Bluest Ocean Strategy for EASY PAISA
INTRODUCTION
Kim and Mauborgne (2005) challenge the leading
position that rivalry is assumed to act in strategic
management. Kim and Mauborgne explained that
in the long term company profits require not be
negatively related to the number of companies in
its industry. They contend that companies can
find markets where they can acquire their profits
without competition.
Suppose a market universe framed of two sorts
of oceans: red oceans and blue oceans. Red
oceans equate to all the industries in existence
today. This is the known market space. Blue
oceans refer all the business not in existence
nowadays. This is the unnamed market space.
Blue oceans are defined by untapped market
space, demand formation, and the chances for
extremely lucrative augmentation. Several blue
oceans are created well beyond existent industry
boundaries and most are shaped from within red
oceans by building up existing industry
boundaries. In blue oceans rivalry is beside the
point because the rules of the game are waiting
to be set. The term “Blue Ocean” represents the
wider potential of market space that is vast,
sound, and not eventually explored.
The formation of blue oceans is relating with driving
costs down while at the same time aiming value up
for buyers. This is a way a bounce in value for both
the company and its buyers is attained. Buyer value
comes from the utility and price that the company
proposes to buyers and because the value to the
company is generated from price and its cost
construction, blue ocean strategy is achieved only
when the entire system of the company’s utility, price,
and cost behavior is properly affiliated.
In an attempt to make the formulation of blue
ocean strategy as systematic and actionable as
rival in the red waters of the known market
space, the case study will study the concept of
Mudasser Ali Khan, M. Phil, IoBM
Easy Paisa introduced by TELENOR with TAMEER
bank in Pakistan. The study is aimed to analyze
the action taken by both companies in their
pursuit of blue oceans that how they have made
an attempt to move from a theory of
Reconstructionism to practical application.
Starting from the analysis of Telecommunication
Industry, the case will provide information on
Banking Industry, therefore Mobile Banking, a
comprehensive discussion of Blue Ocean Strategy
followed by the Product - Easy Paisa
1 TELECOMMUNICATION
“The exchange of information by
electronic means at distant
places is telecommunication”
The sector comprises of Six major segments;
Cellular Mobile Sector, Fixed Line Sector, Wireless
Local Loop Sector, Payphone Services, Internet
Services, Voice over IP.
Telecommunication is one of the most
accelerated developing industries in Pakistan. At
the time of independence, Pakistan had inherited
14,000 landlines only and now there are over 120
million mobile connections. In the year 1994 a
Regulatory authority was formed as “Pakistan
Telecommunication Authority” which is
responsible for the establishment, functioning
and maintenance of telecommunication in
Pakistan. During October 2010, highest mobile
saturation rate was witnessed in South Asian
region. In September 2012, PTA reported that
the overall cellular phone subscriptions had
climbed to 120 million with an increase of 1.5
million new subscribers in the past two months.
Telecom Sector confronted a hard business
environment during the fiscal year 2010-11 due
to levied taxes, Power crisis, Security situation,
abundant subscribers and natural disasters.
Despite all these limitations, the cellular industry
1|Page
Bluest Ocean Strategy for EASY PAISA

managed to double its growth from the previous
fiscal year. One of the key factors of a successful
and advanced cellular market is the geographical
coverage of land area by the cellular mobile
operators in the country. Pakistan has
unparalleled topography ranging from steep
mountains to brutal deserts. Despite such a
challenging terrain, more than 92 percent of the
land area is under the umbrella of cellular mobile
services. At the end of March 2012, there were
33,027 cell Sites across Pakistan. Revenue from
the Cellular Mobile Services climbed to Rs.
262,761 million from Rs. 236,047 million showing
an increase of 11 percent from the preceding
year.
customers. All the existent players have more or
less standardized prices for similar type of
products/services and possibly due to this reason
it is unlikely for the companies to maintain any
kind of product distinction, hence buyers have
adequate options to switch over. The individual
buyers are larger in numbers and do not have
competition among themselves but the
enterprise customers like IT Companies and
Banks do have.
Furthermore, buyers have enough information
regarding the availability of different packages
offered by the companies due to increased social
networking, excessive advertising through TV,
hoardings, banners and word of mouth.

1.1 CAPITAL REQUIREMENTS 1.3 COMPETITION

Pakistan Telecommunication Industry is by and According to one of the Global Technology Report
large dependent upon the Foreign Investment. As 2010-11 of Work Economic Forum, Pakistan ranks
per an estimate, approximately two billion US no. 1 in the Internet and Telephony Competition.
dollars are needed to set up an average Telecom Profiles of existing market players are described
Operation firm in Pakistan. At present, almost all as under:-
the companies in operation are funded by the
foreign groups, which is an evidence of the heavy Orascom Telecom (Mobilink). Orascom Telecom
investment required by the Industry. Table 1 Holding S.A.E. ("Orascom Telecom") or ("OTH")
depicts the Foreign Direct Investment made founded in 1998 has arisen to become a big
during 2003 to 2011. player in the telecommunication market. OTH is
conceived among the broadened network
Table 1 - Foreign Direct Investment in operators in the Middle East, Africa, and South
Telecom Sector Asia is a leading mobile telecommunications
(US $ million)
operator in Six markets with an average
Period FDI in Total FDI Telecom
Telecom (%) Share
penetration of mobile telephony across all
2003-04 207.1 949.4 21.8% markets of approximately 40%. OTH operates
2004-05 494.4 1,524.0 32.4% GSM networks in Algeria (Djezzy), Pakistan
2005-06 1,905.1 3,521.0 54.1% (Mobilink), Egypt (Mobinil), Tunisia (Tunisiana),
2006-07 1,824.2 5,140.0 35.5% Bangladesh (Banglalink) and Zimbabwe
2007-08 1,438.6 5,410.0 26.6%
(Telecel Zimbabwe). OTH has placed itself as a
2008-09 815.0 3,720.0 21.9%
leader in the region for its diverse GSM
2009-10 373.6 2,199.4 17%
2010-11 79.2 1,574.0 5% operations with various GSM support and
1.2 SUBSCRIBERS Internet operations. One of OTH's main strategies
is to create its own non- GSM subsidiaries to act
Generally there are two categories of buyers in
as a backbone of support for its regional GSM
telecom industry: Individual and Enterprise
Mudasser Ali Khan, M. Phil, IoBM 2|Page
Bluest Ocean Strategy for EASY PAISA

