Presentation for Touchtech Payments final-1

US Market Entry Strategy for Touchtech PaymentsUCD Michael Smurfit Graduate Business SchoolFull-time Master of Business Administration

Agenda

IntroductionProject Scope Industry AnalysisCustomer SegmentationMarket Entry StrategyChallenges to InternationalisationRecommendations

Introduction

International market entry strategy for Touchtech

Academic frameworks to frame understanding

Segmented a market of 12,000+ institutions

We produced a shortlist institutionsGained first-hand information from key decision makers in US financial institutions.

12,000+ Financial Institutions

Project Scope

Phase 1: Business Model AnalysisUnderstanding how Touchtech compete in the market

Phase 2: Market AnalysisDetailed analysis of US market

Phase 3: Academic Literature ReviewFocused literature review on best practice for start-ups, internationalisation, and growing & scaling an organisation

Project Scope

Phase 4: Researching Potential CustomersStarting 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 StrategyA guideline for Touchtech Outline the risks involved, key contacts, and estimated required resources

Industry AnalysisUS Market Entry Strategy for Touchtech Payments

Industry Analysis

High degree of competition

Authentication market

No preference of end-users

Access to distribution network Reliance on partnerships

Intricate selling process

Industry Analysis

12000+ Banks and CUs Role of new government Geographical distance Credit Union v/s Banks

US Market Analysis

Industry Analysis

Mobile Wallets3D Secure

Shopping Transactions Large scale identity management solutions

Competitor Categories

Industry Analysis

Product offeringLow High

Mat

urity

of p

rodu

ct /

Bran

d Eq

uity

Low

High

Competitor Diversity

Customer SegmentationUS Market Entry Strategy for Touchtech Payments

Customer Segmentation

US Banks & Credit Unions

Customer Segmentation

US Banks & Credit Unions

Customer Segmentation

Banks

Customer Segmentation

Banks: Segmentation Method

US Banks

Group 1 Group 2 Group 3

Asset Size

> $100 bn < $100 bn, > $2bn

< $2 bn

1. Assets:

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

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

Customer Segmentation

Banks: $2b - $100b Assets

Customer Segmentation

Banks: Assets & Demographics (18-35)

Customer Segmentation

Banks: Assets, Demos & Clusters

Customer Segmentation

Credit Unions

Customer Segmentation

Credit Unions: Segmentation Method

US Credit Unions

Group 1 Group 2

Asset Size > $2bn < $2 bn

1. Assets: Top 100

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

Customer Segmentation

Credit Unions: Top 100 by Assets

Customer Segmentation

Credit Unions: Top 100 by Members

Customer Segmentation

Credit Unions: Top 100 by Branches

Customer Segmentation

Credit Unions: Common 37

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

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 offer Apple Pay / Android

Pay / mobile wallet or any other payment system?

4. Do they currently use a Touch 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

Customer Segmentation

Final List : Banks & Credit Unions

Market Entry StrategyUS Market Entry Strategy for Touchtech Payments

Entry Strategy

TouchtechUS Market Entry

None of which can be viewed in isolation

Entry Strategy comprises of four elements -

Formulate a clear mission and vision statement prior to entering the USA

Strategy

Mission: Why we exist?

Vision: What future we want to create?

Mission and Vision

Strategy

Where to locate?- New York

Which market to tackle?- East coast Banks- Nationwide Credit Unions

What is Touchtech’s product offering?

- Explore and establish quickly

Structure, Geography and Focus

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

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

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

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

Procurement Team

Finance

OfficerLegal

Officer CEO

Procurement Process

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 Utilise CRM 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

Challenges of InternationalisationUS Market Entry Strategy for Touchtech Payments

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

Challenges

1) Lack of InformationBarriers to informationLimited informationUnreliable informationAbility to identify opportunities

2) New norms of doing business

3) “Outsidership”Breaking into new marketsResistanceLiability of Smallness

Challenge 1: Knowledge

Challenges

1. Not just …..Although it is

Essential

2. Scaling and the experience curve

3. Personnel

4. Networks

$$$

Challenge 2: Resources

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

RecommendationsUS Market Entry Strategy for Touchtech Payments

Recommendations

Strategy

FinanceOperati

onsMarketi

ng

• Mission and Vision• Geography• Focus

• Funding• Costs

• Logistics• Human Resources• Procurement• Customer Database and

Learn!• Banks AND Credit unions• Trade Shows

Roadmap forward for Touchtech

The Sky is the Limit