A concept note       by Neel Majumdar   l       d                  1
Concept  The concept   • Start an electronic bill payment company in India that would be a white      labelled electronic ...
Concept  H It W ld W k  How It Would Work                      3
Concept  The types of payments enabled by  The types of payments enabled by   EasyBillPay     Phase 1A          Retail (co...
Concept Rationale  The changing landscape in Indian  The changing landscape in Indian   banking   Indian banks currently u...
Concept RationaleA key trend: the changed environment     y                gfavors increased outsourcing by the banks    •...
Concept RationaleThe mix of services outsourced is movingThe mix of services outsourced is moving up the value chain      ...
Concept Rationale  Some Recent Examples in Outsourcing of   Value Added Services                    Value Added Services O...
Concept Rationale  Another key trend: wealth creation in                y  cities Tier III and below      Rural Sector    ...
Concept RationaleRegional rural banks and rural cooperative b k       ld b         l        d     bbanks could be major pl...
Concept Rationale  While there are significant challenges to                     g                g  using RRBs and rural ...
Concept Rationale   RBI’s and NABARD’s actions are  …RBI s and NABARD s actions are   expected to overcome these challenge...
Concept Rationale  All of the environmental factors  All of the environmental factors   converge to make our concept viabl...
Concept Rationale  B siness Model  Business Model      Consolidator/Aggregator revenue models          Banks             F...
Competition  Existing Competitive Landscape   So, does this concept have competition?   It sure does.   2 primary electron...
Competition  Techprocess   Let’s look at Techprocess first and its footprint.   • 9 banks, 75 billers       –   ICICI Bank...
Competition  Billdesk      Billdesk Banking Clients          40 banks                        June 2008 data               ...
Why we will win  So why will we win (or what makes our  So, why will we win (or what makes our   concept different)   Razo...
Team           Founder CV           Founder CV                                                                            ...
Team  Advisors       Sunil Nair, CFO, Asia‐Pacific, Euronet India       Dilip Asbe, CTO, Prizm Payment Services       Rake...
Thank You!Contact:Neel MajumdarEmail: neel.majumdar@gmail.comMobile: 09830381643                                        21
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Easybillpay v3 [compatibility mode]

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Attaching a Concept Note on a Payments-related Entrepreneurial Idea I had 4 years ago when I was in India. Although a lot has since changed, some trends forecast in the concept note have actually become reality - especially the emergence of Co-operative Banks as a crucial channel for reaching underbanked & unbanked population in the rural areas. Thus, the material may still be somewhat pertinent today. Opening it up for any entrepreneur or Entity interested in the Payments area, especially in India- with possible applications in other Emerging economies as well. Enjoy and feel free to re-use

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Easybillpay v3 [compatibility mode]

  1. 1. A concept note  by Neel Majumdar l d 1
  2. 2. Concept The concept • Start an electronic bill payment company in India that would be a white  labelled electronic payments provider to the RRBs, the coop banks and  the Tier 2 and Tier 3 banks • Competitive differentiation – Totally focused on the Tier 2 & Tier 3 banks, RRBs and District Central  Cooperative Banks (DCCBs) and Urban Cooperative Banks (UCBs) – Less expensive – L Less complex to implement   l    i l – Flexible and modular – Externally hosted – Pay as you go – Very little customization but serve all basic needs of banks, including  Tier 1 customer service – Will utilize mobile and kiosk based payments as critical channels to  serve customers of banks Tier 3 and below 2
  3. 3. Concept H It W ld W k How It Would Work 3
  4. 4. Concept The types of payments enabled by The types of payments enabled by  EasyBillPay Phase 1A Retail (consumer) bill payments Utility bills – electricity, phone, water, sewage, solid waste  l b ll l h ld (where applicable), financial services payables, mobile phone  bills and top ups, various government license fees, tax  payments Phase 1B Payments to housing societies, schools, universities Phase 2 Corporate to Corporate Payments 4
  5. 5. Concept Rationale The changing landscape in Indian The changing landscape in Indian  banking Indian banks currently under tremendous pressure due  to: Global financial meltdown and recession o Profit margin under pressure due to decrease in credit  off‐take and increase in NPAs o Management and operational focus on core areas of  lending , deposit‐taking and managing credit risk A changing regulatory environment Rapid technological advancements Heightened competition and consolidation g p 5
