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    Digital Bangladesh in the Making – Part 1

    Sazzad Hossain
    Sazzad Hossain

    [In this first of the 2 part series blog, I will unfold some great stories of technology landscape in Bangladesh and how they are having an impact on the making of Digital Bangladesh]

    As an emerging economy Bangladesh has embraced technology at a rapid pace. The penetration of the telecom sector, mobile commerce and advent of internet based applications designed by businesses and supported by the tech friendly government validates the growth story that is going to unfold in the e-space of Bangladesh.

    The Internet of Things – The Next Big Thing that Will Reshape Bangladesh Consumer Industry

    With the proliferation of smart gadgets (phones and tabs), expansion of 3G internet connectivity resulting into mass level Social Networking coupled with the flourishing Mobile Financial Services (MFS) and the advent of E-commerce industry, the Internet of Things is gaining momentum in Bangladesh.
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    This growth trend has profoundly impacted, over the last few years, the way people live their lives, communicate with each other as well as their consumption pattern and behavior making it one of the most crucial success factors for several particular industries like Food and Beverage, other FMCG, Telco, Apparel, Footwear as well as Consumer Durable.

    Great Untold Stories of Technology Landscape in Bangladesh – Digital Bangladesh in the Making

    The Rise of the Telecommunication Industry

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    Bangladesh telecommunication sector has a fairly competitive market with falling prices that has led to increasing market penetration rate every year. Currently, there are six mobile operators in Bangladesh with Grameenphone (GP) as the market leader with 42% share of a total of 126.87 million (BTRC June ‘15). The number of subscribers have been growing every year but the market shares of the operators have remained relatively same.

    Expanding Internet Penetration

    Inevitably, there is an increasing level of internet usage in Bangladesh owing to the increase in GDP per capita, low median age and expansion of the telecom sector (both 2G and 3G). While Bangladesh is lagging behind technologically advanced nations like Hong Kong and Malaysia, the internet penetration rate is higher than that of Nepal, Pakistan and Sri Lanka. The number of Facebook users has been growing at impressive rates with the trend set to continue on the back of strong fundamentals.

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    Smarter Phones

    Expansion of mobile networks over recent years increased people’s awareness and comfort with mobile devices and now, the inflow of low cost Chinese smartphones and economies of scale are making smartphones the next frontier. Suddenly, masses of people are able to access the internet right in their pockets. The increase in smartphone usage isn’t just boosting internet usage, but also opening up the scope for digital marketing in mobile devices.
    LightCastle recently conducted a study among the urban youth based out of Dhaka using random sampling of different age groups of cellphone owners. The following results were obtained:
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    Mobile Financial Services (MFS) – Revolutionizing the Banking Industry

    M-banking is a rapidly growing market segment in Bangladesh. New regulatory guidelines, strategy shifts among the key M-banking providers, increased awareness among the public, have all contributed to extensive growth. Bangladesh reached the 10 million registered customers mark in early Nov 2013 (Source: Bangladesh Bank).
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    Till date, Bangladesh Bank has approved 28 banks to operate as mobile financial service providers in the country. Of which 19 banks have been able to officially launch the service so far. In the current market only three players have widespread presence. The top three players are BRAC Bank’s bKash, DBBL Mobile Banking and Islami Bank’s mCash.
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    The Independent has ranked Bangladesh as 7 among the list of the top mobile financial service provider in the world. Bangladesh Bank also recently introduced the National Payment Switch Bangladesh (NPSB) which would further proliferate MFS.

    E-commerce: Propelling the E-Business Frontier

    With the central bank step to allow the implementation of e-payment gateways in 2009, e-commerce businesses have proliferated rapidly. Though many B2C businesses operates under the hybrid model incorporating “cash on delivery” mechanisms. Within five years between 2007 and 2012 the e-commerce and online auction area grew by 10.4% and is expected to grow by 8.8% annually through 2017. The number of businesses operating in the e-commerce sector are expected to grow exponentially to 61K+ over the next five years (source: IBIS World).
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    Fashion wear and consumer care products (34%), followed by Books (12%), Ticketing (11%), Mobile money (8%) and Food delivery (6%) are the top selling categories in the market. (Source: Pi Strategy)

    ITES Sector – The Gateway to the Middle Income Status

    Currently there are over 800 IT and ITES companies registered in Bangladesh with an estimated total industry turnover of around USD 200 million. Nearly 76 percent of these companies are involved with customized application development and maintenance.
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    According to the ITC Exporter Directory there are over 10,000 ICT freelancers active in Bangladesh as of 2014, billing an export revenue of nearly USD 200 million.
    [In the final part I will discuss the driving factors behind this Digital Bangladesh and would like to provide a summary of the whole discussion in a diagram]

    Sazzad Hossain

    Sazzad Hossain is an Assistant Vice President at LightCastle Partners where he brings diversified work experiences from MNCs like HSBC and British American Tobacco. He holds a Bachelor Degree in Business Administration from University of Dhaka. He is also enrolled in the MSc Marketing Program, Class of 2015, in University of Manchester. He can be contacted at [email protected]

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