VISA - Conversational Commerce
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The document proposes a strategic solution to leverage conversational commerce for electricity bill payments in India. The key strategic challenge is to acquire customers at lower cost. The proposed strategic move is to enable utility payments like electricity bill payments via SMS. This would create a blue ocean by targeting the large market of 525 million Indians with bank accounts and 590 million mobile users. The solution would have government support, build trust with consumers, and potentially generate over $100 million annually for Visa with just 10% adoption rate.
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VISA - Conversational Commerce
- 1. Team 1 Soumya Biswal I Shannta Badgett I Rupali Deshpande I Vaidhyaraman S. I Somyata Bhatia I Diluk Perera Conversational Commerce in India
- 2. Agenda • Background • Strategic challenge • Strategic solution • Insights and potential market • Stakeholders • Timeline • Conclusion
- 3. Background • Huge market potential (1.2 Billion Population) • Fastest growing economy • 86% cash transactions • Progressive government • Digital India initiative
- 4. Potential Red Ocean • Partner with Messaging Apps • Build App for merchants
- 5. Challenges For Adoption • Mindset • Security • Awareness • Trust • Regulation
- 6. Overarching Strategic Challenge Create competitive advantage and acquire customers into conversational commerce at a lower cost
- 7. Strategic Move – Blue Ocean • Utility Payments using Conversational Commerce • Electricity Bill Payment through SMS
- 9. Insights 525 Million Indian citizens hold bank account 590 Million unique mobile users Every week 100+ villages are getting electrified SMS alert for electricity bill Survey - 93% adoption rate for SMS payments
- 10. No. of people paying for electricity 634,798,484 Avg. electricity per family Rs.400 No. of families 105,799,747 Annual revenue for VISA Rs.1,015,677,574 Market Potential Total electricity payment in India Rs.42,319,898,927 Adoption rate 10% Monthly revenue for VISA Rs.84,639,798 Per transaction revenue 2%
- 11. Stakeholders Stakeholders Motivations Actions Impact Attributes Power Legitimacy Urgency Central/State Government Digitization Central initiative, Regulations Awareness, promotion High High High Banks Profit, Transactions Enable Changes Ease of transaction Low Medium Medium Reserve Bank of India (RBI) Reduce Corruption Regulations Faster implementation High High High Electricity Boards Ease of operation Establish process, Relationship Faster adoption Medium High Low Consumers Ease of payment Adopt Profit, Brand image High Low Low
- 12. 2016 2020 Today 2016 2017 2018 2019 2020 CEO meet Narendra Modi Pilot Mumbai Roll out to other metros Roll out for other utilities Start Development Roll out to district headquarters Expand to other States Timeline
- 13. Benefits for Visa • Competitive advantage • Government Support • Building trust & loyalty • Driver model for business expansion
- 14. Strategically leverage Prime Minister’s initiatives to establish a strong conversational commerce footprint in India Conclusion
- 15. Additional Slides Total population of India 12108549771.2B No access to electricity 304000000304M No of people having access to electricity 906854977 No of people receiving free electricity 272056493 No of people paying for electricity 634798484 No of families (6 per family) 105799747 Avg monthly electricity bill per family Rs 400 Total electricity payment in India Rs 42319898927 10% adoption rate Rs 4231989893 Monthly revenue for visa Rs 84639798 2% of total revenue Annually Rs 1015677574
Editor's Notes
- The Indian workforce will grow to 900 million strong by 2020 compared to the US which is the third largest in the world with approximately160 million people. "India Economy - GDP, Inflation, CPI and Interest Rate."FocusEconomics. N.p., n.d. Web. 11 May 2016. http://fortune.com/2016/04/08/india-economy/bn Higher income and education levels, allows for households to use alternative mediums of exchange other than cash. Where there is higher income and education levels, other mediums of exchange other than cash are used, plastic money (credit, debit and prepaid cards). "SMPTE October 2014 Cover 2." SMPTE Mot. Imag. J SMPTE Motion Imaging Journal 123.7 (2014): C2. Reasons and Titles to Using Cash in India. Fletcher, 2014. Web. 2016. Narendra Modi has been the Prime Minister of India since 2014 and has been progressive in his efforts to adopt new technologies and improve digital literacy. "Bright Outlook." Economic and Political Weekly 38.37 (2003): 3860-861. Web. 2016
- Red Ocean Looking at the potential solution for the conversational commerce VISA can look out for two main ways Partner with the messaging apps Build mobile application for use by merchents Visa has to definitely take one of these paths since there is a threat of competitor to take the business and the whole industry is changing. There is a huge potential that industry will change to a Red Ocean hence the competition has to create a early competitive advantage
- Lack of awareness on different digital and easier modes of payments Mindset about cash as a convenience method of payments and obsession about holding cash Bank regulations like payment gateways, One Time passwords for authentication makes it difficult for adoption Security is a concern since with plastic money the money and mode of payments is in control of third party (banks)
- The overarching strategic challenges is to how to create a early competitive advantage and acquire customers into conversational commerce at a lower cost
- Visa has to look out for a option of creating a blue ocean strategy to reach out to huge base of people and in the mean time educate people about conversational commerce. Visa can enter utility payment market in India and start with electricity payment as it is the highest market in utility payment. This will create a awareness about conversational commerce and building trust in to people.