operations. OTH has endeavored to achieve this South Africa, the Middle East, South Asia and the
by devoting financial, technical and management Black Sea region in a range of diverse sectors.
resources for supporting its subsidiaries. This
includes network support and installation of GSM China Mobile Pakistan (CMPak) Zong is a 100%
operations, equipment procurement, handset subsidiary of China Mobile commenced a set up
procurement and distribution companies, Value of China Mobile came through acquisition of a
Added Services, and Internet operations. license from Millicom to operate a GSM network
in Pakistan in the year 2008. With a plan to cater
to the fastest growing Pakistani market it is
Pakistan Telecommunication Company Limited
offering extended coverage, voice and data
(PTCL) commenced its operations in January 2001
services as well as a range of tariff options.
under the brand name ‘Ufone’. As a result of
CMPak's has an edge which came from the
PTCL’s privatization, Ufone became a part of the
experience and expertise of running the world's
Emirates Telecommunication Corporation Group
largest telecom service. CMPak Value Added
(Etisalat) in 2006. Since its inception, Ufone has
products are healthful for the individuals,
focused on empowering the people with the
corporates as well as small businesses.
required communication modes claiming of the
lowest call rates, clear sound and a good
Telenor Pakistan is 100% owned by the Telenor
network. Ufone has built a subscriber base of
Group, an international provider of quality voice,
over 20 million in less than a decade. It has
data, content and communication services in 11
network coverage in 10,000 locations and across
markets across Europe and Asia. Telenor Group is
all major highways of Pakistan, currently caters
among the largest mobile operators in the world
for International Roaming to 288 live operators in
with 140 million mobile subscriptions (Q4 2011)
more than 160 countries. Ufone also offers GPRS
and a workforce of approximately 30,000.
& BlackBerry Roaming coverage available with
Telenor Pakistan is the Country's single largest
200 Live Operators across 122 countries.
European foreign direct investments in excess of
US$2 billion. It acquired a GSM license in 2004
Warid Telecom is a joint venture between Abu
and began commercial operations on March 15,
Dhabi Group & SingTel Group. Abu Dhabi Group
2005.
went in a strategic alliance with Singapore
Telecom. Subsequent to this transaction in 2005,
Market Share
SingTel gained 30% percent equity stake in Warid
Telecom, Pakistan, for US$758 million. This
10%
partnership is part of a strategy to support Warid Mobilink
30% Ufone
Telecom's growth and to enhance its market Zong
position. Warid Telecom is backed by the Abu 25% Telenor
Dhabi Group, a business conglomerate in the Warid

Middle East and an investor in Pakistan. It has

diversified business interests, offering strong 20%
15%
financial resources and extensive management
expertise. The Abu Dhabi Group also invests in a Note: Market Shares as of Sep 2012 based on
number of emerging markets including East- & information by PTA.
Rationale
Mudasser Ali Khan, M. Phil, IoBM 3|Page
Bluest Ocean Strategy for EASY PAISA

Mobilink Pakistan, a subsidiary of Orascom million new subscribers, respectively. Table 2

Telecom Holding, is Pakistan’s leading Cellular
service provider with more than 36 million
subscribers. Other major competitors are Telenor
30.1 million, and Warid (Abu Dhabi Group) 12.64
million, Ufone 23.82 million and Zong (China
Mobile Company) 17.8 million. By September
2012, there were 120 million cellular subscribers
in Pakistan out of which over 98% are prepaid
subscribers because of the characteristics
including no security deposit, no line rent,
control over the usage, easy availability and
affordable balance recharge. Hefty net additions
were witnessed till 2008, however, market took a
massive plunge afterwards. The FY 2011 marks
the return of high net addition figures as almost a
million new subscribers joined the cellular
subscriber league. During the year under review,
the cellular operators added 9.70 million
subscribers to their networks showing 100%
growth against a drop of 24% last year. In spite of
being the smallest operator, CMPak came out as
the fastest growing operator in terms of net
addition as this company got almost 4.2 million
subscribers during FY 2011. Though Telenor and
Mobilink put in 2.9 million and 1.2 million
subscribers, respectively, yet their combined net
shows the company-wise net subscriber additions
from the year 2003 to date.
1.4 SUPPLIERS
Setting up a telecommunication, cellular operator
requires a license from Pakistan Tele-
communication Authority and a basic infra-
structure consisting of hardware, software as well
as the technical support. In Pakistan companies
like ZTE Pakistan, Ericsson, Motorola, Siemens,
Alcatel, Hawaii and Wateen telecom are
providing services and equipments of Network &
Passive Infrastructure which mainly includes BTS
(Base terminal stations) along with the Micro
wave link and call centre activities to telecom
operators. On the other hand civil engineering
firms provide services for site acquisition for BTS
and other sort of equipments.
1.5 SUBSTITUTES
There are some substitutes available to the
cellular sector of Telecom Industry. Products and
services from non-traditional telecom industries
can pose serious substitution threats. Landlines,
CDMA, Video conferencing, Viber, Skype, Google
Talk, Chat messengers, Email, social networking

