Team Name

Republic of IIM-I
Registration Number
REG00436

IIM INDORE

IIM INDORE

EXECUTIVE SUMMARY

PBoI is one of the fastest growing banks in India. Aimed at digitalization to ride the growth curve, it is extremely focused on developing a strategy to
enter into the digital segment. To trace the path of innovation followed by various institutions, we studied some innovations undertaken by them.
Among these figured major banking innovations from Fidor Bank AG, Caixa Bank etc. Non-banking innovations shared a major chunk with innovations
like Paypal, Moven, M-swipe, Transferwise etc. A detailed analysis of these innovations based on their customer base, growth prospects, market share,
valuation etc. have been carried out in the document. The path ahead for PBoI is full of opportunities and challenges. Rising use of mobile banking and ecommerce companies offer great opportunities in the years to come. However, lower regulatory bounds on non-banking institutions have led to their
increasing growth which is a potential challenge to face ahead. On benchmarking strategies of Indian banks against foreign institutions, it appears that
foreign institutions tend to outperform in terms of technology adoption, customization, social media integration, business intelligence and service
quality.
A strategic roadmap has also been designed for the PBoI over the course of next 5 to 6 years. PBoI is suggested to invest in IT infrastructure for
developing its capabilities to target a larger customer base. New services like Dashboard Management, and Integration of financial tools on a single
platform are also suggested with their respective budgets and timelines.

IIM INDORE

Innovations in Banks & Non-Banks Globally

PayPal
Online payment, performing payment processing
for online vendors, auction sites and other
commercial users using mobile phone number,
PayPal PIN & card swiping technology attached to
the digital wallet.

Square is a financial services, merchant

services aggregator and mobile payment
gateway. It offers services like Square
register, Square cash, Square capital, Caviar
& Square payroll.

Moven spending meter (Smart

visualization of personal financial spending
capacity), Instant Receipt (Customer
feedback and an infodashboard),
Automatic Categorization, Smart
transfer & Social Media integration.

TransferWise is an online FX Transfer Service. It

has features like, Websiteembedded paylinks,
CallCentre and a very smart and aggressive
referral program and welcomegifts & transferring
money crossborder.

Nimble has made borrowing simple, fast &

stress-free. It finances small loans within 60
minutes of application to private individual.
It works as a pay-day loan provider.

It provides escrow service, in which

consumers can verify whether they are
happy with goods they have bought
before releasing money to the seller.

Bitcoins trading platform with secure and

quick ripple protocol technology

Creating robust ecosystem around

wearable banking and contactless
technology & Community platform

Hello bank of BNP Paribas has created Hello Pay

with wide range of products like, current account,
saving accounts, mortgage, credit, trading, and
insurances on single platform.

Small innovative solution of mobile card swiping

technology which is alternative to POS Machine

It digitalizes the card in the Apple product

which makes it contactless payment getaway.

MoneyForward is an integrated
personal finance solution. It aggregates
all finance tool on a single dashboard.

IIM INDORE

To quantify the success rate of these innovations we have built a heat map based on various parameters
Based on the parameters that we chose
to rank various innovations, Alipay,
Paypal, Paytm and M-pesa figured
among the top rank owing to their
higher growth prospects, rising market
share and modest customer base.
Moreover, number of transactions by
volume have picked up well for these
services. On the other hand, services like
Moven, M-swipe, Nimble etc. are
struggling to gather transaction volume
and customer base. Though, they might
have substantial growth opportunities
but their current market share is meager
(barely 1%). Other innovations like
Applepay, Square, Transferwise etc. are
doing fairly well in their respective
segments and are likely to rise in near
future!

Growth
Paypal
Applepay
M-Pesa
Moven
Transferwise
Money forward
Nimble
Paytm
Alipay
Square
M-Swipe

11%
80%
43%
17%
20%
38%
49%
300%
40%
38%
72%

Market
Share (In

Valuation

respective
Markets)

(million)

49.30%
1.70%
16.00%
0.40%
2.00%
1.00%
0.60%
52.00%
48.50%
10.00%
0.78%

40000
1700
4000
50
1000
50
50
1800
60000
5000
120

No of
Customer Transaction
Volume
Transaction
Base (million)
169
1.1
12.2
5
0.7
0.2
0.5
50
350
2.13
0.25

(million)

(Billion)

228000
762
910
71
1000
52
37
720
150000
4000
12

1100
4.3
730
16.3
2.1
0.74
0.7
180
28800
7.1
0.8

Colour Coding

Benchmarking of Indian and top foreign banks strategy in digital banking space
for customer engagement
Parameters

Foreign
Banks

Indian
Banks

Customization
Technology Adoption
Social Media Integration
Personal Financial Management Tool
Business Intelligence/Analytics
M-Banking
Innovation
Service Quality

High
High
High
High
High
High
High
High

Low
Medium
Low
Low
Low
Medium
Medium
High

Final
Ranking
2
6
4
8
7
11
10
3
1
5
9

IIM INDORE

Possible challenges or opportunities for PBoI in the digital banking segment from banks and non-banks
banks and6non-banks

Opportunities
Partnerships with businesses like e-commerce
Partnering with e-commerce businesses will offer great incentives for PBoI in terms of regularity of transactions, volume and number of transactions.
With e-commerce business riding the growth curve, banks partnership with these platforms will promote their growth as well. However, some of the
non-banking business (like-Paytm, PayPal etc.) have already started taking advantages of this and this is the right time that progressive banks like PBoI
should pitch in.

