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Chinese Merchant Bank Harvard Case Solution & Analysis

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Chinese Merchant Bank Case Study Solution

The case illustrates the transition strategy of the Chinese merchant Bank (CMB).It describes the transformational strategies that the CEO and director of the bank took, in order to make the disruptive change in the banking industry so to sustain the competitive advantage of the bank in market and maintain the leadership as the 6 th most profitable bank after the big five. the core competence of the bank remain technological innovation and its customer oriented service which created a strong brand image in the mind of the customer and also created a distinct position in the market, making it compete against the big 5 bank of the industry.

Over the period of time, with the changes in Chinese government regulations to promote capital market and credit market industry, many foreign banks have entered the Chinese market and also facilitated the local banks to increase the services in order to make the operations profitable and sustainable. The case further outlines, the two transformational strategies CMB took under the leadership of Ma weihua, which transformed the brand image of the bank and also enabled its streamline its operations by making the cost low and profits high. It incorporated digital platform to offer exquisite and above the line services to the customers that integrated with the changing life style buying behavior and target segment of the CMB bank.

Keywords :  Business strategy, leadership, Transformational Strategy

What was the first transformation and how did it address problems faced by CMB?

Chinese Merchant bank is the 6 th most profitable bank in chin, after the big five. It has developed its business strategy so to sustain its competitive advantage in the market leadingto profitability. However, in 2005, when the Chinese government started lifting barriers on capital markets, making these market to emerge in china, and thus diluting the role of banks leading to Financial disintermediation, the CMB bank under its first transformation strategy, introduced the credit cared service in the market.

Ma, believed that the market has the potential and growth in credit card market and estimated the profits in the 8 th year of operations, however, defying the market research and analyst proposals,, the bank started to make profits in the third years, which propagated the idea and also strengthened the strategy of CMB bank to plunge into the credit card market . Also, along with this, under the first transformational strategy, the CMB bank for the first time offered the retail banking services to the customers, small-Medium enterprise loans and non-interest income to the Chinese market. This rousted the bard image of the bank in the industry, making it stand out of the market as a distinct bank. The particular transformational strategy also allowed the CMB to miti gate the increasing power of the suppliers (organization) in reducing the interest rates, and also reduced the dependence of CMB on interest for its profitability .Not only this, the transformational strategy also allowed the bank to attract more customers under different financial services, increasing the footfall, and thus leading to profitability.

Furthermore, while implementing the First Transformational strategy, the bank develop extensive sales teams, which cross sell to the customers by finding or locating them from within the bank or from the super-markets.it also increased the sales teams so to offer the exquisite customer service to each of the customer, establishing the brand equity in the basis of customer services, which leads to customer loyalty and hence retention. Also, it developed the sales teams in different cities of chain, to develop market penetration through low cost structure. All these measures helped CMB to make a stand out position in the market, along with the control on bargaining power of the buyer, with sound profitable operations.

How did the second transformation build on the first transformation?

The aim of the second transformation according to Ma Weihua was to reduce the cost of capital and maximize the profits. Under the particular strategy, the Chinese merchant bank introduced the services of credit card and retail banking, which expanded horizon of service and offering to the customer and thus lead to increased profitability. The second transformational strategy has been developed ion the first strategy, in a way, that under the first transformational strategy and era between 2004-2008, the bank managed to develop a differentiated brand image in the market with smooth stream of cash flows, however, in order to become more sustainable and increase the profitability of bank, CMB focused ton extending the product line , by offering more financial services under the credit card category.

It started offering platinum, diamond and infinite card to the consumers to increase the product penetration in the market. Since the bank already laid its credit card strategy in first transformational strategy ,it becalm easier to extend the service in order to synchronize with market behavior and also tap the market through aggressive market penetration strategy .Also, in order to reduce or mange the non-performing loans, the bank developed a structure to control the non –performing loan, under which it analyzed the customer profile and then offered the loans accordingly. Since in the first transformational phase, the bank gather or managed the customer data, it helped CMB, managing the non-performing loans in the second transformational strategy.

Chinese Merchant Bank Harvard Case Solution & Analysis

In addition, to extent the market reach and developed extensive banking network, the CMB followed the push and pull strategy. Under the Pull strategy, the bank established the online channel to locate and identify the potential wealthy customers for the credit services. This became effective tool for bank to use because it largely laid the sales teams in different markets sand cities of china, in first transformational strategy and thus provided the data to perform the online data analytics to locate the potential customer for credit services .Lastly, the bank developed its credit card services and extended it to use the card for online payments so to sync with the changing market dynamics which was shifting towards online purchases .The bank flanked the new entrants like ali-pay by offering the existing customer promotional gift and the reward point system......................

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Merchant Experiences are as Important as Customer Experience - How Can Acquirer Banks Can Optimize?

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In today's rapidly evolving business landscape, where customer experience takes centre stage, it is imperative for acquirer banks to recognize the significance of optimizing merchant experiences. As providers of omnichannel acquiring and merchant banking solutions, acquirer banks play a critical role in facilitating B2B payments and enabling seamless transactions.

Understanding the infinity loop between Merchants, Customers and Acquirers!

It is crucial to recognize that merchant experiences directly impact customer experiences. Merchants rely on acquirer banks to provide smooth payment processing, seamless integration with e-commerce platforms, and timely settlement of funds. When these elements function optimally, merchants can deliver exceptional customer experiences. Therefore, by enhancing merchant experiences, acquirer banks indirectly contribute to improving the overall customer experience.

At the same time, acquirer banks and merchants share a separate, mutually beneficial relationship. When merchants have a positive experience with their acquirer banks, they are more likely to remain loyal and recommend their services to others. By prioritizing merchant experiences, acquirer banks further foster stronger relationships, driving merchant loyalty and contributing to their own growth and success.