Table 2 - Annual Cellular Subscribers

Period Mobilink Ufone Zong Instaphone Telenor Warid Total
2003-04 3,215,989 801,160 470,021 535,738     5,022,908
2004-05 7,469,085 2,579,103 924,486 454,147 835,727 508,655 12,771,203
2005-06 17,205,555 7,487,005 1,040,503 336,696 3,573,660 4,863,138 34,506,557
2006-07 26,466,451 14,014,044 1,024,563 333,081 10,701,332 10,620,386 63,159,857
2007-08 32,032,363 18,100,440 3,950,758 351,135 18,125,189 15,489,858 88,019,812
2008-09 29,136,839 20,004,707 6,386,571 34,048 20,893,129 17,886,736 94,342,030
2009-10 32,202,548 19,549,100 6,704,288 - 23,798,221 16,931,687 99,185,844
2010-11 33,378,161 20,533,787 10,927,693 - 26,667,079 17,387,798 108,894,518
2011-12 35,953,434 23,897,261 16,836,983 - 29,963,722 13,499,835 120,151,235
Jul-12 35,678,830 23,050,993 17,144,681 - 29,903,055 13,199,210 118,976,769
Aug-12 35,719,433 23,691,492 17,517,108 - 29,945,115 12,897,738 119,770,886
Sep-12 36,073,988 23,829,009 17,801,032 - 30,162,943 12,646,458 120,513,430
additions fell short of that of CMPak. Ufone and websites Cable TV and satellite operators now
Warid trailed behind with 0.9 million and 0.5 compete for buyers. The cable guys, with their
Mudasser Ali Khan, M. Phil, IoBM 4|Page
Bluest Ocean Strategy for EASY PAISA

own direct lines into homes, offer broadband

internet services, and satellite links can substitute
for high-speed business networking needs. On
the other hand, Postal (Courier) services, Faxing
can be used for the exchange of information.

Mudasser Ali Khan, M. Phil, IoBM 5|Page

Bluest Ocean Strategy for EASY PAISA
2 BANKING
Banking in Pakistan has seen drastic shifts a time
period of 65 years since country’s independence
in 1947. At the start it suffered from intense
deficit of resources and uncertainty due to
persisting political and socioeconomic conditions.
Lack of developed human resource and
professionals led into mediocre quality of
products and services. However, State Bank of
Pakistan was constituted as the central bank on
July 1, 1948 to control the financial sector.
Subsequent amendments were brought in to
broaden the control and functions of SBP through
State Bank of Pakistan Act 1956. SBP promoted
the private sector to establish banks and financial
institutions in the country. It resulted into
insalubrious competition and unlawful practices
due to bribe and corruption during the decades
of 1950s and 1960s. In 1974, all the existing
banks were nationalized by the Government. The
performance of nationalized banks devolved due
to government protection to employees,
resulting into the provision of inferior products
and poor services. It also discouraged the private
investors and foreign financial institutions. The
inadequate performance of nationalized banks
caused the reforms/privatization of banking
sector in early 1990s. Today, the Banking sector
of Pakistan is playing crucial role in the growth of
country’s economy. In accordance with the State
Bank of Pakistan Act, the banking system of
Pakistan is a two-tier system including the State
Bank of Pakistan (SBP), commercial banks,
specialized banks, Development Finance
Institutions (DFIs), Microfinance banks and
Islamic banks. As of December 2011, the banking
sector comprised 36 commercial banks (including
25 local private banks, 4 public sector commercial
banks and 7 foreign banks) and 4 specialized
banks with a total number of 9,087 branches
throughout the country. Among the banks, there
Mudasser Ali Khan, M. Phil, IoBM
are 6 fully fledged Islamic banks as at end of
December 2011.
Micro Financing
In Pakistan, Micro financing by the Banks extends
poor people access to primary financial services
such as loans, savings, money transfer services
and micro insurance. People living in poorness,
like everyone else, need a diverse range of
financial services to run their businesses, build
assets, smooth consumption, and manage risks.
Microfinance clients are often described
according to their poverty level - vulnerable non-
poor, upper poor, poor, very poor. This can
obscure the fact that microfinance clients are a
diverse group of people - and need diverse
products. By reducing vulnerability and increasing
earnings and savings, financial services allow poor
households to make the shift from “every-day
survival” to “planning for the future.” Households
are able to send more children to school for
longer periods, and make greater investments in
their children’s education. Increased earnings
from financial services lead to better nutrition
and better living conditions, which translates into
a lower incidence of illness. Increased earnings
also mean that clients may seek out and pay for
health care services when needed rather than go
without or wait until their health seriously
deteriorates.
State Bank of Pakistan has brought microfinance
under the horizon of its regulatory and
supervisory orbit. However, licensing and
regulatory requirements for Micro Credit and
Rural financial institutions have been relaxed and
made simple to help widespread access to small
borrowers particularly in the rural areas. Contrary
to the commercial banks, the Microfinance
Institutions (MFls) can be set up at district,
provincial and national levels with varying capital
requirements. There is less strictness and more
6|Page
Bluest Ocean Strategy for EASY PAISA
facilitative push embedded in the prudential
regulations designed for this type of institutions.
Many microfinance institutions are operating and
their outreach has crossed a million customers.
2.1 ENTRY REQUIREMENTS
Micro Financing is mostly dependent upon
subsidized financial support from Pakistan
Poverty Alleviation Fund (PPAF) to finance their
lending operations. Under the current legislative
structure, supervisory responsibility for
conventional and microfinance banks fall within
the legal authority of the State Bank of Pakistan,
while the remaining financial institutions are
monitored by other authorities. No MFB shall
commence business unless it has a minimum
paid-up capital as prescribed in MFIs Ordinance
2001. It shall also uphold capital equivalent to at
least 15% of its risk weighted assets.
The barrier of entry for the banking industry can
be trust. Since, the industry deals with other
people's money and financial information
therefore, new banks find it difficult to start up.
Due to the nature of the industry, people are
more willing to place their trust in big name, well
known, major banks who they consider to be
trustworthy.
The banking industry has gone through a
consolidation in which major banks seek to serve
all of a customer’s financial needs under their
roof .This consolidation furthers the role of trust
as a barrier to entry for new banks looking to
compete with major banks, as consumer are
more likely to allow one bank to hold all their
accounts and service their financial needs. It is
difficult for a new bank to enter the industry
offering the trust and full range of services as a
major bank; it is fairly easy to open up a smaller
bank operating on the regional level, however
microfinance bank or institution can be
Mudasser Ali Khan, M. Phil, IoBM
established to service the under banked market
of Pakistan.
2.2 COMPETITION
Conventional banking industry is considered
extremely competitive. The financial services
industry has been around for hundreds of years
and just about everyone who needs banking
services already has them. Because of this, banks
must attempt to lure clients away from
competitor banks. They do this by offering lower
financing, higher rates, investment services, and
greater conveniences than their rivals. The
banking competition is often a race to determine
which bank can offer both the best and fastest
services, but has caused banks to experience a
lower ROA (Return on Assets). Given the nature
of the industry it is more likely to see additional
consolidation in the banking industry. Major
Banks tend to choose to acquire or merge with
other banks than to spend money marketing and
advertising. As far as the Micro Financing is
concerned, the services can be classified as
under;
 Microfinance banks (MFBs) specialized
institutions that operate as microfinance
banks;
 Rural Support Programmes (RSPs): programs
that run microfinance operations as a part of
integrated rural development initiatives;
 Nongovernmental rganizations/microfinance
institutions (NGO MFIs): nongovernmental
organizations that run microfinance
operations as part of integrated development
programs or that focus exclusively on
microfinance;
 Commercial financial institutions:
commercial institutions involved in
microfinance; or government-owned
institutions: institutions involved in
microfinance that are owned by the
government.
7|Page
Bluest Ocean Strategy for EASY PAISA
Players Profile
Tameer Microfinance Bank Limited (TMFB) is a
majority (51%) owned subsidiary of Telenor
Pakistan. It is a private commercial Microfinance
bank licensed by the State Bank of Pakistan under
the Microfinance Institutions Ordinance 2001.
TMFB differentiates itself from other
Microfinance Banks by being one of the first
countrywide, private sectors, non-NGO
transformed, commercially sustainable micro-
finance institutions in Pakistan. Tameer
Microfinance Bank (TMFB) aims to provide
committed services to the economically active
poor and to be demand driven, client centered
and responsive to the special needs of customers.
Serving low-income, salaried, self-employed and
micro entrepreneurs men and women with a
range of financial products designed to allow
them to grow their businesses and produce
significant economic multiplier effects throughout
local economies.
Askari Bank Limited incorporated in Pakistan in
Oct 1991, as a public limited company. It
commenced operation on April 1, 1992, and is
principally engaged in the business of banking.
The Bank is listed on Karachi, Lahore and
Islamabad Stock Exchanges. Since inception, the
bank has concentrated on growth through
improving service quality, investment in
technology and people, utilizing its extensive
branch network which includes Islamic and
Agricultural banking. In the year 2012, Askari
Bank has started branchless banking operations
under the umbrella of Micro financing to cater
the mass market of under banked potential
customers.
Waseela Microfinance Bank Limited is a fully-
owned subsidiary of Orascom Telecom Holdings
established in May 2012, a sister concern of
Pakistan Mobile Communications Limited (PMCL)
constituted to cater to the demand of the
Mudasser Ali Khan, M. Phil, IoBM
banking and financial services approachable for
the unbanked and under-banked. The bank is
aimed to bring in mass market financial products
for providing more choices and benefits to the
people. Waseela Microfinance is the most former
addition to the microfinance industry of Pakistan
having a goal to serve lower-income groups by
providing structured financial services suited to
the need.
United Bank Limited (UBL) founded in 1959 is
considered to one of the most promising bank in
Pakistani market, having 3.5 million customer
base. UBL launched Branchless banking product
in the name of UBL Omni in the year 2010 to
serve the masses. UBL was awarded ‘Bank of Year
2012 Pakistan’ by the International publication
‘The Banker’ for promoting industry-wide services
in the global banking community.
Currently the network of microfinance providers
in Pakistan spans 1,343 branches and services
about 1.5 million clients with a gross loan
portfolio of PKR 15.1 billion ($250 million). The
sector is dominated by one or two players within
each of the groups. The heavy concentration of a
few institutions in the sector (NRSP, Khushhali
Bank, Tameer Bank and Kashf Foundation) serves
70 percent of the market (Please refer to Table-
3). The largest and fastest-growing providers in
the sector, these institutions have outpaced the
rest of their competitors.
8|Page
Bluest Ocean Strategy for EASY PAISA

