IIM INDORE

Team Name

Republic of IIM-I

Registration Number

REG00436

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 e-

commerce 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.

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EXECUTIVE SUMMARY

Creating robust ecosystem around

wearable banking and contactless

technology & Community platform

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.

MoneyForward is an integrated

personal finance solution. It aggregates

all finance tool on a single dashboard.

It digitalizes the card in the Apple product

which makes it contactless payment getaway.

It provides escrow service, in which

consumers can verify whether they are

happy with goods they have bought

before releasing money to the seller.

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.

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.

Innovations in Banks & Non-Banks Globally

Small innovative solution of mobile card swiping

technology which is alternative to POS Machine

PayPal

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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.

Moven spending meter (Smart

visualization of personal financial spendingcapacity), Instant Receipt (Customer

feedback and an infodashboard), Automatic Categorization, Smart

transfer & Social Media integration.

Bitcoins trading platform with secure and

quick ripple protocol technology

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.

Growth

Market

Share (In respective

Markets)

Valuation (million)

Customer

Base (million)

Transaction

Volume (million)

No of

Transaction (Billion)

Final

Ranking

Paypal 11% 49.30% 40000 169 228000 1100 2

Applepay 80% 1.70% 1700 1.1 762 4.3 6

M-Pesa 43% 16.00% 4000 12.2 910 730 4

Moven 17% 0.40% 50 5 71 16.3 8

Transferwise 20% 2.00% 1000 0.7 1000 2.1 7

Money forward 38% 1.00% 50 0.2 52 0.74 11

Nimble 49% 0.60% 50 0.5 37 0.7 10

Paytm 300% 52.00% 1800 50 720 180 3

Alipay 40% 48.50% 60000 350 150000 28800 1

Square 38% 10.00% 5000 2.13 4000 7.1 5

M-Swipe 72% 0.78% 120 0.25 12 0.8 9

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!

Parameters Foreign Banks

Indian Banks

Customization High Low

Technology Adoption High Medium

Social Media Integration High Low

Personal Financial Management Tool High Low

Business Intelligence/Analytics High Low

M-Banking High Medium

Innovation High Medium

Service Quality High High

Expanding market

shares/region

Compliance with

regulatory

requirements

Inform and educate

Cost Cutting by

reducing

administrative staffs.

Benchmarking of Indian and top foreign banks strategy in digital banking space

for customer engagement

Colour Coding

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To quantify the success rate of these innovations we have built a heat map based on various parameters

6

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.

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

banks and non-banks

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Innovations

banks and non-banks

Welcome to PBoI 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.

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.

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Innovation Roadmap

banks and non-banks

Business Outcome

Sp

he

re o

f In

no

va

tio

n

Heightened Customer Engagement Quantum leap in Customer Acquisition

Comprehensive M-

banking (Dashboard

Management System &

Integrated Financial

Management Tool)

Dashboard Management and Integrated financial tool platform will draw attention from young users

One stop solutions for customers will gather more traffic

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 and

Predictive models

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

Data Analytics will improve the

conversion rate of customers, thus

helping in customer acquisition

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Strategic Framework

banks and non-banks

Budget Allocation

banks and non-banks

APPENDIX

200

450

2012 2020

Potential Digital bankers in India (in mn)The heat map below details the current maturity state of some key departments in Indian

banks.

Capability is at nascent stage

Developed Stage Moderate Stage

90%

10%

Composition of transactions in Indian Economy

Cash and Cheque Electronic Transactions

*Source:- RBI Report

162224

304386

467550

625388

389

364

332291

243195

0

100

200

300

400

500

600

700

800

900

FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20

343 387434 477

525577 629

No. of smart phone users No. of non-smart phone users

No. of Actuve Accounts

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-25-

million-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