How Can Acquirer Banks Optimize Merchant Experiences?

There are several ways how an acquirer bank can ensure an optimal, omni-channel, integrated experience for all its merchants.

• Seamless onboarding processes: The onboarding process sets the foundation for the entire merchant experience. Acquirer banks must leverage technology to simplify and streamline this process, minimizing paperwork and manual tasks. Implementing a digital onboarding solution enables merchants to complete the necessary documentation online, saving time and effort. This self-service approach empowers merchants, putting control in their hands and ensuring a smoother and more efficient experience.
• Tailored payment solutions: Recognizing that each merchant has unique requirements and preferences, acquirer banks should offer a wide range of payment solutions. This includes card-based, mobile, and online payments, catering to the diverse needs of merchants. Additionally, providing customizable features such as recurring billing, invoicing, and multi-currency support enables merchants to manage their payments efficiently and align them with their business strategies.
• Robust fraud prevention measures: Security is a top concern for merchants. Acquirer banks must prioritize fraud prevention by leveraging advanced technologies like artificial intelligence (AI) and machine learning (ML). These technologies can detect patterns and anomalies in transaction data, enabling banks to identify and prevent fraudulent transactions effectively. Real-time monitoring and strong authentication mechanisms add an extra layer of security, ensuring secure payment processing and enhancing merchant trust.
• Transparent pricing and settlement: Clear and transparent pricing models are vital for fostering trust and maintaining strong relationships with merchants. Acquirer banks should provide detailed information on transaction fees, chargebacks, and other costs associated with payment processing. By ensuring transparency, banks help merchants make informed decisions about their payment processing needs. Additionally, prompt settlement of funds is essential for merchants' cash flow management. Acquirer banks should strive to expedite the settlement process, providing merchants with timely access to their funds.
• Analytics and reporting: Acquirer banks can add value to the merchant experience by offering comprehensive analytics and reporting tools. These tools provide insights into transaction trends, customer behavior, and sales performance. By equipping merchants with data-driven insights, banks empower them to make informed business decisions, optimize their operations, identify growth opportunities, and better understand their customer base. Advanced analytics capabilities enable merchants to refine their strategies and improve their overall performance.
• Proactive customer support: Responsive and efficient customer support is critical for ensuring a positive merchant experience. Acquirer banks should establish dedicated support channels, offering prompt assistance to resolve any issues or concerns. Investing in knowledgeable support staff who understand the intricacies of payment processing ensures that merchants receive the necessary support when they need it most. Promptly addressing merchant queries or challenges builds trust and strengthens the relationship between banks and merchants.
• Empowering tools and self-service capabilities: To optimize the merchant experience, acquirer banks must provide tools and capabilities that empower merchants in an omnichannel business environment. Offering a self-service portal or dashboard enables merchants to have control over their payment processes, access transaction history, generate reports, and manage their accounts effectively. Enabling maximum user journeys and intuitive interfaces simplifies navigation and minimizes the need for merchant support, enhancing the overall experience.

Did you know - FSS Payment Gateway supports 30+ user journeys for 250+ merchant categories while providing a complete self-servicing dashboard? Want to know more, click here .

In the competitive landscape of B2B payments, acquirer banks must acknowledge that optimizing merchant experiences is as important as focusing on customer experience. By leveraging technical advancements, such as self-service portals, tailored payment solutions, and more, banks can enhance merchant experiences, foster stronger relationships, drives merchant loyalty, and indirectly contributes to superior customer experiences. Acquirer banks that prioritize merchant experiences not only survive but thrive in the dynamic world of B2B payments, establishing themselves as trusted partners in the success of their merchants.

To know more about FSS Products, write to us at [email protected] .

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Chinese Merchant Bank Case Solution & Answer

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Chinese Merchant Bank Case Solution

How successful has the first transformation been in terms of changing the bank focus?

The first transformational strategy gave the bank the vision to develop the differentiation strategy in the market, in order to retain its competitive advantage in the market, along with the sustainability of its operations and reducing the cost of operating and increasing the profitability by cntrolli8gthe bargaining power of the buyer.

The first transformational strategy enabled it to develop the credit card market which according to the McKinney would have been unsuccessful and destructive on Chinese market, however, Chinese merchant bank took the blue ocean strategy and develop the credit card market along with retail banking and SME loans. This attracted a large mount of customers to the banks which helped it to maintain its profits while retaining its market position. It has been due the first transformational strategy, that the management of CMB recognized the need of disruptive strategy in maintaining or developing a competitive advantage in the market, and due to the early addition to the credit and retail banking, the bank remain the leader of offering these services.

Also, due to the initiation of the credit card service and its success in the market, the bank reached its goals in 3 rd years to make profits that it estimates to cover in 8 th year after initiation. This success attracted many other banks to join the industry and extend the services and hence developed the market potential leading to high adaptability and acceptance to the credit card. Lastly, the success of first transformation can be seen under the comparative advantage of the company which it shifted from customer service and technology to credit card service and retail banking, plunging the roots of CMB deeper into the market.

How much capital is needed for CMB to continue its current growth and dividend trajectory at current and increased capital adequacy levels?

Capital adequacy can be defined as, the ratio which is used to express the bank’s capital with respect to bank’s weighted credit exposures. It is an effective measure to hedge the risk of the depositors. To maintain an appropriate capital adequacy levels,is necessary for the banks to promote that they have sense to portray that the banks gives importance to financial stability and maintaining efficiency in the financial environment. According to Basel 3 requirements, all the banks have to maintain the capital adequacy ratio of more than 8%.