  6. 6. Concept RationaleA key trend: the changed environment  y gfavors increased outsourcing by the banks  • Changing landscape in the banking industry is driving  banks to explore the outsourcing option to achieve  efficiencies. • Total opportunity for outsourcing in the domestic  banking sector estimated at Rs. 11.2 b for FY08.  (source: Valuenotes J l   (  V l July 2008  8  http://www.sourcingnotes.com/content/view/352/55/) – Little over one‐third of this opportunity currently being  pp y y g met.  – Majority of revenues earned from voice‐based services in  sales and marketing.  sales and marketing   6
  7. 7. Concept RationaleThe mix of services outsourced is movingThe mix of services outsourced is moving up the value chain Current Future Outsourced services generally simple  Moving toward outsourcing more value  and do not require domain expertise in  d d   t  i  d i   ti  i   added services to quickly bring new  dd d  i  t   i kl  b i     banking products to the market and rapidly scale  o Entry level services like data entry,  up across locations.  digitization, data preparation and  o Bill payments, Mobile banking, Inbound  validation etc.  Remittances, Tax Payments, Insurance  o Al   l   d  Also, sales and marketing activities like  k i   i i i  lik   Payments, D‐mat facility, Market updates  P t  D t f ilit  M k t  d t   loyalty programs, outbound sales and  etc. inbound customer support As the banking industry matures in its  A majority of the vendors primarily  outsourcing initiative, demand for  provide voice‐based CRM services to  quality value added services is likely to  large banks. These vendors include large  l  b k  Th   d  i l d  l   gain prominence in the long term.   i   i  i  th  l  t    international BPOs (like IBM‐Daksh,  (Valuenotes July 2008) MphasiS, etc.), BPOs with substantial  focus on domestic market (like  InfoVision, Intelenet, etc.).  7
  8. 8. Concept Rationale Some Recent Examples in Outsourcing of  Value Added Services Value Added Services Outsourced Value‐ Added Services Banks outsourcing these services Electronic Bill Payments  HDFC, Citibank, ABN Amro, State Bank  of India, Punjab National Bank, Bank of  India, IDBI Bank, Central Bank of India,  India  IDBI Bank  Central Bank of India   Union Bank, Syndicate Bank, Corporation  Bank, Kotak Mahindra Bank, ING Vysya Bank, Centurion Bank, Dena Bank, Bank  of Baroda ATM Outsourcing ICICI, Corporation Bank, HDFC Self ‐ Self  Bank  ING Vyasa Bank  8
  9. 9. Concept Rationale Another key trend: wealth creation in  y cities Tier III and below Rural Sector o Roughly 70% of India’s 1.145 billion population live in 6,27,000 villages o Not just witnessing increase in income but also in consumption and production o According to a McKinsey survey (2007), in another 20 years rural India is: g y y y Poised to grow bigger than the total consumer market in South Korea or Canada Anticipated to grow almost four times from its estimated size of US$ 577 billion in  2007 o The urban‐retail split in consumer spending stands at 9:11, with rural India accounting  for 55 per cent of private retail consumption. (India Retail Report 2009—by Images FR  f       t  f  i t   t il  ti  (I di  R t il R t  b  I  FR  Research) o The total number of rural households is expected to rise to 153 million in 2009‐10 from  135 million in 2001‐02, suggesting a huge market.  Tier II and Tier III cities o Factors like urbanisation, dual income family units, the growing trend of nuclear family  and a fast‐paced lifestyle continue to boost growth o PC consumption grew 16% in top 4 metros compared to same period last year and 24%  in next 4 metros o The rest of India posted a year‐on‐year growth of 55%. (MAIT‐IMRB mid‐year review of  the IT industry’s performance in 2005‐06) 9
  10. 10. Concept RationaleRegional rural banks and rural cooperative b k ld b l d bbanks could be major players in distributing  gand accessing this wealth Rural India boasts of a significant financial network: 88 regional rural banks (RRBs) covering 525 districts with a  g ( ) g5 5 network of 14,494 branches (31 March 2006) 3 tier Short term cooperative credit structure consisting of:  o Nearly 1.09 lakh Primary Agricultural Credit Societies (PACS),  l l kh l l d ( ) 368 District Central Cooperative Banks (DCCB) with 12,858  branches and 30 State Cooperative Banks (SCB) with 953  branches or a total of 122,590 service outlets.  b h       l  f    i   l   o On an average, there is one PACS for every 6 villages o Total membership in PACS of more than 120 million rural people  p p p making it one of the largest rural financial systems in the world. 10
  11. 11. Concept Rationale While there are significant challenges to  g g using RRBs and rural coop banks as  distribution points….. distribution points Currently the RRBs and rural coop banks are  ineffective  as distribution points due to: Lack of a core banking system and other technological  enablers Poor quality of personnel that are not trained to handle  sophisticated systems p y 11
  12. 12. Concept Rationale RBI’s and NABARD’s actions are …RBI s and NABARD s actions are  expected to overcome these challenges  The RRBs and Coop banks are set to become more  sophisticated with RBI’s technology transformation  initiative for RRBs and NABARD s cooperative revival  initiative for RRBs and NABARD’s cooperative revival  and reforms programs Many of the RRBs and State and District Cooperative  Banks are expected to get computerized and connected  to core banking systems in the next 2 years Simultaneously, NABARD’s Financial Inclusion  l l ’ l l program should also result in technological innovation  through the Financial Inclusion Technology Fund  (FITF) 12