Table – 3 Details of Major MFBs/MFIs The main categories of microfinance users are
Heads of households, pensioners, retrenched
Gross Loan Portfolio Gross Loan No. of
Portfolio borrowers workers, small farmers, and micro-entrepreneurs.
with loans Locations include urban and rural areas, but
outstanding penetration of rural areas, where most of the
Khushhali Bank 54,911,820 435,353
poorest live, is more difficult. On the whole
National Rural Support Prog 45,131,081 333,511
women tend to be poorer than men, and
Kashf Foundation 31,212,895 286,443
First MicroFinanceBank Ltd 36,699,473 161,341
therefore to prefer smaller loan sizes. In the rural
ASA Pakistan Limited 16,168,125 146,876 culture of Pakistan, women have less access to
Tameer Micro Finance Bank 66,131,261 144,850 collateral, such as title deeds to land, which also
NRSP Microfinance Bank Ltd 23,832,505 110,849 makes it more difficult for them to secure larger
BRAC – Pakistan 9,773,951 96,567 loans. Users of Micro-financing products are
Punjab Rural Support Prog 9,493,465 73,944 mostly Traders (31%), Agriculturist (24%),
Sindh Rural Support Org 10,425,613 63,340 Manufacturers (7%), Service Sector (7%) and
Akhuwat 7,970,814 63,085 Housing (1%).
Thardeep Rural Development 5,794,064 55,404
Orangi Pilot Project 5,017,865 40,462 The individual doesn't pose much of a threat to
Safco Support Foundation 3,651,340 34,543 the industry, but one major factor affecting the
DA for Mobilization 6,000,083 33,629
power of buyers is relatively high switching costs.
Rural Comm Develop. Society 3,559,422 24,104
If a person has one bank that services their
Kashf Bank 8,873,566 22,035
banking needs, it can be a huge hassle for that
Jinnah Welfare Society 3,229,416 20,178
person to switch to another banking option. To
Orix Leasing 2,113,963 16,231
Community Support Concern 2,207,463 13,882
try and convince customers to switch to their
Asasah 1,412,391 13,662 bank they will often times lower the price of
Aga Khan Rural Support Prog. 1,722 12,288 switching, though most people still prefer to stick
Taraqee Foundation 1,623,518 12,203 with their current bank.
Pak-Oman Microfinance Bank 1,583,428 12,052
Sungi Develop. Foundation 683,573 8,666 2.4 SUPPLIERS
Bank of Khyber 4,091,241 7,852 Capital is the primary resource of any bank and
Woman Co-operative Develop 1,185,978 7,433 there are following major suppliers of capital in
Network Leasing Corporation 8,635,255 3,768 the industry. 
Sarhad Rural Support Prog. 242,464 3,121
Narowal Rural Develop. Prog. 283,024 2,716  Deposits & Grants
Save the Poor 1,004 2,000  Mortgages and loans
Gender Awareness Prog. 156,627 1,662  Mortgage-backed securities
Support Working Solution 276,851 792  Pakistan Poverty Alleviation Fund (PPAF)
Apna Microfinance Bank 303,482 696  Loans from other financial institutions.
Buksh Foundation 82,081 565
Rozgar MicroFinance Bank 10,469 52
By utilizing these major supplies, a bank can be
Farz Foundation 13,641 -
sure that they have the necessary resources
Source : Statebank of Pakistan, Data as on 30th June 2012 required to service their borrowing needs while
2.3 MICRO FINANCE USERS maintaining enough capital to meet withdrawal
expectations. Power of the suppliers is largely
Mudasser Ali Khan, M. Phil, IoBM 9|Page
Bluest Ocean Strategy for EASY PAISA