The Chinese merchant bank have capital adequacy ratio of 10.45% in 2009 and 11.21% in 2010, it is calculated by dividing the capital of the company with risk weighted assets.  Currently, the bank has fulfilled the requirement by maintaining more than 8% capital adequacy ratio at current capital level. According to the analysis and the capital projections of the upcoming years, the bank has to increase its capital adequacy reasonably, because the capital of the bank has also shown increasing trend. The capital has been projected by taking the average growth rates of the two years that is 2009 and 2010. The capital adequacy ratio should also be increased to maintain the benchmark and making appropriate measures to fulfill the growth patterns of the banking operations.

According to the projections the growth of the capital is seen as 22% in the recent two years, this has shown bank has potential to grow, the requirements of the capital that would be necessary to maintain an appropriate capital adequacy is more than 0.53 trillion RMB as calculated by the analysis.

Identify the main structural changes in the organization and state how they have improved service

China merchant bank, under the leadership and vision of Ma weihui, transformed its organizational structure in order to integrate the organizational function, operations with the change in business strategy. In doing so, it first established the retail head office with the department like personal loans and credit card services .The CMB initiated developing the head office in the branches system, to monitor and control the functions of the other branches along with the ease of offering extended services to the direct customers .It also enabled the bank to develop separate customer data and customer profiles for particular services, leading to streamlining the offerings accordingly. In addition, since many of the branches of CM Bank operated through autonomy structure, the head office approach helped bank in regulating, controlling and monitoring the services and performance of each bank.

In addition to this, the company also developed its online portal and initiated the mobile banking to tap the customers and to synchronize the offerings and its presence with the changing lifestyle and preferences of the Chinese market. Since the use of smart phone have incased, the development of mobile banking technology enabled the bank to align itself with customer needs and de3mands, making banking more and convenient, thus leading high profitability.

The bank also developed its online self-services and took the first mover advantage. In doing so, it developed its online portal through web, to offer the customers the case of banking and convenience all over chain, without any physical barrier and synchronized with the busy or on the go life style of the customer and hence created value. This particular structural change enabled the company in reducing the number of sales forces, leading to low operating cost, Also such approach sustained the retention rate of the employee and hence offered the efficiency in operation and maintenance of customer service.

Lastly, the company introduced the SAS software to manage the data of the customer which could help in tapping or cross-selling the customer with related choices. In doing so, the bank made the credit adaptability high with many other systems and brands, making the credit card one solution card. Also, the CMB introduced the technological innovations which mitigated the use of multiple passwords to operate different accounts, hence offering exquisite services to the customer in the shape of digital configuration. This allowed the CMB to attract more number of customers which increased the sales of financial services, leading topro fits. Not only this, it also enabled the bank to effectively utilize customer data analytics, making it ahead of market in devising new service level and offers………………..

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Top 10 FinTech Case Studies [A Detailed Exploration] [2024]

In the dynamic realm of financial technology—often abbreviated as FinTech—groundbreaking innovations have revolutionized how we interact with money, democratizing access to myriad financial services. No longer confined to traditional banking and financial institutions, today’s consumers can easily invest, transact, and manage their finances at their fingertips. Through a deep dive into the top five FinTech case studies, this article seeks to illuminate the transformative power of financial technology. From trailblazing start-ups to industry disruptors, we will unravel how these companies have reshaped the financial landscape, offering invaluable lessons for consumers and future FinTech leaders.

Top 10 FinTech case studies [A Detailed Exploration] [2024]

Case study 1: square – democratizing payment processing.

Launched in 2009 by Twitter co-founder Jack Dorsey, Square sought to fill a gaping hole in the financial services market—accessible payment processing for small businesses. In an industry overshadowed by high costs and complexity, Square introduced a game-changing point-of-sale (POS) system, using a tiny card reader that could be plugged into a smartphone.

Key Challenges

1. High Costs: The financial burden of traditional payment systems made it difficult for small businesses to participate, affecting their growth and market reach.

2. Complexity: Legacy systems were cumbersome, requiring hefty upfront investments in specialized hardware and software, with a steep learning curve for users.

3. Limited Accessibility: Many small businesses had to resort to cash-only operations, losing potential customers who preferred card payments.

Related: Important FinTech KPIs Explained

Strategies Implemented

1. User-Friendly Hardware: Square’s portable card reader was revolutionary. Easy to use and set up, it integrated seamlessly with smartphones.

2. Transparent Pricing: A flat-rate fee structure eliminates hidden costs, making budgeting more predictable for businesses.

3. Integrated Business Solutions: Square went beyond payment processing to offer additional services such as inventory management, analytics, and loans.

Results Achieved

1. Market Penetration: As of 2023, Square boasted over 4 million sellers using its platform, solidifying its market position.

2. Revenue Growth: Square achieved significant financial gains, reporting $4.68 billion in revenue in Q2 2021—a 143% year-over-year increase.

3. Product Diversification: Expanding its ecosystem, Square now offers an array of services from payroll to cryptocurrency trading through its Cash App.

Key Learnings

1. Simplicity is Key: Square’s user-centric design proved that simplifying complex processes can open new markets and encourage adoption.

2. Holistic Ecosystems: Offering integrated services can foster customer loyalty and increase lifetime value.

3. Transparency Builds Trust: A clear, straightforward fee structure can differentiate a FinTech solution in a market known for its opaqueness.

4. Accessibility: Providing easy-to-use and affordable services can empower smaller businesses, contributing to broader economic inclusion.

Related: Benefits of Green FinTech for Businesses

Case Study 2: Robinhood – Democratizing Investment

Founded in 2013, Robinhood burst onto the financial scene with a disruptive promise—commission-free trading. Unlike traditional brokerage firms that charged a fee for every trade, Robinhood allowed users to buy and sell stocks at no direct cost. The platform’s user-friendly interface and sleek design made it particularly appealing to millennials and Gen Z, demographics often underrepresented in the investment world.

