cc 052 siddharthdas paymentbank1

7/25/2019 CC 052 SiddharthDas PaymentBank1

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CASE: PAYMENTBANK

LIVE PROJE

NA

EMAIL: !""!""


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M*-!#-!*O)-!

#"-!*

L!-,#-,,!

D#-#)*'')-!*

R%,!*

#)-*,A#'!

C'-,A#'!

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PAMENT BAN: NAT;RE O B;SINESS

The . *)-!of setting up a Payments Bank is to furtherthe cause of nancia incusion to sma !usinesses" o#$incomehouseho%s" migrant a!our #orkforce" an% other unorgani&e%entities

The -!-! '!%!' to set up a Payments Bank incu%e e'istingnon$!ank pre$pai% instrument issuers( NB)CS" mo!ie teephonecompanies" supermarket chains" A promoter* promoter group canha+e a ,- #ith an e'isting sche%ue% commercia !ank to set up aPayments Bank

C# #))

COMPARISON O VALPROPOSITION

DIRHAM BAN

)ocus on CASA"oans" insurancean% in+estments

)oo#s Brickan% Mortar;Branch< centric%istri!utionmo%e

)ocus on acustomersegments $ retai"MSMEs an%corporate

PA

M)acprtr

)!a

)inun!athm

P#&- B#. +# -+


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CHALLENGES ROM PAMENT BANS

CHALLENGES ROM E@ISTING COMMERCIALBANS

Low-cost savings accounts:Payment banks will take cheap deposits away from the commercial

banking system, which will increase competition for deposits, but

also slim down net interest margins.

Easy transfer of money:Payment Banks while targeting the unbanked / migrants offer easy

virtually movement of currencies with the adoption of technology

Expanding to Semi-urban areas:

Commercial banks are increasingly making tie-ups with payment

banks and epanding to semi-urban areas which is a key market for

payment banks

Leveraging existing distribution Network

!everaging the eisting distribution network and infrastructure,

ability to implement lean banking platforms and digital initiatives to

increase there customer base

CASA gro#th +aue %ecining in commerciaur!an area


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P-,#-!* '' *?!-!% >#)!#'

,!)

I"!# 2013S*,): D'*!--

A#'!

Num!er of peope #ith !ankaccounts =per ;33>

4?

Num!er of !ank !ranches=per 2 akh>

22

Num!er of ATMs =per 28akh>

220@

PoS Terminas =per miion> ?@Tota Car%s =per ;333> ?0

L#). *? >#)!#'' !#' ! &*"' -* , -+ B*--*& *? -+ P,#&!" ),*!" * *,-!-

Sourc

D 8ife .nsurance annua premium scroreAnnua 9ro#th: 23$25!> Mutua )un%s: 1s 4@"333 croreCommission: 2$45

MARET SI

E'ten% in+estment an% insurance B! &*"')*!",#-!*:)ocus on un!anke% an% un%er$!anke% customersE'tensi+e reach in rura areaspro%ucts

Source: 1B.

GAPS OPPORT;NITIES


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POTENTIAL TIE ;PS OR DIRHAM BB#. !*'&-

Digh

8o#

O


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CHALLENGES IN GENERATING REVEN;E:"hree-#uarters of the deposits they get will have to be invested in government

securities

"he rest will be deposited in a scheduled commercial bank $for easy li#uidity%.Payments banks cannot give loans and therefore, cannot earn any revenue from the

interest spread between loans and deposits.

Payments banks will earn interest on deposits in government securities and will

definitely pass this on to their customers to attract customer. &'(C' ('"

)("*'+" *)( )!! B' !0

SOL;TION

Last mile connectivity, wide reach and large volume of transactions

"hey will have to rely mostly on fees from remittances and services such as utility

payments or mobile top-ups

bility to generate transaction volumes, having a business structure smart on

technology

SCOPE O REVEN;E GE

POSSIBLE BENEITS

Interest arbitrage1

Payment Banks will offer interest rates

with other banks and government depo

ransaction costs !fees"

lot of services which are free of cos

charged in the payment banks as a cha

#ross selling "

Commercial banks providing payment

investment and insurance products so t

ELE#$% &'$(I)E

obile phone and e-wal

*each unbanked users a

segments

'E*IL #+*IN $+uper

'stablished trust with co

"arget higher economic

HIGH VOL;ME=LO MARGIN


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CONCERNS ROM LO INCOMEGRO;PS

PAMENT BANS ILL ESSENTIALL BE TECHNOLOG=DRIVEN TO PROVIDE LAST=M

)nability to transact due to network/service downtime)nade#uate data privacy and protection

'EI'E%EN. &ayments banks have to be

digital at core

Poor customer recourse for grievances and #ueries6ser interfaces that many find comple and confusing

'EI'E%EN. &hysical branches need to

complement digital banking

ONCERNS ROM COMMERCIAL BANS

argin is low in this business model

'EI'E%EN. he payment bank model could

be viable if technology is used to bring down costs

RONT ENDT')*&

P,*!",>

MIDDLEARE D#-#A#'-!)

BAC ENDC*&&,)!

#' B#.

Technoogy

Patform

8ast mie

connecti+ity

API

API

C-*&, I-''!%

CORE BANING

TECHNOLOG CAN ACILITATE A ASENVIRONMENT

gile technology can provide:*eal time seamless data across chann7ast and resilient transactions"rust among the customers


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TDANK YH

cc 052 siddharthdas paymentbank1

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