- Almost 525 million Indian citizens hold bank account making the process easier There is around 590 million unique mobile users and already the infrastructure is built for sending bill sms for electricity payment Almost 100+ villages are getting electrified every week http://www.thehindu.com/business/Industry/175-million-new-bank-ac-in-india-in-three-years-world-bank/article7109166.ece http://data.gov.in http://garv.gov.in/dashboard
- http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Cost%20of%20Cash/IBGC%20WP13-01%20Cash%20Outlook%20India.pdf
- The Stakeholders playing key roles in the strategy we proposed are: Central/ State Government : Government is a major stakehlder with high power and high urgency. The motivation for government is to encourage Digitization in India. This can have a positive impact on Visa's brand promotion and spreading awareness among people. Banks: Banks have a low power in this strategy because they have to abide by the government regulations. They are motivated to support this as their will be an increased number of transactions. The increase in transactions will generate more profits for banks. Reserve Bank of India : Reserve Bank of India is a high power and high urgency stakeholder. Their motivation behind supporting this strategy is to reduce corruption by reducing the cash transactions. They can create regulations. This will lead to faster implementation of our strategy. Electricity Boards: Electricity board is a medium power stakeholder. They are motivated due to the ease of operation. They can establish the process and lead to faster implementation of this strategy. Consumers: Consumers are stakeholders with high power. They are motivated to use this for ease of payment. When they adopt this method profits for Visa will increase and create a strong Brand Image.
- VISA CEO should meet Narendra Modi and give a very high level briefing of Visa’s plan (utility bill payment thru conversational commerce) in India and how it can help India and its citizens, with a special emphasis on how it will help in strengthening digital India and will also curb corruption. The message directly from the VISA CEO will show the seriousness of the company at the same time give credibility to the message. Then both the leaders can pass on the baton to the second rung leaders. The VISA team mostly comprising of Jim McCarthy (Global Head of Innovation & Strategic Partnerships), Bill Sheedy (Global Executive, Corporate Strategy, M&A, and Government Relations) & Rajat Taneja (EVP of Technology) can start the discussion with Piyush Goyal (Minister for Power & Energy) and Ravi Shankar Prasad (Minister for communication and IT). Both the departments should also be duly represented by the Secretaries (Upendra Tripathy - Energy & Dr. Aruna Sharma - communication). Since we are talking about a new way of commerce, hence the minister and secretary of commerce department (Nirmala Sitharaman - MoS & Rita Teaotia - Secretary ) should also be duly notified with the proceeding of the meeting. Ministry of finance & law should be appraised since its a foreign company doing business in India. A task force comprising of the above mentioned people should decide the blue print of the policy. Once its decided and both the parties come to an agreement, MOU can be signed between Govt of India/State Govt & VISA (MOU will strengthen the position of VISA and will also put an immediate barrier to other players who want to enter). VISA should enter into negotiations with the basic framework and system in place, so that they can start the pilot project in 6 – 8 months. Mumbai should be chosen for the pilot project because its the financial capital of India. The government in state belongs to the same party to that of center, so it will lead to smooth functioning of the project. Mumbai should also be selected for its sheer size of 13 million people and the diversity of people. This diversity will give an idea of who can be the early movers, frictions that might develop during the course of implementation & incentive/boost that needs to given for people to adopt the change. The actual communication during the pilot project should be between the State of Maharashtra (CM, secretaries) & VISA leadership team, with Govt in India in loop. The timeline in which visa wants to operate in India aligns with the plans and needs of the current government. VISA aggressive growth plans is in sync with the progressive plans of the government. Government wants to achieve a great deal before it goes to election in early 2019 and VISA wants to achieve a great deal within the next couple of years
- http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Cost%20of%20Cash/IBGC%20WP13-01%20Cash%20Outlook%20India.pdf