Case Study Description of bKash: Financial Technology Innovation for Emerging Markets
The founder of bKash Limited (bKash), a successful mobile financial services (MFS) model pioneered in Bangladesh, built the company from scratch, targeting services at the lower socioeconomic segment of society and eventually acquiring 26 million customers. bKash has had a positive impact on the lives of countless poor people and has gained worldwide recognition for its innovative business model. The model required close collaboration with telecommunications operators, banks, non-governmental organizations, and regulators. In particular, the Bangladesh central bank supported the venture, allowing experimentation in MFS to address poverty through financial inclusion. By the end of 2016, the founder was concerned about future regulations and looking to strengthen the foundation of his disruptive business to make it more robust. How could the company continue to grow while maintaining its financial inclusion objective? The authors Ishtiaq P Mahmood, Marleen Dieleman, and Narmin Tartila are affiliated with National University of Singapore.
Swot Analysis of "bKash: Financial Technology Innovation for Emerging Markets" written by Ishtiaq Mahmood, Marleen Dieleman, Narmin Tartila includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bkash Mfs facing as an external strategic factors. Some of the topics covered in bKash: Financial Technology Innovation for Emerging Markets case study are - Strategic Management Strategies, Innovation, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the bKash: Financial Technology Innovation for Emerging Markets casestudy better are - – geopolitical disruptions, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, increasing commodity prices, increasing energy prices,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of bKash: Financial Technology Innovation for Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in bKash: Financial Technology Innovation for Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bkash Mfs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bkash Mfs operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of bKash: Financial Technology Innovation for Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in bKash: Financial Technology Innovation for Emerging Markets case study
2. Improving business portfolio management of Bkash Mfs
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bkash Mfs
Strengths bKash: Financial Technology Innovation for Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bkash Mfs in bKash: Financial Technology Innovation for Emerging Markets Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Bkash Mfs in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Bkash Mfs digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Bkash Mfs has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Bkash Mfs is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Bkash Mfs is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in bKash: Financial Technology Innovation for Emerging Markets Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Bkash Mfs
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bkash Mfs does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Bkash Mfs is one of the leading recruiters in the industry. Managers in the bKash: Financial Technology Innovation for Emerging Markets are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Leadership & Managing People industry
– bKash: Financial Technology Innovation for Emerging Markets firm has clearly differentiated products in the market place. This has enabled Bkash Mfs to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Bkash Mfs to invest into research and development (R&D) and innovation.
Strong track record of project management
– Bkash Mfs is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Bkash Mfs is one of the most innovative firm in sector. Manager in bKash: Financial Technology Innovation for Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Bkash Mfs has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in bKash: Financial Technology Innovation for Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Leadership & Managing People field
– Bkash Mfs is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Bkash Mfs in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the bKash: Financial Technology Innovation for Emerging Markets Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Bkash Mfs has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in bKash: Financial Technology Innovation for Emerging Markets Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses bKash: Financial Technology Innovation for Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of bKash: Financial Technology Innovation for Emerging Markets are -
High cash cycle compare to competitors
Bkash Mfs has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Bkash Mfs needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Increasing silos among functional specialists
– The organizational structure of Bkash Mfs is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Bkash Mfs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Bkash Mfs to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As bKash: Financial Technology Innovation for Emerging Markets HBR case study mentions - Bkash Mfs takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Bkash Mfs has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study bKash: Financial Technology Innovation for Emerging Markets that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case bKash: Financial Technology Innovation for Emerging Markets can leverage the sales team experience to cultivate customer relationships as Bkash Mfs is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study bKash: Financial Technology Innovation for Emerging Markets, in the dynamic environment Bkash Mfs has struggled to respond to the nimble upstart competition. Bkash Mfs has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study bKash: Financial Technology Innovation for Emerging Markets, it seems that the employees of Bkash Mfs don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study bKash: Financial Technology Innovation for Emerging Markets, is just above the industry average. Bkash Mfs needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study bKash: Financial Technology Innovation for Emerging Markets, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study bKash: Financial Technology Innovation for Emerging Markets has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Bkash Mfs 's lucrative customers.
Opportunities bKash: Financial Technology Innovation for Emerging Markets | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study bKash: Financial Technology Innovation for Emerging Markets are -
Using analytics as competitive advantage
– Bkash Mfs has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study bKash: Financial Technology Innovation for Emerging Markets - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bkash Mfs to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Bkash Mfs can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bkash Mfs can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Bkash Mfs to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Bkash Mfs can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Bkash Mfs can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Learning at scale
– Online learning technologies has now opened space for Bkash Mfs to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Bkash Mfs to increase its market reach. Bkash Mfs will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Developing new processes and practices
– Bkash Mfs can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bkash Mfs can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, bKash: Financial Technology Innovation for Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Bkash Mfs can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Bkash Mfs can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Bkash Mfs can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. bKash: Financial Technology Innovation for Emerging Markets suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bkash Mfs is facing challenges because of the dominance of functional experts in the organization. bKash: Financial Technology Innovation for Emerging Markets case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats bKash: Financial Technology Innovation for Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study bKash: Financial Technology Innovation for Emerging Markets are -
Environmental challenges
– Bkash Mfs needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Bkash Mfs can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Bkash Mfs will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study bKash: Financial Technology Innovation for Emerging Markets, Bkash Mfs may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Technology acceleration in Forth Industrial Revolution
– Bkash Mfs has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Bkash Mfs needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bkash Mfs with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Bkash Mfs in the Leadership & Managing People sector and impact the bottomline of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Bkash Mfs is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Bkash Mfs needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Consumer confidence and its impact on Bkash Mfs demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Bkash Mfs high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bkash Mfs in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of bKash: Financial Technology Innovation for Emerging Markets Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study bKash: Financial Technology Innovation for Emerging Markets needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study bKash: Financial Technology Innovation for Emerging Markets is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study bKash: Financial Technology Innovation for Emerging Markets is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of bKash: Financial Technology Innovation for Emerging Markets is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Bkash Mfs needs to make to build a sustainable competitive advantage.