bKash Founder and CEO on the Transformative Impact of Financial Inclusion

After spending a summer in New York’s private equity scene, Kamal Quadir, MBA ’05, quickly determined he was not a “private equity guy.”

“I am not the type of guy who can work on Wall Street,” Quadir (who happens to be the younger brother of Iqbal Quadir, founder and director emeritus of the Legatum Center for Development and Entrepreneurship) told students, faculty, and alumni at the Martin Trust Center for MIT Entrepreneurship. “I figured out that I had to do something where I felt I belonged, and where I enjoyed what I was doing, so I went back home to Bangladesh.”

Quadir, founder and CEO of bKash, the mobile financial services provider he started in 2011, returned to Cambridge in late March to share his story. He spoke at length about bKash, which became the first Bangladeshi startup to achieve the coveted unicorn status—a valuation of $1 billion or higher—in 2021.

However, as Quadir explained, neither this feat nor any of the company’s many other financial accolades are front and center in the bKash story.

“Financial inclusion is at the core of everything we do,” he said.

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Credit: Tim Correira

 

Figuring it out (no, really!)

According to Quadir, Rod Garcia saved his life.

After studying art and economics at Oberlin College and returning to Bangladesh to work, Quadir decided to branch out. He applied to several business schools, including MIT Sloan, and on Valentine’s Day in 2003, he “got the call from Rod” informing him of his acceptance.

“I was very happy,” Quadir said with a smile.

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valuation for bKash

After serving as assistant dean of admissions at MIT Sloan for 33 years before retiring in 2021, Garcia fondly remembers Quadir and many of the 14,000 students that were admitted during his tenure.

“Whether you are a student or an administrator, you have the chance to really get to know everyone at a small school like MIT Sloan. This was especially true for me. You can build these relationships that will last long after graduation,” he said. “Kamal is a living example of a principled, innovative leader who continuously improves the world. From CellBazaar to bKash, millions of unbanked and underbanked people benefit from innovations he introduced.”

Of course, Garcia and MIT Sloan did not literally save Quadir’s life. As the latter explained it to the Trust Center audience, his matriculation in the MBA program helped to free him from an endless cycle. From attending Oberlin and working in New York to returning to Bangladesh, Quadir was always trying to “figure it out” with varying degrees of success.

“When I graduated from MIT Sloan, I figured out that I had to stop this ‘figuring it out’ business,” he said. “This time, I really had to figure things out, so after graduation, I traveled and did nothing for three months.”

It was during this interlude in Africa and South Asia that Quadir had several epiphanies.

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Credit: Tim Correira

 

The power of financial inclusion

Quadir credited the first of these to a chance meeting with a man on a ferry who was trying to sell fish to passengers while consulting his phone for pricing. The two haggled about the price of the fish, which the seller kept reducing, prompting Quadir to ask him why.

“‘After 7 p.m. there are no buyers here and I’m not the fisherman. I just bought it from the local market to resell it,’ he said. And that’s when I had this idea, that you can create a marketplace,” recalled Quadir. “With a $15 Nokia phone, you can create your very own marketplace.”

This powerful and affordable technology combined with a second realization Quadir had about providing members of the country’s unbanked and underbanked communities with access to the Bangladeshi and global economies.

“There were no financial accounts for the common people in Bangladesh,” said Quadir. “There were only 800,000 plastics, but it’s a country of 171 million people, so I was trying to figure out how we could create financial accounts for everyone else—stored value accounts where one can store money, and transfer and receive money from others. The government of Bangladesh also urged all things to be done as much digitally as possible.”

Hence bKash, a mobile financial services provider that, after being in operation for over a decade, does over 13 million digital transactions per day. Instead of conventional bank branches, bKash built a network of 330,000 agents across the country who serve as “human ATMs.” These human ATMs convert physical cash into digital money and digital money into physical cash. With these two simple functions, they play a pivotal role in enabling people to access formal financial services in digital form.

Besides the agents, a network of half a million merchants offers their customers the option of using bKash instead of, or in addition to, physical currency. “People are empowered, especially women, who make up 46% of our customers,” said Quadir.

The company operates under the strict regulatory supervision of the central bank of Bangladesh, as well as significant investments from BRAC Bank, the International Finance Corporation of the World Bank Group, the Bill and Melinda Gates Foundation, Ant Financials of the Alibaba Group, and the SoftBank Vision Fund. As of 2021, bKash is valued at over $2 billion. All this success, said Quadir, is due to the accessibility of mobile phone technology and the empowerment of unbanked and underbanked communities across Bangladesh.

“Most people in Bangladesh do not use smartphones. Twelve years ago, when I used to come to places like MIT, everyone was talking about and using smartphones while forgetting the context,” he explained. “If we would have stuck to a smartphone app, only the very wealthy or most well-off people would have been able to use our service, and that would have defeated the purpose of what I wanted to do.”

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Credit: Tim Correira

 

A mountain of fertile financial opportunity

Although the Himalayas are hundreds of miles to the north of Bangladesh, the massive mountain range has had significant ecological and financial impacts on the country.

They are partly responsible for the enormous amount of fertile sediment that stretches across much of Bangladesh, which is dominated by the largest river delta in the world, the Ganges Delta. As a result, agriculture is a dominant industry in the young South Asian nation, which is the eighth most populous country in the world with a population of nearly 170 million.

This sense of fertility and industry courtesy of the Himalayas reminded Quadir of when he first saw the mountains from an airplane, of financial inclusion.

“Financial inclusion, to me, is a little bit like this,” he said. “In the past, the middle class earned money and put it in banks, and the banks would have all this cash to use for development. Now, the money of even the poorest people is in the system, and it can also be used for economic development.”

“The economic silt and water are spread across the country through all these financial institutions,” he concluded. “It’s one drop at a time, and it all contributes to the overall economy of the country.”