Assessing the Small and Medium Enterprise Market Potential in India and Defining an Entry Strategy for a Non-Banking Financial Company

Financial Services Consulting

Client Challenge

The client was a multinational non-banking financial company (NBFC) in India, with a strong presence in low ticket unsecured loans and loan against property, and a network of 150 branches in about 95 cities in India. It requested UC Strategy to assess the market potential in the small and medium enterprise (SME) segment in India, and to define a plan to enter the segment, which had witnessed an aggressive entry of some other NBFCs and banks.

Our Approach

To assess the SME market potential, UC Strategy adopted the following approach:

  • Conducted market assessment of 6 products – unsecured loans, loans against property, office equipment, medical equipment, channel financing, receivables financing – based on market size, growth, profitability, competition intensity and ability of client to differentiate, and identified the focus products based on overall attractiveness
  • Defined a detailed entry strategy for each of the focus products –
    • Conducted a detailed competitive assessment to understand the market share, product strengths, channel etc. of key players
    • Conducted extensive primary research with SMEs to understand their current banking relationships, their needs and preferences, their product sensitivities. All of this was mapped with their demographic profile to understand the segments that should be targeted for each product
    • Identified and studied all the key touch points for SMEs, and identified tie-up/alliance opportunities to target SMEs
    • Identified key clusters/locations to be targeted based on SME concentrations in these clusters, sector focus in these clusters and competition focus
    • Suggested underwriting methods for each product based on analysis of SME’s ability and intention to pay and competition offering
    • Also identified the risks, critical success factors and value proposition for each product segment

Our Impact

UC Strategy delivered a detailed assessment of the SME market in India by analysing competition and understanding the SME’s needs and preferences, which provided a platform to kick start their operations in India. The client also had a detailed understanding of the entry strategy for attractive products – product features, channel, location, customer segments, value proposition, risks and critical success factors.

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