Leveraging on technical support of other businesses

Banks can leverage upon technical support offered by small players. Sometimes, mergers, acquisitions and partnerships might also work. This model of
growth has been followed by several foreign banks like Wells Fargo etc. For instance, M-swipe can be a great substitute to POS machines used at various
locations. In order to leverage upon the technology of such platforms, PBoI can either partner with these platforms or acquire them. For example, PBoI
can use technology of M-swipe where they do not have POS machines or at places where it is infeasible to use POS machines.

Integration with social media

Social media offers a great opportunity to ride on their growth curve. Integrating products and services with social platforms will certainly boost growth
for the banks.

Challenges
Challenges from Banks
Increased attention paid to Digitalization of operations by major banks has led to
better services and increased customers and revenues for them. For instance, some
banks have launched mobile applications (like pockets from ICICI Bank) to transfer
most of their operations online. These aps are primarily to target young populations
which are more close to technology.

Challenges from Non-Banks

Non-Banking digital players enjoy some advantages over banks in terms of less regulatory
constraints, higher risk appetite and greater leeway from customers. Nonbank challengers
are operationally built for continuous innovation, and frequently upgrade their arsenal.
For example, PayPal has a sizeable group of dedicated antifraud professionals on close loop
solution.

IIM INDORE

Innovations
banks and non-banks

Welcome to PBoI

Innovation 1 Dashboard Management System

A Dashboard Management System is a tool that consolidates various
measures for a customer including details of monthly expenditures,
schedule of bill payments, budgets, saving and expenditure goals etc. on a
single platform. Dashboard management system basically provides
necessary information to a customer which guides him/her to plan future
courses of action (transactions). For instance, a user can make budget for a
month in a dashboard and then keep track of expenditures and the amount
of money left at different points in time. This product will be of immense
utility for young people with medium income levels.

Welcome to PBoI

Innovation 2 Integrated Personal Financial Management

Tools (IPFM)
One major requirement of working class population is personal
financial management tools which can simultaneously take
care of all the financial commitments of an individual. An
integrated platform that gives access to different services (like
Insurance policies, Pension Fund status, Provident Fund
Balance, Securities and Stocks etc.) enrolled by a user is the
need of the hour. IPFM is a platform designed to do exactly
this!! Using this innovative tool a user can know the status of
all the financial commitments in one go.

IIM INDORE

Innovation Roadmap
banks and non-banks

IIM INDORE

Strategic Framework
banks and non-banks

Business Outcome

Sphere of Innovation

Heightened Customer Engagement

Comprehensive Mbanking (Dashboard

Management System &
Integrated Financial
Management Tool)

Data Analytics and

Predictive models

Dashboard Management and Integrated financial tool

platform will draw attention from young users
One stop solutions for customers will gather more
traffic

Data can be analysed to identify trends, customer

usage behaviour and patterns.
The analysis will help us drive our future courses of
action for increasing customer engagement even
further

Budget Allocation

banks and non-banks

Quantum leap in Customer Acquisition

Target Customers Educated, Digitally

Savvy, young and working people

Base of Target Customers (no. of

smartphone users in India) 224 million
(2015) and 625 million (2020)

Target Customer growth rate 23%

annually (in Appendix)

Conversion Rate Estimate -10%

Data Analytics will improve the

conversion rate of customers, thus
helping in customer acquisition

APPENDIX

900

No. of smart phone users

800

No. of Actuve Accounts

195

700

Electronic Transactions

291
332

500

364

10%

389

200
162

434

387

343
224

629

577

388

300

100

Cash and Cheque

243

600

400

Composition of transactions in Indian

Economy

No. of non-smart phone users

477
386

304

525
467

550

625

90%

FY-14

FY-15

FY-16

FY-17

FY-18

FY-19

*Source:- RBI Report

FY-20

The heat map below details the current maturity state of some key departments in Indian
banks.

Potential Digital bankers in India (in mn)

450

200

2012
Capability is at nascent stage
Developed Stage

Moderate Stage

2020

References

1) McKinsey_Breakthrough_IT_banking Report 2013

2) PWC Report- Breakthrough Through Innovation
3) BCG DIGITAL Banking in India
4) Going Digital - The Banking Transformation Road Map_ATKearney Report
5) https://www.datanyze.com/market-share/payments/paypal-market-share
6) http://www.statista.com/statistics/277819/paypals-annual-mobile-payment-volume/
7) http://thefinancialbrand.com/37169/moven-mobile-banking-mobile-money/
8) http://www.paymentsjournal.com/Content/Featured_Stories/18541/
9) http://www.business-standard.com/article/companies/mswipe-technologies-closes-series-c-funding-of-25million-115072200168_1.html
10)

http://www.livemint.com/Industry/n6Y8UfUsTVP8NOQL3al2fJ/The-age-of-making-payments-with-

ease.html
11)

http://www.medianama.com/2015/07/223-mswipe-funding-25m/

12)

http://www.marketwatch.com/investing/stock/nmbl

13)

http://www.chinainternetwatch.com/tag/alipay/

14)

http://www.statista.com/topics/1211/online-payment-in-china/

15)

http://www.reuters.com/article/2015/06/06/us-apple-pay-idUSKBN0OL0CM20150606