1. High Commissions: Traditional brokerages often had fee structures that discouraged individuals, especially younger investors, from participating in the stock market.

2. Complex User Interfaces: Many existing trading platforms featured clunky, complicated interfaces that were intimidating for novice investors.

3. Limited Access: Entry-level investors often felt the investment landscape was an exclusive club beyond their financial and technical reach.

1. Commission-Free Trading: Robinhood’s flagship offering eliminated the financial barriers that commissions presented, inviting a new cohort of individual investors into the market.

2. User-Friendly Design: A sleek, intuitive interface made stock trading less intimidating, broadening the platform’s appeal.

3. Educational Resources: Robinhood provides educational content to help novice investors understand market dynamics, equipping them for more informed trading.

1. Market Disruption: Robinhood’s model has pressured traditional brokerage firms to rethink their fee structures, with several following suit by offering commission-free trades.

2. User Growth: As of 2023, Robinhood has amassed over 23.2 million users, a testament to its market penetration.

3. Public Scrutiny: Despite its success, Robinhood has not been without controversy, especially regarding its revenue model and lack of transparency. These issues have sparked widespread debate about ethical practices in fintech.

1. User-Centricity Drives Adoption: Robinhood’s easy-to-use platform illustrates that reducing friction encourages higher user engagement and diversifies the investor base.

2. Transparency is Crucial: The controversies surrounding Robinhood serve as a cautionary tale about the importance of transparent business practices in building and maintaining consumer trust.

3. Disruption Spurs Industry Change: Robinhood’s entry forced a reevaluation of longstanding industry norms, underscoring the influence a disruptive FinTech company can wield.

Related: How to Get an Internship in the FinTech Sector?

Case Study 3: Stripe – Simplifying Online Payments

Founded in 2010 by Irish entrepreneurs Patrick and John Collison, Stripe set out to solve a significant problem—simplifying online payments. During that time, businesses looking to accept payments online had to navigate a complex labyrinth of banking relationships, security protocols, and regulatory compliance. Stripe introduced a straightforward solution—APIs that allow businesses to handle online payments, subscriptions, and various other financial transactions with ease.

1. Complex Setup: Traditional online payment methods often require cumbersome integration and extensive documentation.

2. Security Concerns: Handling financial transactions online raised issues about data safety and compliance with financial regulations.

3. Limited Flexibility: Most pre-existing payment solutions were not adaptable to specific business needs, particularly for start-ups and SMEs.

1. Simple APIs: Stripe’s suite of APIs allowed businesses to integrate payment gateways effortlessly, removing barriers to entry for online commerce.

2. Enhanced Security: Stripe implemented robust security measures, including tokenization and SSL encryption, to protect transaction data.

3. Customization: Stripe’s modular design gave businesses the freedom to tailor the payment experience according to their specific needs.

1. Broad Adoption: Stripe’s intuitive and secure payment solutions have attracted a diverse client base, from start-ups to Fortune 500 companies.

2. Global Reach: As of 2023, Stripe operates in over 46 countries, testifying its global appeal and functionality.

3. Financial Milestone: Stripe’s valuation skyrocketed to $50 billion in 2023, making it one of the most valuable FinTech companies globally.

1. Ease of Use: Stripe’s success proves that a user-friendly, straightforward approach can go a long way in attracting a wide range of customers.

2. Security is Paramount: Handling financial data requires stringent security measures, and Stripe’s focus on secure transactions sets an industry standard.

3. Scalability and Flexibility: Providing a modular, customizable solution allows businesses to scale and adapt, increasing customer satisfaction and retention.

Related: FinTech Skills to Add in Your Resume

Case Study 4: Coinbase – Mainstreaming Cryptocurrency

Founded in 2012, Coinbase set out to make cryptocurrency trading as simple and accessible as using an email account. At the time, the world of cryptocurrency was a wild west of complicated interfaces, murky regulations, and high-risk investments. Coinbase aimed to change this by offering a straightforward, user-friendly platform to buy, sell, and manage digital currencies like Bitcoin, Ethereum, and many others.

1. User Complexity: Before Coinbase, cryptocurrency trading required high technical know-how, making it inaccessible to the average person.

2. Security Risks: The lack of centralized governance in the crypto world led to various security concerns, including hacking and fraud.

3. Regulatory Uncertainty: The absence of clear regulations concerning cryptocurrency created a hesitant environment for both users and investors.

1. User-Friendly Interface: Coinbase developed a sleek, easy-to-use platform with a beginner-friendly approach, which allowed users to start trading with just a few clicks.

2. Enhanced Security: The platform incorporated advanced security features such as two-factor authentication (2FA) and cold storage for digital assets to mitigate risks.

3. Educational Content: Coinbase offers guides, tutorials, and other educational resources to help demystify the complex world of cryptocurrency.

1. Mass Adoption: As of 2023, Coinbase had over 150 million verified users, contributing significantly to mainstreaming cryptocurrencies.

2. Initial Public Offering (IPO): Coinbase went public in April 2021 with a valuation of around $86 billion, highlighting its commercial success.

3. Regulatory Challenges: While Coinbase has succeeded in democratizing crypto trading, it continues to face scrutiny and regulatory hurdles, emphasizing the sector’s evolving nature.

1. Accessibility Drives Adoption: Coinbase’s user-friendly design has played a pivotal role in driving mass adoption of cryptocurrencies, illustrating the importance of making complex technologies accessible to everyday users.

2. Security is a Selling Point: In an ecosystem rife with security concerns, robust safety measures can set a platform apart and attract a broader user base.

