A concept note by 

l dNeel Majumdar

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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 differentiationCompetitive 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   l    i l– Less complex to implement– Flexible and modular– Externally hosted– Pay as you goPay 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 belowserve customers of banks Tier 3 and below

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H It W ld W k

Concept

How It Would Work

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The types of payments enabled by

Concept

The types of payments enabled by EasyBillPay

Phase 1ARetail (consumer) bill payments

l b ll l h l dUtility bills – electricity, phone, water, sewage, solid waste (where applicable), financial services payables, mobile phone bills and top ups, various government license fees, tax payments

Phase 1BPayments to housing societies, schools, universitiesPayments to housing societies, schools, universities

Phase 2Corporate to Corporate Payments

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The changing landscape in Indian

Concept Rationale

The changing landscape in Indian bankingIndian banks currently under tremendous pressure due to:Global financial meltdown and recessionGlobal financial meltdown and recessiono 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 environmentA changing regulatory environmentRapid technological advancementsHeightened competition and consolidationg p

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A key trend: the changed environment Concept Rationale

y gfavors increased outsourcing by the banks 

• Changing landscape in the banking industry is driving banks to explore the outsourcing option to achieve efficiencies.efficiencies.

• Total opportunity for outsourcing in the domestic banking sector estimated at Rs. 11.2 b for FY08. (  V l J l   8 (source: Valuenotes July 2008 http://www.sourcingnotes.com/content/view/352/55/)– Little over one‐third of this opportunity currently being pp y y gmet. 

– Majority of revenues earned from voice‐based services in sales and marketing  sales and marketing. 

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The mix of services outsourced is moving

Concept Rationale

The mix of services outsourced is moving up the value chain

Outsourced services generally simple d d   t  i  d i   ti  i  

Moving toward outsourcing more value dd d  i  t   i kl  b i    

Current Future

and do not require domain expertise in bankingo Entry level services like data entry, 

digitization, data preparation and validation etc. Al   l   d  k i   i i i  lik  

added services to quickly bring new products to the market and rapidly scale up across locations. o Bill payments, Mobile banking, Inbound 

Remittances, Tax Payments, Insurance P t  D t f ilit  M k t  d t  o Also, sales and marketing activities like 

loyalty programs, outbound sales and inbound customer support

A majority of the vendors primarily provide voice‐based CRM services to l  b k  Th   d  i l d  l  

Payments, D‐mat facility, Market updates etc.

As the banking industry matures in its outsourcing initiative, demand for quality value added services is likely to 

i   i  i  th  l  t   large banks. These vendors include large international BPOs (like IBM‐Daksh, MphasiS, etc.), BPOs with substantial focus on domestic market (like InfoVision, Intelenet, etc.). 

gain prominence in the long term.  (Valuenotes July 2008)

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Some Recent Examples in Outsourcing of Concept Rationale

Value Added ServicesValue Added Services Outsourced

Value‐ Added Services Banks outsourcing these services

Value Added Services Outsourced

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 VysyaBank, Centurion Bank, Dena Bank, Bank of Barodaof Baroda

ATM Outsourcing ICICI, Corporation Bank, HDFC

Self  Bank  ING Vyasa Bank Self ‐ Bank  ING Vyasa Bank 

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Another key trend: wealth creation in Concept Rationale

ycities Tier III and below

Rural Sectoro Roughly 70% of India’s 1.145 billion population live in 6,27,000 villageso Not just witnessing increase in income but also in consumption and productiono 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 CanadaAnticipated 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 f       t  f  i t   t il  ti  (I di  R t il R t  b  I  FR for 55 per cent of private retail consumption. (India Retail Report 2009—by Images 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 citiesTier II and Tier III citieso Factors like urbanisation, dual income family units, the growing trend of nuclear family 

and a fast‐paced lifestyle continue to boost growtho PC consumption grew 16% in top 4 metros compared to same period last year and 24% 

in next 4 metroso 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)

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Regional rural banks and rural cooperative b k ld b l d b

Concept Rationale

banks could be major players in distributing and accessing this wealthg

Rural India boasts of a significant financial network:88 regional rural banks (RRBs) covering 525 districts with a g ( ) g 5 5network of 14,494 branches (31 March 2006)3 tier Short term cooperative credit structure consisting of: 

l l kh l l d ( )o Nearly 1.09 lakh Primary Agricultural Credit Societies (PACS), 368 District Central Cooperative Banks (DCCB) with 12,858 branches and 30 State Cooperative Banks (SCB) with 953 b h       l  f    i   l  branches or a total of 122,590 service outlets. 

o On an average, there is one PACS for every 6 villageso 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.

