Bangladesh’s bKash Adoption Puzzle

On a recent trip to Bangladesh, one question kept pestering me:  if mobile bank accounts are so good for the poor, why haven’t they adopted them already? After all, financial products and services for the poor have the potential to improve lives, but only if they are actually adopted and used. 

I traveled to Bangladesh to set up a randomized controlled trial to test for the impacts of mobile banking on financial management, food security, health and self-reported well-being for poor households.  By randomly varying whether households have access to trainings on how to sign up for and use mobile money, we hope to test whether having individual accounts where people can deposit, save, transfer and receive money, actually benefits poor households.

Our team first came across this adoption puzzle in our work to pilot the intervention. When we first visited households in December, very few were using the mobile money service through individual accounts, but most expressed a strong interest in acquiring an individual account.  If the interest was so strong, why hadn’t they already gotten one?

As our work has gotten farther, the puzzle has only gotten deeper:  the expression of interest in signing up for accounts could have lacked credibility, but when offered training and help signing up, 28 of all 28 eligible rural households and 26 of 28 eligible urban migrants accepted and successfully signed up for individual accounts through bKash, a BRAC Bank-based mobile money provider.  Not only do households express a strong interest in signing up for accounts, when they are offered help with doing so, they actually do sign up.

One explanation could be that the process for signing up for individual bKash accounts is excessively burdensome, or that points at which individuals can register for the service are at long distances from them.  This doesn’t appear to be the case, however – the process is takes as little as 10 minutes and registration is available at the nearly ubiquitous bKash agent shops on seemingly every corner.

Another is that individuals may not believe that the benefits of individual accounts are very high – until they are approached by a non-governmental organization offering them the opportunity to sign up.  The mere presence of the experiment may be changing people’s beliefs about the benefits of the technology, and thus their choices regarding adoption.  These experimenter-observer effects are pervasive throughout field research, and we’re not yet sure how to try to minimize them.

A third is that there may be behavioral factors impeding individuals from signing up for services that they know will be beneficial for them – just as people in the United States procrastinate enrolling in retirement plans or IRAs, people in Bangladesh might procrastinate in enrolling for bKash, until they are gently prodded in the right direction.

The policy implications of this last explanation are the most interesting.  One approach to addressing these behavioral factors might be to “nudge” people to sign up for mobile banking accounts – by for example marketing them jointly when people sign up for new SIM cards, or making ownership of an account a default that people who acquire a new SIM can opt out of.  These of course would entail implementation challenges – limiting the number of dormant accounts, for example – but behavioral insights on adoption drawn from other realms might be useful in helping to broaden the reach of mobile banking in relatively new markets, where as in Bangladesh, adoption rates overall still remain low.

Photo by Jean Lee:  bKash agent outside of his shop in Gaibandha, Bangladesh