3. Regulatory Adaptability: The ongoing regulatory challenges highlight the need for adaptability and proactive governance in the fast-evolving cryptocurrency market.

Related: Top FinTech Interview Questions and Answers

Case Study 5: Revolut – All-In-One Financial Platform

Founded in 2015, Revolut started as a foreign currency exchange service, primarily focusing on eliminating outrageous foreign exchange fees. With the broader vision of becoming a financial super-app, Revolut swiftly expanded its services to include digital banking, stock trading, cryptocurrency exchange, and other financial services. This rapid evolution aimed to provide users with an all-encompassing financial solution on a single platform.

1. Fragmented Services: Before Revolut, consumers had to use multiple platforms for various financial needs, leading to a fragmented user experience.

2. High Costs: Traditional financial services, particularly foreign exchange and cross-border payments, often have hefty fees.

3. Slow Adaptation: Conventional banking systems were slow to integrate new financial technologies, leaving a gap in the market for more agile solutions.

1. Unified Platform: Revolut combined various financial services into a single app, offering users a seamless experience and a one-stop solution for their financial needs.

2. Competitive Pricing: By leveraging FinTech efficiencies, Revolut offered competitive rates for services like currency exchange and stock trading.

3. Rapid Innovation: The platform continually rolled out new features, staying ahead of consumer demand and forcing traditional institutions to catch up.

1. User Growth: As of 2023, Revolut has amassed over 30 million retail customers, solidifying its reputation as a financial super-app.

2. Revenue Increase: In 2021, Revolut’s revenues climbed to approximately $765 million, indicating its business model’s viability.

3. Industry Influence: Revolut’s multi-functional capabilities have forced traditional financial institutions to reconsider their offerings, pushing the industry toward integrated, user-friendly solutions.

1. User-Centric Design: Revolut’s success stems from its focus on solving real-world consumer problems with an easy-to-use, integrated platform.

2. Agility Wins: In the fast-paced world of fintech, the ability to innovate and adapt quickly to market needs can be a significant differentiator.

3. Competitive Pricing is Crucial: Financial services have always been a cost-sensitive sector. Offering competitive pricing can draw users away from traditional platforms.

Related: Surprising FinTech Facts and Statistics

Case Study  6 : Chime – Revolutionizing Personal Banking

Essential term: digital banking.

Digital banking represents the digitization of all traditional banking activities, where financial services are delivered predominantly through the internet. This innovation caters to a growing demographic of tech-savvy users seeking efficient and accessible banking solutions.

Founded in 2013, Chime entered the financial market with a bold mission: to redefine personal banking through simplicity, transparency, and customer-centricity. At a time when traditional banks were mired in fee-heavy structures and complex service models, Chime introduced a revolutionary no-fee model complemented by a streamlined digital experience, challenging the status quo of personal banking.

1. Fee-Heavy Structure: Traditional banks heavily relied on various fees, including overdraft and maintenance charges, alienating a significant portion of potential customers, particularly those seeking straightforward banking solutions.

2. Complexity and Inaccessibility: Conventional banking systems were often marred by cumbersome procedures and lacked user-friendly interfaces, making them less appealing, especially to younger, more tech-savvy generations.

3. Customer Service: The traditional banking sector frequently struggled with providing proactive and responsive customer service, creating a gap in customer satisfaction and engagement.

1. No-Fee Model: By eliminating common banking fees such as overdraft fees, Chime positioned itself as a customer-friendly alternative, significantly attracting customers frustrated with traditional banking penalties.

2. User-Friendly App: Chime’s app was designed with user experience at its core, offering an intuitive and accessible platform for everyday banking operations, thereby enhancing overall customer experience.

3. Automatic Savings Tools: Chime innovated with features like automatic savings round-up and early paycheck access, designed to empower customers in their financial management.

1. Expansive Customer Base: Chime successfully captured a broad market segment, particularly resonating with millennials and Gen Z, evidenced by its rapid accumulation of millions of users.

2. Catalyst for Innovation: The company’s growth trajectory and model pressured traditional banks to reassess and innovate their fee structures and service offerings.

3. Valuation Surge: Reflecting its market impact and success, Chime’s valuation experienced a substantial increase, marking its significance in the banking sector.

1. Customer-Centric Approach: Chime’s journey underscores the importance of addressing customer pain points, such as fee structures, and offering a seamless digital banking experience, which can be instrumental in rapid user base growth.

2. Innovation in Features: The introduction of genuinely helpful financial management tools can significantly differentiate a FinTech company in a competitive market.

3. Disruptive Influence: Chime’s success story illustrates how a digital-first approach can disrupt and challenge traditional banking models, paving the way for new, innovative banking experiences.

Related: Is FinTech Overhyped?

Case Study  7 : LendingClub – Pioneering Peer-to-Peer Lending

Essential term: peer-to-peer (p2p) lending.

Peer-to-Peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without using an official financial institution as an intermediary. This model directly connects borrowers and lenders through online platforms.

LendingClub, founded in 2006, emerged as a trailblazer in the lending industry by introducing a novel P2P lending model. This innovative approach offered a substantial departure from the traditional credit system, typically dominated by banks and credit unions, aiming to democratize access to credit.

1. High-Interest Rates: Traditional loans were often synonymous with high-interest rates, rendering them inaccessible or financially burdensome for many borrowers.

2. Limited Access to Credit: Conventional lending mechanisms frequently sidelined individuals with lower credit scores, creating a significant barrier to credit access.

3. Intermediary Costs: The traditional lending process involves numerous intermediaries, leading to additional costs and inefficiencies for borrowers and lenders.

