BANKING INDUSTRY

Globally, banking industry has been in the forefront of digital innovation & industry disruption.
Banking is changing rapidly & the drivers of these changes—rising consumer expectations,
nimble new industry players, powerful emerging technologies and shifting regulations—put
immense pressure on incumbent banks to bring meaningful innovation to their established
businesses.
Many digital-only players are using their non-linear and adaptive business model to attack
incumbent banks where they are most exposed. The strategy of each challenger varies, but
they are unified in their ability to configure innovative products and propositions quickly and at
scale, with lower customer acquisition costs
This has posed a serious challenge in front of incumbent players to stay relevant in the ever-
changing external environment. Banks are beginning to respond to this challenge by innovating
across areas like operating model, product proposition & customer experience.
Many incumbent banks have tried to create a market differentiation by launching their own
Digital Challenger banks. Challenger banks are mobile, online and tech-based small retail banks
that offer single or multiple financial products, without any physical branch presence. Since
these banks predominantly operate online, they have less paperwork, offer real-time services &
have lower operating costs. Marcus by Goldman Sachs, Digibank by DBS & Kotak 811 by Kotak
Mahindra bank are few examples of this modus operandi.
ABC Bank Ltd. is a one of the largest private banks in India with a retail focus. The bank has a
book size of ~11 Lakh Crore INR & 5000+ branches across India. The bank has a strong
presence in Urban segment – specifically premium segment [HNI & UHNI] with 80%+ customer
base coming from Metro & Tier I cities & is trying to scale its rural presence. In terms of
products, the bank has strong presence in Credit Cards & Personal Loans [apart from other
retail lending products like Mortgage loans]; however large part [70%+] of customer acquisition
happens through physical / assisted channels [branch, sales agents & call centre]. Recently the
bank has been losing share in personal lending area due to entry of disruptive players with
innovative Credit & BNPL offerings. The bank has also been struggling with rising cost of
acquisition [10% Y-o-Y increase for last 3 years] & customer servicing cost [12 - 15% Y-o-Y
increase for last 3 years]
The bank is looking to launch a Digital Challenger bank in India & have come to you to co-
create a launch strategy for this initiative. Some of the questions which will be key in deciding
the strategy would be:

• What is the challenger bank’s differentiated value proposition?

• What should be the challenger bank’s GTM (Go To Market) Strategy - What customer
segments, channels, products & geographies is the bank targeting?

• What is the business plan/planned ROI for the proposition?

• What technology capabilities will be required to meet the business objectives? What will be
built / bought / re-used / partner?

• How does the bank plan to embed AI & analytics to become a data-driven organization?

• What capabilities will the challenger share with the parent bank?

• What is the operating model and organization structure required to meet the business
objectives?

The Judging Criteria:

• Quality of presentation
• Analytical Thinking
• Creative thinking – novel idea for disruption
• Big picture thinking – ability to understand the dynamics of an industry
• Feasibility of implementation / scale-up
• Usage of new-age technologies
• Creativity in delivery