based on the market, their power is often

considered to fluctuate between medium to high.

2.5 SUBSTITUTES
Some of the banking industry's largest threats of
substitution are not from rival banks but from
non-financial competitors. The industry does not
suffer any real threat of substitutes as far as
deposits or withdrawals; however insurances,
mutual funds, and fixed income securities are
some of the many banking services that are also
offered by non-banking companies. There is also
the threat of payment method substitutes and
loans are relatively high for the industry. Often
times these non-banking companies offer a lower
interest rates on payments then the consumer
would otherwise get from a traditional bank loan.

Substitutes to Micro financing in Pakistan can be

the informal source where commercial creditors
liaison with marketing intermediaries, Land–
based credit arrangements extended by landlords
to farmers, socially based arrangements of
friends and family. Further, Conventional banking
initiatives can also be considered as a major
Substitute force for Micro Financing.

Mudasser Ali Khan, M. Phil, IoBM 10 | P a g e

Bluest Ocean Strategy for EASY PAISA
3 MOBILE BANKING
Under banked consumers need minute-to-minute
information about their finances, and mobile
financial services are well befitted to deliver it.
Although these consumers often have insufficient
access to financial services, their access to mobile
phones is fairly widespread. This disparity
suggests an opportunity exists for financial
providers to efficaciously serve the under banked
population using the mobile channel. Given the
absolute volume of mobile phone usage all over
the world, combined with ever-increasing mobile
phone functionality, there is a potential for a rich
suite of mobile financial management and
transaction tools to strengthen the financial lives
of under banked consumers.
A wide spectrum of branchless banking models is
developing. These models differ primarily on the
question that who will establish the relationship
(account opening, deposit taking, lending etc.) to
the end-customer, the Bank or the Non-
Bank/Telecommunication Company (Telco).
Another difference lies in the nature of agency
agreement between bank and the Non-Bank.
3.1 MODELS OF BRANCHLESS BANKING
Models of branchless banking can be classified
into three broad categories - Bank Focused, Bank-
Led and Nonbank-Led.
Bank-Focused Model emerges when a traditional
bank uses non-traditional low-cost delivery
channels to provide banking services to its
existing customers. Examples range from use of
automatic teller machines (ATMs) to internet
banking or mobile phone banking to provide
certain limited banking services to banks’
customers. This model is additive in nature and
can be seen as modest extension of conventional
branch-based banking.
Mudasser Ali Khan, M. Phil, IoBM
Bank-Led Model offers a distinct alternative to
conventional branch-based banking in that
customer conducts financial transactions at a
whole range of retail agents (or through mobile
phone) instead of at bank branches or through
bank employees. This model promises the
potential to substantially increase the financial
services outreach by using a different delivery
channel (retailers/ mobile phones). Bank led
model may be implemented by either using
correspondent arrangements or by creating a
Joint Venture between Bank and Cellular
Operator. In this model customer account
relationship rests with the bank.
Nonbank-Led Model is where bank does not
come in picture (except possibly as a safe-keeper
of surplus funds) and the Non-Bank/ Telecom
Operator performs all the functions.
Mobile phones have several properties that make
them desirable for delivering financial services to
consumers. Four core features-mobile phones are
portable, ubiquitous, personalized, and multi-
modal- enable financial providers / Banks to use
these devices to connect with their customers on
a much deeper level than is possible with any
other channel. These same features offer
customers vastly improved access to their
financial information.
3.2 ATTRIBUTES OF MOBILE PHONES
Portability. It is the key attribute that makes
mobile phones ideal for delivering financial
information to consumers. This feature underlies
all of the others that follow, as the portability of
the mobile device is central to its utility to
consumers generally, and to under banked
consumers in particular. Because most cell phone
users carry their phones with them at all times,
financial providers can use mobile phones to
deliver time-sensitive information, such as fraud
11 | P a g e
Bluest Ocean Strategy for EASY PAISA
alerts, low-balance warnings, and overdraft
warnings, and consumers can use them to get
immediate account information at any time.
Ubiquitousity. Mobile phone usage is
ubiquitous all over the world, and people
increasingly are relying exclusively on wireless
phones for their calls. In 2010, 27 percent of U.S.
households had only wireless phones and no
landline. Unlike internet access at home, mobile
access is consistently high across demographic
and socioeconomic groups. In addition to placing
calls and sending text messages, people use
mobile devices to take pictures, check email,
manage appointments, access maps and traffic
information, edit documents, and much more.
Personalization. Because the mobile phone is
often the primary way people reach friends and
family, users feel an emotional connection with
their phones. Moreover, these devices house a
great deal of information about the people who
use them—location, purchasing behavior,
interests, health, contact with friends and family,
and much more. A MasterCard survey found that
more than half of consumers believe a person’s
phone reveals more about them than their
wallet.7 Similarly, many experts note anecdotally
that consumers are quicker to miss a lost phone
than a lost wallet. This suggests that financial
providers can connect with their customers more
personally through a mobile device than through
other channels.
Multi-modal. In addition to placing calls and
sending text messages, people use mobile
devices to take pictures, check email, manage
appointments, access maps and traffic
information, edit documents, and much more.
With these multi-modal devices, people can
download applications to maintain a budget,
track diet and exercise, access social media tools,
play games, and complete a growing number of
Mudasser Ali Khan, M. Phil, IoBM
other tasks. The increasing sophistication of
mobile phones increases the possibilities for
financial providers to use them to interact with
their customers for more complex purposes, such
