US Market Entry Strategy

1. US Market Entry
Strategy forTouchtech
Payments
UCD Michael Smurfit Graduate Business School
Full-time Master of Business Administration

2. Agenda
 Introduction
 Project Scope
 Industry Analysis
 Customer Segmentation
 Market Entry Strategy
 Challenges to Internationalisation
 Recommendations

3. Introduction
International market entry strategy for
Touchtech
Academic frameworks to frame
understanding
Segmented a market of 12,000+ institutions
We produced a shortlist institutions
Gained first-hand information from key
decision makers in US financial institutions.
12,000+ Financial Institutions

4. ProjectScope
Phase 1: Business Model Analysis
 Understanding howTouchtech compete in
the market
Phase 2: Market Analysis
 Detailed analysis of US market
Phase 3: Academic Literature Review
 Focused literature review on best practice
for start-ups, internationalisation, and
growing & scaling an organisation

5. ProjectScope
Phase 4: Researching Potential Customers
 Starting at a high level with 12,000+
institutions
 Complete list of high level potential targets
 Deep dive and shortlisting of the highest
potential customers
Phase 5: Market Entry Strategy
 A guideline forTouchtech
Outline the risks involved, key contacts,
and estimated required resources

6. IndustryAnalysis
US Market Entry Strategy forTouchtech Payments

7. Industry
Analysis
 High degree of competition
Authentication market
 No preference of end-users
 Access to distribution network Reliance on partnerships
 Intricate selling process

8. Industry
Analysis
 12000+ Banks and CUs
 Role of new government
 Geographical distance
 Credit Union v/s Banks
US Market Analysis

9. Industry
Analysis
MobileWallets3D Secure
ShoppingTransactions Large scale identity management
solutions
Competitor Categories

10. Industry
Analysis
Product offeringLow High
Maturityofproduct/BrandEquityLowHigh
Competitor Diversity

11. Customer
Segmentation
US Market Entry Strategy forTouchtech Payments

12. Customer
Segmentation
US Banks & Credit Unions

13. Customer
Segmentation
US Banks & Credit Unions

14. Customer
Segmentation
Banks

15. Customer
Segmentation
Banks: Segmentation Method
US Banks Group 1 Group 2 Group 3
Asset Size > $100 bn < $100 bn, > $2bn < $2 bn
1. Assets:

16. Customer
Segmentation
Banks: Segmentation Method
US Banks Group 1 Group 2 Group 3
Asset Size > $100 bn < $100 bn, > $2bn < $2 bn
1. Assets:
2. Demographics:
US Banks Group 1 Group 2 Group 3
Population Under 18 18 – 35 yr Over 35 yr

17. Customer
Segmentation
Banks: Segmentation Method
US Banks Group 1 Group 2 Group 3
Asset Size > $100 bn < $100 bn, > $2bn < $2 bn
1. Assets:
2. Demographics:
3. Geographical:
 Identified banking clusters
US Banks Group 1 Group 2 Group 3
Population Under 18 18 – 35 yr Over 35 yr

18. Customer
Segmentation
Banks: $2b - $100b Assets

19. Customer
Segmentation
Banks: Assets & Demographics (18-35)

20. Customer
Segmentation
Banks: Assets, Demos & Clusters

21. Customer
Segmentation
Credit Unions

22. Customer
Segmentation
Credit Unions: Segmentation Method
US Credit Unions Group 1 Group 2
Asset Size > $2bn < $2 bn
1. Assets:Top 100

23. Customer
Segmentation
Credit Unions: Segmentation Method
US Credit Unions Group 1 Group 2
Asset Size > $2bn < $2 bn
1. Assets:Top 100
2. Members:Top 100
3. Branches:Top 100
US Credit Unions Group 1 Group 2
No. of Members > 150,000 < 150,000
US Credit Unions Group 1 Group 2
No. of Branches > 20 < 20

24. Customer
Segmentation
Credit Unions:Top 100 by Assets

25. Customer
Segmentation
Credit Unions:Top 100 by Members

26. Customer
Segmentation
Credit Unions:Top 100 by Branches

27. Customer
Segmentation
Credit Unions: Common 37

28. Customer
Segmentation
1. Strong retail / personal banking section?
2. Technology focused strategy?
3. Online banking capability?
4. Mobile banking capability?
5. Active on social media?
6. Decreased its number of branches over the past five
years?
7. Customer focused strategy?
8. Customer complaints re login / payment systems?
9. Has new management / CEO been appointed?
Banks & Credit Unions: Shallow Dive

