the company, he added. 

"As bKash leads the market, it wants to set a trend of market responsibility for others to follow. From this aspect, bKash focused on quality service and ensuring transparency in financial transactions and compliances," he said. 

He hoped the strong platform that bKash had established would bring long-term benefits for shareholders. 

In the midst of the coronavirus upheaval, the company introduced new products, including those enabling users to send money to non-bKash users, while also adding major new billers to the bill pay product, according to the annual report of Brac Bank.

With this, any public utility bills can now be paid through bKash. 

bKash reached the historic five-crore milestone in registered client base in 2020. 

In addition, many new merchants onboarded, and ticketing for all modes of transportations (air, bus, launch/ferry, and train) can now be done through the bKash app.

A solid customer growth resulted in a 29.3% increase in the consolidated transaction amount last year. The daily average transaction through bKash was above Tk2,000 crore, according to bKash.

As a result of increased customers and agents in the bKash network, the float balance registered a substantive increase of 46.2% over the prior year.

"bKash, with its new products and services, leading market position, strong and inescapable brand recall, and large agent and merchant network, is expected to retain its position as a frontline market leader in the coming years as well," said the Brac Bank statement. 

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