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While there are significant challenges to Concept Rationale

g gusing RRBs and rural coop banks as distribution pointsdistribution points…..

Currently the RRBs and rural coop banks are ineffective  as distribution points due to:

Lack of a core banking system and other technological enablersenablersPoor quality of personnel that are not trained to handle sophisticated systemsp y

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RBI’s and NABARD’s actions are

Concept Rationale

…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 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

l l ’ l lSimultaneously, NABARD’s Financial Inclusion program should also result in technological innovation through the Financial Inclusion Technology Fund through the Financial Inclusion Technology Fund (FITF)

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All of the environmental factors

Concept Rationale

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 

outsourced electronic bill Tier 3  towns

Computerisation in RRBs 

outsourced electronic bill payments by RRBs and Cooperative Banks

Computerisation in RRBs and Cooperative banks

A il bili   f  bil    d Availability of mobile  and kiosk banking & launch of e‐governance initiatives

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B siness Model

Concept Rationale

Business ModelConsolidator/Aggregator revenue models

BanksFee per transactionFixed fee per month/yearCombination or either/or optionp

Alternate Channel PartnersE‐Gov Channels

Citizen Service Centers (CSCs) Tax and utility paymentse‐chaupals

Retail/Agent Channel PartnersPer transaction revenues from retail agents from walk‐in b ibusiness

Biller Direct revenue model Direct hosting of biller bill pay sites (e.g. MTNL, BSNL etc )etc.)

Revenue per transaction14

Competition

Existing Competitive LandscapeSo, does this concept have competition?It sure does.2 primary electronic bill payment service providers serving the domestic market:

T h (f l  BillJ i )• Techprocess (formerly BillJunction)• Billdesk

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Competition

TechprocessLet’s look at Techprocess first and its footprint.• 9 banks, 75 billers

– ICICI Bank– Standard Chartered Bank– HSBC– Axis Banks a– Greater Mumbai Cooperative Bank– Saraswat Cooperative Bank – The Shamrao Vithal BANKThe Shamrao Vithal BANK– Mandvi Bank– Karnataka Bank Ltd.

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Competition

BilldeskBilldesk Banking Clients

40 banksJune 2008 data200 billers June 2008 data

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So why will we win (or what makes our

Why we will win

So, why will we win (or what makes our concept different)Razor‐edged focus on Tier 2 banks and belowFocus on simplicityOnly offer hosted optionOnly offer hosted optionTie 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 o Kiosks (Integrate with SREI Sahaj kiosks in West Bengal, Citizen Service Centers, partner with e‐governance initiatives)

o Banking CorrespondentsM bil   d h dh ld d io Mobile and handheld devices

Eventually, the same flexible infrastructure can be used to facilitate B2B payments

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Founder CVTeam

Relevant experience

Tel: +91 33 2341 3090Mobile: +91 98 30381643neel.majumdar@in.pwc.com

Founder CVNeel Majumdar

• 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.

N l i th BFSI d i l d f th IT Eff ti P ti N l l t P C t th M bilN l h   i   • Neel is the BFSI domain lead for the IT-Effectiveness Practice. Neel also represents PwC at the Mobile Payments Forum of India (MPFI).

• Neel has more than 10 years of experience in consulting, project management, opportunity assessment and management of new products, strategic business development and management of strategic initiatives that have an enterprise-wide impact

Neel has extensive experience working for both multinational financial services 

have an enterprise wide impact.

• Prior to joining PwC, Neel used to work for Bank of America as Vice President, Enterprise Payments Strategy, where he was responsible for the creation, development, execution, and supervision of the Bank’s enterprise-wide payments strategy across credit cards, debit cards, checks, Automated Clearing House (ACH) payments, online banking and electronic remittances, covering both retail and wholesale sides of the bank. He also served

companies and banks in North America and in Financial Srvices Consulting & 

as an SME in emerging payment instruments including Internet Protocol-based payment technologies, mobile payments, decoupled debit cards, and web-based consumer payments instruments.

• As part of his role, Neel represented Bank of America in various payments industry bodies. These include: a) "The Mobile Payments Steering Committee" of the Strategic Payments Forum at The Clearing House

Business Development in the Indian Subcontinent

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.

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Team

AdvisorsSunil Nair, CFO, Asia‐Pacific, Euronet IndiaDilip Asbe, CTO, Prizm Payment ServicesRakesh Mahaptra, Founder & CEO, Bimamall, ex‐VP, Bancassurance, Bajaj Allianz Insurance

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Thank You!Thank You!

Contact:Neel MajumdarEmail: neel.majumdar@gmail.comMobile: 09830381643

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