1. Direct Platform: LendingClub’s platform revolutionized lending by directly connecting borrowers with investors, reducing the overall cost of obtaining loans.

2. Risk Assessment Tools: The company employed advanced algorithms for assessing the risk profiles of borrowers, which broadened the spectrum of loan accessibility to include individuals with diverse credit histories.

3. Streamlined Process: LendingClub’s online platform streamlined the loan application and disbursement processes, enhancing transparency and efficiency.

1. Expanded Credit Access: LendingClub significantly widened the avenue for credit, particularly benefiting those with less-than-perfect credit scores.

2. Influencing the Market: The P2P lending model introduced by LendingClub prompted traditional lenders to reconsider their rates and processes in favor of more streamlined, borrower-friendly approaches.

3. Navigating Regulatory Hurdles: The journey of LendingClub highlighted the intricate regulatory challenges of financial innovation, underscoring the importance of adaptive compliance strategies.

1. Efficiency of Direct Connections: Eliminating intermediaries in the lending process can lead to substantial cost reductions and process efficiency improvements.

2. Broadening Credit Accessibility: FinTech can play a pivotal role in democratizing access to financial services by implementing innovative risk assessment methodologies.

3. Importance of Regulatory Compliance: Sustainable innovation in the FinTech sector necessitates a keen awareness and adaptability to the evolving regulatory landscape.

Related: Who is a FinTech CTO?

Case Study  8 : Brex – Reinventing Business Credit for Startups

Essential term: corporate credit cards.

Corporate credit cards are specialized financial tools designed for business use. They offer features like higher credit limits, rewards tailored to business spending, and, often, additional tools for expense management.

Launched in 2017, Brex emerged with a bold vision to transform how startups access and manage credit. In a financial landscape where traditional corporate credit cards posed steep requirements and were often misaligned with the unique needs of burgeoning startups, Brex introduced an innovative solution. Their model focused on the company’s cash balance and spending patterns rather than relying on personal credit histories.

1. Inaccessibility for Startups: Traditional credit systems, with their reliance on extensive credit history, were largely inaccessible to new startups, which typically lacked this background.

2. Rigid Structures: Conventional corporate credit cards were not designed to accommodate rapidly evolving startups’ fluid and dynamic financial needs.

3. Personal Guarantee Requirement: A common stipulation in business credit involves personal guarantees, posing a significant risk for startup founders.

1. No Personal Guarantee: Brex innovated by offering credit cards without needing a personal guarantee, basing creditworthiness on business metrics.

2. Tailored Financial Solutions: Understanding the unique ecosystem of startups, Brex designed its services to be flexible and in tune with their evolving needs.

3. Technology-Driven Approach: Utilizing advanced algorithms and data analytics, Brex could assess the creditworthiness of startups in a more nuanced and comprehensive manner.

1. Breaking Barriers: Brex made corporate credit more accessible to startups, removing traditional barriers.

2. Market Disruption: By tailoring its product, Brex pressures traditional financial institutions to innovate and rethink its credit card offerings.

3. Rapid Growth: Brex’s unique approach led to rapid adoption within the startup community, significantly growing its customer base and market presence.

1. Adapting to Market Needs: Brex’s success underscores the importance of understanding and adapting to the specific needs of your target market.

2. Innovative Credit Assessment: Leveraging technology for credit assessment can open new avenues and democratize access to financial products.

3 Risk and Reward: The move to eliminate personal guarantees, while riskier, positioned Brex as a game-changer, highlighting the balance between risk and innovation in FinTech.

Related: Is FinTech a Dying Career Industry?

Case Study  9 : SoFi – Transforming Personal Finance

Essential term: financial services platform.

A financial services platform offers a range of financial products and services, such as loans, investment options, and banking services, through a unified digital interface.

SoFi, short for Social Finance, Inc., was founded in 2011 to revolutionize personal finance. Initially focused on student loan refinancing, SoFi quickly expanded its offerings to include a broad spectrum of financial services, including personal loans, mortgages, insurance, investment products, and a cash management account. This expansion was driven by a vision to provide a one-stop financial solution for consumers, particularly catering to the needs of early-career professionals.

1. Fragmented Financial Services: Consumers often had to navigate multiple platforms and institutions to manage their various financial needs, leading to a disjointed financial experience.

2. Student Loan Debt: Many graduates needed more flexible and affordable refinancing options with student debt escalating.

3. Accessibility and Education: A significant segment of the population lacked access to comprehensive financial services and the knowledge to navigate them effectively.

1. Diverse Financial Products: SoFi expanded its product range beyond student loan refinancing to include a suite of financial services, offering more holistic financial solutions.

2. Tech-Driven Approach: Utilizing technology, SoFi provided streamlined, user-friendly experiences across its platform, simplifying the process of managing personal finances.

3. Financial Education and Advice: SoFi offered educational resources and personalized financial advice, positioning itself as a partner in its customers’ financial journey.

1. Expanding Consumer Base: SoFi succeeded in attracting a broad customer base, especially among young professionals looking for integrated financial services.

2. Innovation in Personal Finance: The company’s expansion into various financial services positioned it as a leader in innovative personal finance solutions.

3. Brand Recognition and Trust: With its comprehensive approach and focus on customer education, SoFi built a strong brand reputation and trust among its users.

1. Integrated Services Appeal: Offering a broad array of financial services through a single platform can attract customers seeking a unified financial management experience.

2. Leveraging Technology for Ease: Using technology to simplify and streamline financial services is key to enhancing customer experience and satisfaction.

3. Empowering Through Education: Providing users with financial education and advice can foster long-term customer relationships and trust.

Related: FinTech vs Investment Banking

Case Study  10 : Apple Pay – Redefining Digital Payments

Essential term: mobile payment system.

