Cases

Entry Strategy for the Business Financial Services Division of a Multinational Bank in India

Challenge

The client was a large multinational bank that planned to offer banking products and services to Small and Medium Enterprises (SMEs). Top management wanted to understand the market with respect to the following factors:

  • Target manufacturing and service sectors
  • Number of SMEs in target sectors
  • Geographic clusters of SMEs in target sectors
  • Preferred banking products and services
  • Market size for preferred banking products and services targeted at SMEs
  • Key competitors
  • Channels of distribution
  • Strategic initiatives to counter competitors

Our Approach

To develop an entry strategy, UC adopted the following approach:

  • Defined 176 industry segments in manufacturing, services, trading and retail sectors
  • Short listed the target sectors based on the following filters:
    • First level: sales growth pattern, profit/ loss pool, risk profile
    • Second level: age of industry, location, liquidity, predictability, nature of collateral
    • Market economics: asset base, capital structure
  • Defined the market size for SME banking products and services for all short listed industry segments based on the expected banking products
  • Conducted extensive primary research to understand preferred banking products and services, need gaps, distribution channels usage, reasons for switching banks, etc.
  • Short listed the sectors based on the market size and findings of the primary research
    • Manufacturing – 11 sectors
    • Services – 10 sectors
    • Trading – 7 sectors
    • Retail – 5 sectors

Impact

Client received a future earning scenario based on the competitive landscape, operational and management capabilities of the firm, customer and franchisee acquisition strategy, and the likely trend of the various asset classes. UC also provided a Go/ No-Go decision based on the returns achievable, which was further based on the scenarios in an optimistic equity market and a flat equity market.