  13. 13. Concept Rationale All of the environmental factors All of the environmental factors  converge to make our concept viable Cost pressures driving  banks to outsource non‐ core functions Wealth creation in the  rural sector and Tier 2 and  Favorable condition for  Tier 3  towns outsourced electronic bill  payments by RRBs and  Cooperative Banks Computerisation in RRBs  and Cooperative banks Availability of mobile  and  A il bili   f  bil    d  kiosk banking & launch of  e‐governance initiatives 13
  14. 14. Concept Rationale B siness Model Business Model Consolidator/Aggregator revenue models Banks Fee per transaction Fixed fee per month/year Combination or either/or option p Alternate Channel Partners E‐Gov Channels Citizen Service Centers (CSCs) Tax and utility payments e‐chaupals Retail/Agent Channel Partners Per transaction revenues from retail agents from walk‐in  business b i Biller Direct revenue model  Direct hosting of biller bill pay sites (e.g. MTNL, BSNL  etc.) etc ) Revenue per transaction 14
  15. 15. Competition Existing Competitive Landscape So, does this concept have competition? It sure does. 2 primary electronic bill payment service providers  serving the domestic market: • T h Techprocess (f (formerly BillJunction) l  BillJ i ) • Billdesk 15
  16. 16. Competition Techprocess Let’s look at Techprocess first and its footprint. • 9 banks, 75 billers – ICICI Bank – Standard Chartered Bank – HSBC – Axis Bank s a – Greater Mumbai Cooperative Bank – Saraswat Cooperative Bank  – The Shamrao Vithal BANK – Mandvi Bank – Karnataka Bank Ltd. 16
  17. 17. Competition Billdesk Billdesk Banking Clients 40 banks June 2008 data June 2008 data 200 billers 17
  18. 18. Why we will win So why will we win (or what makes our So, why will we win (or what makes our  concept different) Razor‐edged focus on Tier 2 banks and below Focus on simplicity Only offer hosted option Tie up with channels that are most likely to be used by the end users of our  target banks o Kiosks (Integrate with SREI Sahaj kiosks in West Bengal  Citizen Service  Kiosks (Integrate with SREI Sahaj kiosks in West Bengal, Citizen Service  Centers, partner with e‐governance initiatives) o Banking Correspondents o M bil   d h dh ld d i Mobile and handheld devices Eventually, the same flexible infrastructure can be used to facilitate B2B  payments 18
  19. 19. Team Founder CV Founder CV Tel: +91 33 2341 3090 Mobile: +91 98 30381643 Neel Majumdar neel.majumdar@in.pwc.com Relevant experience • Neel is a Banking and Payments Subject Matter Expert (SME) and currently employed as a Managing Consultant in the Performance Improvement practice of PricewaterhouseCoopers India (PwC). Neel holds a Bachelor’s Degree in Civil Engineering from Jadavpur University, Master of Civil Engineering from North Carolina State University, Raleigh, USA, and an MBA from Carnegie Mellon University.Neel has extensive  •N l h   i   Neel is the N l i th BFSI domain lead for the IT-Effectiveness Practice. N l also represents P C at th M bil d i l d f th IT Eff ti P ti Neel l t PwC t the Mobileexperience working  Payments Forum of India (MPFI).for both  • Neel has more than 10 years of experience in consulting, project management, opportunity assessment andmultinational  management of new products, strategic business development and management of strategic initiatives thatfinancial services  have an enterprise wide impact enterprise-wide impact.companies and banks in North  • Prior to joining PwC, Neel used to work for Bank of America as Vice President, Enterprise Payments Strategy,America and in  where he was responsible for the creation, development, execution, and supervision of the Bank’s enterprise-Financial Srvices  wide payments strategy across credit cards, debit cards, checks, Automated Clearing House (ACH) payments,Consulting &  online banking and electronic remittances, covering both retail and wholesale sides of the bank. He also servedBusiness  as an SME in emerging payment instruments including Internet Protocol-based payment technologies, mobileDevelopment in the  payments, decoupled debit cards, and web-based consumer payments instruments.Indian  • As part of his role, Neel represented Bank of America in various payments industry bodies. These include: a)Subcontinent "The Mobile Payments Steering Committee" of the Strategic Payments Forum at The Clearing House Payments Company, b) Council for Electronic Billing and Payment (CEBP) of NACHA. • .Prior to this, Neel had worked with Checkfree Corporation (recently acquired by Fiserv), an industry leader in Electronic Payments and Financial E-Commerce, as a Product Strategist and Senior Product Manager. 19
  20. 20. Team Advisors Sunil Nair, CFO, Asia‐Pacific, Euronet India Dilip Asbe, CTO, Prizm Payment Services Rakesh Mahaptra, Founder & CEO, Bimamall, ex‐VP,  Bancassurance, Bajaj Allianz Insurance 20
  21. 21. Thank You!Contact:Neel MajumdarEmail: neel.majumdar@gmail.comMobile: 09830381643 21

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