The digitalisation of the financial sector is one of the pillars of the Digital Bangladesh vision — an area where Nagad has made significant contributions. Nagad has introduced Bangladesh to many features and convenience — all brainchild of Tanvir A Mishuk, founder and the managing director of Nagad — that became a lifeline for the economy during the depths of the pandemic. Through his initiatives, Mishuk has become the flagbearer of digital payment in this part of the world, where access to formal banking is a real challenge. Against all the odds, Mishuk pushed Nagad along and brought it to the front and centre of customers’ minds.
1. As Bangladesh’s leading finance company, what new trends are you adopting to help you stand out?
Tanvir A Mishuk: Nagad has been a disruptive player in Bangladesh’s mobile financial services industry, where there are 17 players. And it took us only a year to clinch the second spot. We did that by putting customers at the front and centre of all our activities, leveraging technology as much as possible to reduce their hassles and bring them convenience.
Nagad tried to make the customer onboarding process as simple and smooth as possible to bring the unbanked population into the system. We introduced Bangladesh to e-KYC, which has shaken up the financial landscape of Bangladesh. Anyone looking to open an account can do so with a few taps on one’s smartphone. Those days of filling out a ten-page-long form and attaching documents and photographs with it are behind us because of Nagad’s innovation. And we take the greatest pride in this.
But, we were not done after e-KYC. Soon, it dawned on us that smartphone penetration in Bangladesh was too little to create too much of a dent in our customer acquisition ambitions. We had to develop something to allow those with feature phones to open Nagad accounts just as easily. We partnered with mobile operators to create a system that will enable account opening from a feature phone by dialling *167# and setting a four-digit PIN.
Another innovation of Nagad is the Send Money To Any Phone (SMTAP) option, which lets any Nagad user send money to those who do not have a Nagad account yet.
Nagad’s other massive contribution was to inject competition into the market. Before Nagad, the incumbents continued to charge high for services that should have progressively become cheaper for them to offer. One of our goals was to change this and make the services more affordable for customers. And we have been quite successful in doing so. Now, the other carriers are following suit and bringing down their service charges.
This and the innovations have created a massive disruption in the industry and took forward the financial inclusion agenda. Before Nagad, financial inclusion was about 32 per cent. Now, after three years, about half the population of Bangladesh is under the formal banking umbrella.
We also made utility bill payments free of charge. About 35,000 merchants are now connected with Nagad, and people can pay their bills hassle-free anytime. Ten to hundreds of educational institutions are associated with us, and paying tuition fees is now an easy task. In the thick of the pandemic, when people were paranoid about using cash, Nagad made it possible to pay Covid testing fees from their phones. People can easily top up their balance with their bank cards.
2. Apart from investing, how do you help a business grow?
Tanvir A Mishuk: I have a few strategies that helped Nagad grow. The most important part to me is that I’m aware of what is going on internally and externally. But I don’t micromanage. Employees want a certain degree of freedom, and they want their managers to feel confident in their abilities. Intrusive observations, manipulation and intensive communication send out a clear message to employees that their managers do not have much faith in them, making them feel defeated, paranoid and unappreciated. No employee can develop their skills when managers do not show complete confidence in their teams and individual members. When your employees perform to the best of their abilities, you are bound to grow as an organisation.
At Nagad, we have a culture of openness from top to bottom. Listening should be a priority more than just the periodic engagement or targeted pulse surveys. Our managers listen actively and seek out ideas and opinions, and listening should be as much a part of their supervisory duties as any other. When managers listen to their employees, they build cohesive teams. And when they ignore the ideas and concerns of their staff, they build resentment. Side by side,all levels of staff should be encouraged to offer their thoughts, ideas and concerns, either to their direct supervisor or to management. An open-door policy should be baked into every organisation.
3. In all your years of experience, how do you know which business is scalable and which isn’t?
Tanvir A Mishuk: A scalable company has the potential and flexibility to meet increased demand and multiply revenue with minimal and predictable incremental cost. And there are specificcharacteristics I look for in a business to figureout if it is scalable or not.