as check depositing and fraud detection.
3.3 BENEFITS FOR A BANK AND
TELECOM OPERATOR
Financial Institutions have the potential to:
• Drive increased financial capability: Timely
access to account information through
alerts, reminders, and more can empower
consumers to make more informed choices
about how and when they spend, borrow,
and save.
• Offer greater convenience: One of the most
significant benefits of mobile financial
services is the added convenience of using
Banking tools.
• Lead to improved security and fraud
protection: All consumers, but especially
those who are under banked, may benefit if
security advances lead to a higher level of
trust between consumers and financial
providers.
As mobile financial services grow more
sophisticated, these tools may eventually:
• Transition consumers from cash to
electronic transactions: Turning cash
transactions into electronic transactions
could benefit consumers with added
convenience and potentially lower cost,
while enabling providers to generate
additional fee revenue on electronic
transactions.
• Improve access to basic financial
accounts: Mobile devices may eventually
become a distribution channel for financial
products, creating new access for the
underserved.
12 | P a g e
Bluest Ocean Strategy for EASY PAISA
4 MOBILE BANKING IN PAKISTAN
In order to evaluate the potential for Banking
Sector to drive financial inclusion in Pakistan, it is
important to examine international models that
have increased access to financial products and
services. Mobile Banking systems around the
world have evolved by following the models of
Branchless Banking. Those have generally set out
to create new access to formal financial services
for the unbanked, whereas those following an
additive approach have sought to deploy mobile
financial services simply as a supplementary
channel for existing customers. 20 Mobile
Financial Systems in the developing world have
tended to follow a transformational approach,
while those in developed countries have typically
been additive.
In developing countries where mobile financial
services have been transformational, formal
banking services were generally limited prior to
the introduction of Mobile Banking, and these
limitations were caused at least in part by a lack
of banking and payments infrastructure. In 2008,
for example, only 10 percent of Kenyan adults
had access to formal financial services. When
Safaricom’s M-PESA service was introduced in
2007, it vastly improved access and efficiency in
meeting Kenyans’ basic financial services needs.
M-PESA enhanced the way millions of people
send and receive money, solving for a distinct and
poorly met need. People who had migrated to
urban centers from rural villages regularly sent
money back to their families in their home
villages. But a limited banking infrastructure
meant that methods for sending money home
were inefficient, slow, and risky. M-PESA’s
person-to-person payments functionality offered
a much better tool for completing these
transactions.
4.1 POTENTIAL
Mudasser Ali Khan, M. Phil, IoBM
The banking industry of Pakistan has tremendous
growth potential and can deliver a lot more than
what it is delivering right now. The driving force
behind the efficiency and dynamism of the
banking business today is the use of technology.
The significance of e-banking and e-commerce
can be emphasized because of the fact that both
have brought about remarkable changes in the
ways people think and do their banking business
today. Introduction of more efficient mobile
banking services in the country can utilize the
strengths of Mobile Networks to provide financial
services to the large unbanked (rural, poor)
population as well as increase the overall
efficiency of the banking sector in Pakistan. The
State Bank of Pakistan had introduced the
Branchless Banking Regulations in March 2008
and subsequently, the Ministry of IT issued the
Policy Directive (May 2008) to support the
technical implementation of mobile banking
within the country. According to the World
Bank’s Consultative Group to Assist the Poor
(CGAP) 2011, Pakistan is the fastest growing
branchless banking market in the world. The
banking architecture for the subject services has
been developed in a robust manner in
collaboration with the telecommunication
industry that is not only helping its growth but
also ensuring quality of services and connectivity.
The Pakistani population is vast, and in rural
areas of the country, deploying traditional bank
infrastructure was not appropriate due to the
expense and lack of access to physical branches.
As such, the government has fostered an
advanced approach to governance and regulation
to encourage developments such as the
introduction of mobile financial services. 88% of
the Pakistan population does not have access to
financial services. There are only 16 million bank
accounts for a population totaling 180 million
(CGAP, 2011).
4.2 UN-BANKED SEGMENT
13 | P a g e
Bluest Ocean Strategy for EASY PAISA

According to State Bank of Pakistan’s statistics,

there are 5.06 branches per 100,000 individuals
Cellular Growth in Pakistan
Mobile Subscribers in Millions
in Pakistan as opposed to the global median of
8.4 branches for every 100,000 individuals and to 94 99
88
reach the global median Pakistan needs another
63
5,517 branches in addition to 8,343 branches
35
which mean increasing the branch network of
13
Pakistan by 66%. 2 2 5

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10
Number of Brancher per 100,000
Individuals

Growth of Branch Network in Pakistan

Number of Branches
8,343
7,847 7,755
7,253 6,966 6,916 6,882 7,105 7,421

8.4
5.06
3.34

2002 2003 2004 2005 2006 2007 2008 2009 2010

Global Median Pakistan Gap

On the other hand, the average annual growth

The problem is particularly prevalent in rural
rate of bank branches in Pakistan from year 2000
areas, with only 2,500 banking branches servicing
to 2008 was 0.8% whereas the average annual
105 million people – an average of 42,000
growth rate of cellular subscribers was 91.65%
Pakistanis per branch. However in direct contrast
during the same time period.
to this, the mobile market enjoys 65%
penetration – a figure which is set to grow to 95%
Pakistan: Branchless Banking Target Segments
by 2013 (PTA, 2011).
Huge
8% Untapped
Banking+Cell Market The result was a perfect storm of factors that had
Potential
Convertees
49% Cellphone the potential for the explosive mobile financial
Users
services adoption: a proactive mobile operator,
an operator with a banking license and a market
43% Non-
Cellphone Users with high mobile penetration but low financial
inclusion.