A mobile payment system allows consumers to make payments for goods and services using mobile devices, typically through apps or integrated digital wallets.

Launched in 2014, Apple Pay marked Apple Inc.’s foray into the digital payment landscape. It was introduced with the aim of transforming how consumers perform transactions, focusing on enhancing the convenience, security, and speed of payments. Apple Pay allows users to make payments using their Apple devices, employing Near Field Communication (NFC) technology. This move was a strategic step in leveraging the widespread use of smartphones for financial transactions.

1. Security Concerns: The rising incidences of data breaches and fraud in digital payments made consumers skeptical about the security of mobile payment systems.

2. User Adoption: Convincing consumers to shift from traditional payment methods like cash and cards to a digital platform requires overcoming ingrained habits and perceptions.

3. Merchant Acceptance: For widespread adoption, a large number of merchants needed to accept and support Apple Pay.

1. Enhanced Security Features: Apple Pay uses a combination of device-specific numbers and unique transaction codes, ensuring that card numbers are not stored on devices or servers, thereby enhancing transaction security.

2. Seamless Integration: Apple Pay was designed to work seamlessly with existing Apple devices, offering an intuitive and convenient user experience.

3. Extensive Partnership with Banks and Retailers: Apple forged partnerships with numerous banks, credit card companies, and retailers to ensure widespread acceptance of Apple Pay.

1. Widespread Adoption: Apple Pay quickly gained a significant user base, with millions of transactions processed shortly after its launch.

2. Market Leadership: Apple Pay became one of the leading mobile payment solutions globally, setting a standard in the digital payment industry.

3. Influence on Payment Behaviors: The introduction of Apple Pay substantially accelerated the shift towards contactless payments and mobile wallets.

1. Trust Through Security: The emphasis on security can be a major driving force in user adoption of new financial technologies.

2. Integration and Convenience: A system that integrates seamlessly with users’ daily lives and provides tangible convenience can successfully change long-standing consumer habits.

3. Strategic Partnerships: Building a network of partnerships is key to the widespread acceptance and success of a new payment system.

These stories of globally renowned FinTech trailblazers offer invaluable insights, providing a must-read blueprint for anyone looking to make their mark in this rapidly evolving industry.

1. Square shows that focusing on user needs, especially in underserved markets, can drive innovation and market share.

2. Robinhood serves as both an inspiration and a cautionary tale, advocating for democratization while emphasizing the importance of ethical practices.

3. Stripe proves that simplifying complex processes through customizable, user-friendly solutions can redefine industries.

4. Coinbase highlights the transformative potential of making new financial instruments like cryptocurrency accessible while reminding us of regulatory challenges.

5. Revolut sets the bar high with its user-centric, all-in-one platform, emphasizing the need for agility and competitive pricing in the sector.

The key to FinTech success lies in simplicity, agility, user focus, and ethical considerations. These case studies serve as guiding lights for future innovation, emphasizing that technological superiority must be balanced with customer needs and ethical responsibilities.

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Payment disputes in banking: A pathway to deeper customer relationships

Card-related payment disputes between customer and merchant occur in fewer than 1 percent of transactions, but these moments can have an outsized impact on bank-customer relationships. The cornerstone of these relationships is customer trust—that their deposits are safe, and that they can dispute a charge or transaction and get a quick, factual answer.

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For customers, disputes can be a source of frustration and inconvenience. For banks, disputes are expensive to resolve. If banks treat disputes simply as issues to be minimized, they can miss the silver lining: the opportunity to strengthen their relationships with customers.

This point is particularly important today. Globally, customers continue to move away from cash and checks toward electronic payments (Exhibit 1). Overall, this trend is a positive development for banks and card issuers, but as card transactions grow, so does the number of disputable transactions (and the incidence of fraud), putting pressure on dispute processes that often are already overextended, and leading to increasesi  operating costs of hundreds of millions of dollars.

As they benefit from growth in credit- and debit-card use, in other words, banks and card providers must ensure that the customer experience is not degraded. A number of banks are therefore rethinking the way they manage disputes with an eye toward maintaining and even strengthening their trust-based customer relationships—all while processing disputes more cost efficiently and at lower regulatory risk.

Complex operating models and other obstacles

Today, most banks face a number of costly obstacles as they seek to address a rising number of card disputes:

• Complex operating models. Most banks’ traditional, budget-controlled functional structures lack a clear, end-to-end chain of responsibility for the disputes experience. The operating model’s complexity obscures distinct ownership of the client experience, and in some cases there is a definitive separation among the functions required to take in and resolve disputes (the call center, dispute research, and the back office). This disjointed model leads to more customer pain points and delays in time-to-credit and overall dispute resolution. To exacerbate matters, most dispute organizations are scattered geographically—some US-based banks have as many as 15 dispute-resolution locations—which intensifies operational complexity.
• Overprocessing of disputes. Banks and issuers usually process all disputes above $25, regardless of dollar amount, customer, or the merchant’s dispute history, and apply the same process across the board. This lack of triage allows dispute volume to rise and puts pressure on dispute teams to process disputes quickly to save costs and avoid regulatory infractions.
• Long, complex research process. In most banks, the dispute process involves multiple IT systems and tends to be driven by the technology the bank has rather than the technology it needs. In some cases, banks must turn to third parties to conduct additional research on fraud.
• Ineffective quality assurance. At some banks, the process of reviewing dispute decisions is overly focused on checking regulatory boxes rather than on the overall accuracy of the decision. Banks and issuers thus miss the opportunity to catch and fix incorrect decisions. This problem is especially prevalent at larger institutions, where intense regulatory scrutiny often inadvertently makes compliance a higher priority than quality control. Instead, leading banks are now embedding regulatory processes into more effective dispute processes.
• Inadequate performance management. Process complexity of the kind that characterizes dispute resolution at most banks results in highly variable individual performance. As mentioned, banks are often overly focused on preventing regulatory violations at the expense of performance. McKinsey has seen differences in productivity of more than two and a half times between the top and bottom quartiles of dispute-research analysts who process disputes. Limited use of metrics, a lack of individual and team performance targets, and a dearth of fact-based coaching to improve individual performance and identify problems all exacerbate the problem.
• Over-reliance on the case-management system. Years ago, many institutions implemented case-management systems for dispute resolution with the expectation that the technology would drive down costs. However, most realized only marginal improvements in efficiency and speed of resolution. In McKinsey’s experience, case-management systems deliver full value only when they can integrate effectively with the various systems used to investigate disputes—fraud prevention, ATM, and transaction history systems, for example—and can follow a streamlined process to resolve them. Typically, the handle time for resolving a case does not go beyond an hour, but it can take up to five days to provide an answer to the customer.
• Increasing regulatory focus. Customer-protection regulations—such as Regulations E and Z in the US—tighten the timelines for banks to resolve disputes and raise the pressure on teams to process disputes and provide credit faster. However, while providing credit faster alleviates one pain point, many firms see it as a simply a Band-Aid, leaving the underlying issue unresolved.