Firstly, low customer acquisition costs. Scalable businesses do not need massive spending on marketing and sales. A highly scalable business has organic growth, which lowers customer acquisition costs progressively.
Secondly, modest upfront investment with fewer incremental costs. Software andtechnology can be replicated and simultaneously used by multiple people, and tens of millions of people can use the same software at a meagre incremental cost to the company—finally, economies of scale. Economies of scale exist when there are reductions in the average cost per unit associated with increasing the production scale for a product or service.
4. Has there been a time when you walked away from a company even after investing? What lesson did you learn then?
Tanvir A Mishuk: About a decade ago, I started a business in the telecommunication field, and my company’s job was to bring international incoming phone calls into the country through the white channel. Since more than a hundred million Bangladeshis live abroad,the call volume is huge — it was not less than 150 million minutes, and every minute costs eight to twelve cents then. It was a massive business in 2015– and I’m talking about the time when WhatsApp, Viber and Imo were not household apps — but I walked out of itthenas my intuition told me that in the coming days, this business would not survive.
I learned from that venturethat no business, especially digital products, can’t last long, and we need to keep innovating. If we can’t bring in newfeatures every year, no digital product will not last long, even if they are performing well.
5. How do you see yourself and your company in the future?
Tanvir A Mishuk: In the last week of March, Nagad completed its three years, and it has been a remarkable journey so far. In only three years, we have acquired more than 62 million customers. We have laid a solid foundation, and now it is time to build a skyscraper on it as the future is cashless.
Financial inclusion is at the heart of my vision and having a positive social impact– we want to make sure people from all walks of life have access to financial services. Through Nagad, we have been able to bring the underbanked people of Bangladesh into a financial ecosystem, catalysing local economic growth along the way. We want to magnify that impact in the coming days and, in so doing, create a more equitable society.
6. How do you reach out to businesses in new countries, and how do you determine their legitimacy?
Tanvir A Mishuk: I always do my homework before making any decision. I have no interest in expanding beyond Bangladesh, but if any genuine opportunity arises, I will go back to my basics — look into the news regarding their operations and impact and check the backgrounds of the founders. I do not associate myself with any business that is not ethical and does not align with my moral values, and I do not care how profitable that business is. After my research, if I think a company fits my aspirations, I will contact the founder or someone from the top management. Sometimes, I connect them to someone from my team for smooth communication.
7. What values do you look for in a team?
Tanvir A Mishuk: At Nagad, I have a driven team full of youths and fresh mindsets. The best teams must have some core values like passion, first and foremost. The team must be highly passionate about the purpose of the organisation. Secondly, hardworking. We must work relentlessly and give our 110 percent at all times. Last but not least, teamwork. We go far when we walk together, so working as a team provides the best results.
8. How do you make the team cultivate the right mindset?
Tanvir A Mishuk: At Nagad, and especially in my team, we have cultivated a growth mindset, enabling us to accomplish things previously thought impossible. The way we develop this mindset is first by finding purpose in our work.
Secondly, taking on challenges. Embrace challenges and view them as fruitful learning experiences. Finally, ask for constructive feedback. A growth mindset proactively sources input from peers, friends and leadership. It’s a chance to find lessons and learn from mistakes.
9. How do you measure your performance?
Tanvir A Mishuk: I believe in setting goals and striving to achieve those. A goal is a dream with a deadline — it needs to be accomplished within that timeframe. I think we are on the right track to achieving our goals.
Our initial goal was to bring momentum to financial inclusion, and we have succeeded a fair bit. I hope that the inclusion number will be very satisfactory within a short time. Our second goal was to ensure digital service through digital payment facilities, which we are doing now. Currently, BDT 10 billion ($120 million) is transacted in a day on an average through Nagad. Our platform already allows all bill payments, which was a hassle before as it needed going to a bank branch and standing in a queue. We have already digitalised government disbursement. So far, the government has distributed about BDT 120 billion ($1.40 billion) under safety net schemes to about 35 million people.
Our next target is to establish a digital bank by this year and increase the daily transaction volume by a few more times by ensuring digital payment facilities everywhere.