Population of Pakistan

Mudasser Ali Khan, M. Phil, IoBM 14 | P a g e

Bluest Ocean Strategy for EASY PAISA
5 RECONSTRUCTIONIST
APPROACH – BLUE OCEAN
STRATEGY
A Blue Ocean is an exclusively new industry,
created by bringing in neglected prospective
customer segments through offering them
compelling buyer utility not currently offered
anywhere. In a recent research, four buyer utility
values were mentioned by the users of Mobile
Banking. Ninety-eight per cent (98%) cited speed,
98% picked safety, 96% identified convenience
and 96% cited affordability. In a Blue Ocean
competition is irrelevant. With no competition,
profits are sterling.
5.1 THE PRODUCT – EASY PAISA
Telenor Pakistan is 100% owned by the Telenor
Group, a global provider of high quality data,
voice, and communication services in 11 markets
across Asia and Europe. Telenor is among the
largest mobile operators in the world with 140
million mobile subscriptions and a labor force
around 30,000. Telenor Pakistan is the country's
single largest European foreign direct investor,
with investments in excess of US$2 billion. It
acquired a GSM license in 2004 and began
commercial operations on March 15, 2005.
Telenor Pakistan acquired 51% of Tameer
Microfinance Bank in November 2008. In 2009 it
launched 'Easy paisa' to become Pakistan's first
telecom operator to partner with a bank to offer
mobile financial services across Pakistan.
Telenor Pakistan partnered with Tameer Micro
Finance Bank to bring in branchless banking for
the first time in Pakistan. The pioneering product
Easy paisa gives the people total ease for
performing financial transactions. And there is
no need to travel extensively, wait in long queue
at Banks or be constrained by limited operational
hours. People can use Easy paisa services by
Mudasser Ali Khan, M. Phil, IoBM
visiting nearest Easy paisa shop, Telenor
Franchise, Telenor Sales & Service Center or a
Tameer Microfinance Bank branch.
Telenor Pakistan structured its offering for the
diverse Pakistani market. It provided a mobile
wallet offering, which was an entirely
‘standalone’ function, which gave new customers
a fully functional bank account. The second
offering was an additive service, which allowed
existing Tameer Bank customers to enhance their
bank account with mobile functionality. Careful
planning prior to the launch was part of the
success of the new service. It was important to
set up a transparent governance structure as the
responsibilities across the value chain crossed
two separate legal entities regulated by different
regulators.
5.2 THEME
Easy paisa is accessible for all mobile phone users
and In fact to public without mobile phones can
similarly enjoy Easy paisa products. With Easy
paisa, customers have access to the easiest way
to perform financial transactions related to
paying bills, sending and receiving money within
country, receiving money from abroad,
purchasing airtime for mobile phones or giving
donations etc. 
Product
 Easypaisa slogan “ Badlay Zindagi assani
say” (changes life through convenience)
 Expanding agent network for cash
deposit, withdrawal, money transfers and
account opening
 OTC Channel open to everyone
 Extended timings, no queues and minimal
paperwork
 Mobile Accounts for more convenience
and security
15 | P a g e
Bluest Ocean Strategy for EASY PAISA
Promise
 Financial Services for the financially
excluded
 Empowers individuals to break down the
barriers to get things done
 Businesses to use for m-commerce
 Individuals to use for transfers, deposits,
bill payments, savings
 Agent / franchisees to expand business
 Operator to realize network and
distribution for new income
 Government to formalize informal
transactions currently outside the banking
industry
Platform
 State Bank of Pakistan’s robust branchless
banking framework, detailed guidelines
 Licensed bank behind all transactions with
country’s first branchless banking license
 Telenor ownership in the bank for
seamless integration of banking platform
and mobile phones
 A Large customer base
 Agent network and its familiarity of
mobile based transactions
5.3 OPERATIONAL VIEW
Mudasser Ali Khan, M. Phil, IoBM
5.4 GO TO MARKET STRATEGY
While many services have been launched
successfully, many have been less than
successful. The service can be compelling,
revolutionary even, but without careful
management of distribution it will never take off.
The selection of agent and its location was very
important in order to provide easy access for
consumers and ensure liquidity was easily
managed within the agent network. The roll out
of the offering was also supported with a
targeted marketing campaign to aid consumer
understanding. The campaign increased uptake,
as potential customers were made aware of the
service, and existing customers gained visibility of
the new offerings available. It also enabled
Telenor Pakistan to educate the subscribers on
the benefits of the service. The marketing
campaign implemented by Telenor Pakistan,
designed to maximize outreach, included:
 Advertorial and editorial content in
national and local publications
 Billboard and banner adverts
 YouTube videos, explaining the
deployment in detail including how to
register and use
 The agent network carried relevant
educational material
5.5 IMPLEMENTATION VIEW
16 | P a g e
Bluest Ocean Strategy for EASY PAISA

5.7 RANGE OF SERVICES

5.6 VALUE PROPOSITION

Reliability The Easy paisa service includes a mobile account.