29. Customer
Segmentation
1. How user friendly is their login platform?
2. How bad are the reviews of their payment / login
systems?
3. Do they currently offerApple Pay / Android Pay /
mobile wallet or any other payment system?
4. Do they currently use aTouch ID technology or any
other biometric technology?
5. What is the reason for the % change in branch
numbers (if any) over the past 5 years?
6. Do they have a digital development program in
place?
Banks & Credit Unions: Deep Dive

30. Customer
Segmentation
Final List : Banks & Credit Unions

31. Market EntryStrategy
US Market Entry Strategy forTouchtech Payments

32. EntryStrategy
Touchtech
US Market Entry
None of which can be viewed in isolation
Entry Strategy comprises of four elements -

33. Formulate a clear mission and vision statement prior to
entering the USAStrategy
Mission: Why we exist?
Vision: What future we want to create?
Mission andVision

34. Strategy
Where to locate?
- NewYork
Which market to tackle?
- East coast Banks
- Nationwide Credit Unions
 What isTouchtech’s product offering?
- Explore and establish quickly
Structure, Geography and Focus

35. Finance
 Ensure sufficient resources for market entry 2+ years
 Establish and affirm cost structure prior to internationalisation.
Understanding costs means you
understand your product’s price point
Costs and Financing

36. Operations
Don’t get spread too thin?
 Increased risk of failure by entering multiple geographies
simultaneously
Personnel
 Establish the right team
 Senior US marketing and sales personnel with strong network
connections
 Junior US personnel
 Original / founding Irish personnel
 Desired founding culture is embedded from initiation
 Original / founding Irish personnel
 continuity of desired standards and expectations – mission and
vision
 Senior management support is imperative during entry phase
 strongest team members must be available to support market entry
 Leverage Enterprise Ireland’s industry networks as part of the marketing
plan
Resources Critical for Success

37. Operations
 Things to know
 Human resources - critical differentiators between success and
failure.
 A key reason cited for market entry failure was shortcomings in
personnel and support structures for the market entry
programme.
 Human resources management costs are high and can be a
barrier to entry.
 Structural barriers, bureaucratic barriers and cost barriers are low
e.g. US company ex-Delaware can be established in three days
 Post establishment professional service costs are considerably
higher than that of Europe e.g. accountancy, legal services
Resources Critical for Success

38. Operations
 Understand the procurement processes of your clients
 Procurement processes for some tier 2 banks and large credit
unions will be well-defined, involving multiple business units
evaluating the new technologies.
 Example: Mountain America FCU’s Chief Risk Officer. (Information
acquired through interview at recent CU conference, Belfast)
 CUSO’s (Credit Union Service Organisations)
IT Dept.
Risk
Officer
Procure
ment
Team
Finance
Officer
Legal
Officer
CEO
Procurement Process

39. Marketing
 Crucial to attend industry trade shows to gather first hand data
No amount of secondary research can
replace primary, in-person research!
 Attending tradeshows needs to be a disciplined process.
 Establishing contact and pre-arranging meetings
 Information gathered and managed in a dedicated report format
 Accessible and visible to all marketing and sales personnel
 UtiliseCRM software to manage process – make it a discipline
 Develop marketing materials based on customer feedback
 Exhibiting at trade shows
 Expensive - $10,000 to $40,000
Marketing Process for the US

40. Challenges of
Internationalisation
US Market Entry Strategy forTouchtech Payments

41. Challenges
 Lucrative returns possible but face an uphill challenge
 Attitude to risk from Organisation
 Previously un-encountered Barriers-
1. Knowledge
2. Resources
3. Regulations
Challenges of Internationalisation

42. Challenges
1) Lack of Information
Barriers to information
Limited information
Unreliable information
Ability to identify opportunities
2) New norms of doing business
3) “Outsidership”
Breaking into new markets
Resistance
Liability of Smallness
Challenge 1: Knowledge

43. Challenges
1. Not just …..Although it is Essential
2. Scaling and the experience curve
3. Personnel
4. Networks
$$$
Challenge 2: Resources

44. Challenges
1. Dodd Frank Act 2010
2. Regulation driving Institution consolidation
3. Regulation compliance driving IT uptake
4. Regulation fear of jumping ahead of the curve
Challenge 3: Regulation

45. Recommendations
US Market Entry Strategy forTouchtech Payments

46. Recommendations
Strategy
Finance
Operations
Marketing
• Mission andVision
• Geography
• Focus
• Funding
• Costs
• Logistics
• Human Resources
• Procurement
• Customer Database and Learn!
• Banks AND Credit unions
• Trade Shows
Roadmap forward for Touchtech

47. The Sky is the Limit