 Assurance that transaction is valid
 Money is safe
 Peace of mind (that my money is safe)
 Responsive & proactive retailer
 It’s worth paying for: The benefits BB
provides are perceived higher than price
paid
 Post-transaction CS
 Money is placed in SBP regulated Bank
 Brand endorsed by a BANK
Convenience
 Service is always available (geographically
& around the clock)
 Easy to use – intuitive, user friendly
 Anyone can use it
 Makes life easy
Empowerment
 Power in hands
 People say that user of this brand is very
smart
These are virtual bank accounts that work just
like a normal bank account. Users can go to any
of the thousands of Easy paisa shops in Pakistan
to deposit or withdraw cash from their Easy paisa
mobile account. The initial deployment was
concentrated in urban areas, where the service
was used predominantly to send money to the
more isolated areas in rural Pakistan. The service
also allowed for the payment of bills via the
mobile phone. However, within a year the
service rapidly expanded to provide subscribers
with far more sophisticated services, such as:
 Mobile accounts (M-wallet)
–Payments (bills, person)
–Cash deposits
–Cash withdrawals
–ATM Cards (Future)
–Funds Transfers (Inter-bank, a/c to a/c)
 Inter bank Funds Transfer (Future)
 Donations
 C 2 B (Corporate and Government Payments)
 Money transfers
–Over the Counter
–CNIC to CNIC
–M-wallet to CNIC

Mudasser Ali Khan, M. Phil, IoBM 17 | P a g e

Bluest Ocean Strategy for EASY PAISA
–CNIC to M-Wallet
– M-Wallet to Card
–Card to M-Wallet
 Utility Bill Payments
–Over the Counter
 International remittance
–Cash to counter
–Cash to m-wallet
–Cash to other banks
 M-commerce (Future)
–Retail Purchase and settlement
The service was also then deployed into more
rural areas. This provided financial services to the
huge rural populace of Pakistan, who until this
point, had been unable to access them due to the
isolating geography of the country, and the
expense required in building brick and mortar
banking branches. Easypaisa overcame these
problems, and was able to provide rural people
with a mobile wallet service.
International remittances were then introduced
as key service in September 2010. A large portion
of the Pakistani workforce finds employment
outside the country. There are at least seven
million Pakistanis living abroad, remitting US$8
billion to Pakistan. The government of Pakistan
realised that facilitating easy and affordable
transfers back home would significantly impact
the economy and have assisted the introduction
of cross-border payments at a policy and
Mudasser Ali Khan, M. Phil, IoBM
regulatory level. The service is offered without
any added charges, due to its positive effect on
the inflow of international remittances, which is
important to Pakistan's economy. The mobile
financial service which helped Telenor Pakistan to
provide has seen huge uptake in Pakistan. More
than one million Pakistani people subscribe to the
service, and which processes up to 80,000
transactions a day.
5.8 OPPORTUNITIES AND CHALLENGES
Opportunities include the following
 More Security options
 Merchant efficiencies
 Consumer Convenience, Demographic &
Life style changes
 Marketing & Location-Based services (LBS)
 Convergence with value-added services
 Financial inclusion
Challenges include the following
 Lack of consumer demand
 Business model revenue sharing
 Customer (and data) ownership
 Collaboration of many stakeholders
 Lack of global standards
 Unclear regulatory direction
18 | P a g e
Bluest Ocean Strategy for EASY PAISA

7
6
5 Conventional 5.10
Banking
4
Easy Paisa
3
2 EASY
Offerings

1 PAISA –
0

Factors of Competition
5.9

EASY PAISA – ACTION FRAME

STRATEGY CANVAS
WORK (ERRC)

Mudasser Ali Khan, M. Phil, IoBM 19 | P a g e

Bluest Ocean Strategy for EASY PAISA

5.11 SECURITY, RISK AND MITIGATION 6 CONCLUSION

Webroot survey (UK/US 2011) reported that out Large market for the people who are un-banked
of 1200 mobile users 40% have security but have a mobile phone. Generally only 12% of
applications and 50% do not lock phones. Pakistani adults have any form of bank or MFI
Possible Threats for Easy Paisa and mitigation account. Typically 500% more phone owners than
tools can be classified as under:- the banked population; this equates to 60M to
70M individuals who could benefit from such
Threat Mitigation services. Besides the competition given by UBL
Inadequate fraud Strong password to
Omni, launch of Mobilink Mobi-Cash and Zong’s
controls access phone
Timepey exactly at the time of writing of this case
Unauthorized access to Multifactor authentication study lead to transforming the Mobile Phone
device of financial data Banking from Blue Ocean to a conventional Red
Ocean Market.
Poor mobile device Remote devise
security deactivation
References:
Mobil device lost or Remote wipe and lock
Easy Paisa, Pakistan, website www.easypaisa.com.pk – Accessed
stolen
November 2012
Limit and monitor
Download virus, infected transaction
Kim, W. Chan and Mauborgne, Renée (2005). Blue Ocean Strategy.
application or malware Boston: Harvard Business School Press
Use alerts to notify
customer of suspicious Pakistan Telecommunication Authority, Annual Report 2010 &
activity 2011

Encrypt sensitive data Pakistan Telecommunication Authority, website www.pta.gov.pk -

stored on mobile Accessed November 2012
device/wallet
Pakistan Economic Survey 2011 - Transport and Communications
Chapter 13
Encrypt transmissions
Sulaiman D. Muhammad, European Journal of Social Sciences
during process and at rest
Microfinance Challenges and Opportunities in Pakistan Volume 14,
Number 1 (2010)
Provide consumer
education for mobile Syndicate Group no. 2, “The Rapid Growth of Banking Sector in
device and app security Pakistan and its Impacts on Revenue Generation” Directorate
General of Training & Research Academy (Dot), FBR, Lahore
Develop mobile policies
and procedures State Bank of Pakistan, website www.statebank.gov.pk – Accessed
November 2012

Telenor Pakistan website, www.telenor.com.pk – Accessed

November 2012

Viruli de Silva Director Studies, Blue Ocean Strategy for Integrated

Development Anniversary Convention 2011

W. Chan Kim & Renée Mauborgne (2005) Blue Ocean Strategy:

From Theory to Practice, California Management Review Vol. 47,
No. 3

Mudasser Ali Khan, M. Phil, IoBM 20 | P a g e