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Simpler, smarter processing.

New insights, tools, and capabilities are emerging that enable banks to address many of the obstacles they currently face in the dispute-resolution arena. An integrated, next-generation operating model based on these new capabilities improves the customer experience (providing 100 percent of customers with real-time, provisional credit decisions), reduces costs (with efficiency gains of 30 percent or more) and financial losses (by up to 5 to 7 percent), and lowers regulatory risk (reducing customer-impacting errors by 80 percent). To achieve these results, banks and card issuers can focus on five imperatives (Exhibit 2):

1. Digitize the dispute-resolution process

Digitizing the dispute process dramatically reduces the time and effort required for a customer to file a dispute and for the bank to take in the dispute. Best-in-class institutions are simplifying their intake process by taking a customer-centric view, to the point where customers can file disputes in a couple of minutes on their mobile devices, compared with the ten minutes it takes to do so speaking on the phone. Banks are also streamlining the research process by providing a set of questions that customers must answer up front. Call-center agents and customers no longer have to plow through a questionnaire to understand or explain the dispute.

2. Redesign the process with lean principles

Traditionally, banks have sought to improve the dispute process through technology investments and process tweaks, leading to only marginal gains. Only banks that have conducted a “zero-based” design of the entire dispute process have achieved dramatic change. Designing a new dispute process from scratch is the only way to truly simplify dispute research policies and requirements. Some banks have increased productivity quickly by categorizing disputes according to their complexity (number of transactions, number of different systems required to decision, for example).

3. Apply advanced analytics

Some banks and issuers are leveraging advanced analytics and machine learning (in which computers “learn” patterns from examples and apply the insights to new data) to predict disputes and fraud (for example, by letting customers know when a suspicious transaction has occurred and giving them the option to decline it). While fraud detection has leveraged neural networks for the last two decades, the next generation of models is substantially more powerful, leveraging more data within shorter time spans. These processes work by using dozens to hundreds of variables to determine whether provisional or final immediate credit is the optimal strategy for resolving a particular dispute. Banks are also using analytics to estimate the amount of effort required to research a dispute, based on the customer’s history and the merchant profile. The value of such an approach is significant; consider that one regional US bank was conducting a complete research process for all disputes before providing provisional credit, despite the fact that it approved final credit in 98 percent of cases. Advanced analytics can also dramatically improve the customer experience by expediting time-to-funds, and it frees up research capacity to focus on more complex and higher-impact disputes.

Putting customer experience at the heart of next-generation operating models

4. employ intelligent process automation.

Intelligent process automation (IPA), or robotics, automates aspects of the end-to-end dispute-processing value chain. IPA can reduce dispute-resolution cycle times, boost operational efficiency, and improve overall customer experience. The most common use cases include:

• Fraud prevention. Advanced analytics can flag potentially fraudulent transactions and address them before they become disputes. For example, McKinsey has worked with QuantumBlack to develop a model that uses machine learning and a random forest model to flag potential fraud cases based on 13 months of transaction history.
• Intake review. Natural-language processing and machine learning can identify the type of dispute (fraudulent vs. nonfraudulent, PIN-based vs. non-PIN-based).
• Dispute management. Advanced analytics can separate complex disputes from simple ones and assign them to the appropriate analyst. For example, a US bank used an algorithm to identify complex disputes and matched disputes to analysts based on analysts’ skill sets and the other disputes they were working on that day. The result was less “context changing” and significantly increased productivity.
• Dispute processing. Banks use robotics to collect information automatically and prepare cases for human processing.
• Postdispute processing. Robotics can be used to process credits and to send notifications and status alerts to customers.
• Postdispute QA on fraud. Machine learning can be used to identify paid dispute cases that need to be audited.

5. Strengthen management systems

While new technologies offer banks the opportunity to re-envision and redesign dispute processes, there is no substitute for best-in-class management systems. Banks and card issuers that excel at dispute management usually take an end-to-end approach to managing the dispute process. They assign a product owner to the entire dispute process for each product or claim, and that owner is responsible for—and compensated for—delivering better customer experience, quality, and efficiency across intake, research, payout, and communication. Clarity in expected customer outcomes and strong key performance indicators (KPIs)—such as those that measure the process from end to end, or those that assess performance from the customer’s perspective—help staff to focus on the right goals.

A disputes transformation

A top-20 US bank recently simplified its disputes process from end to end. Before this effort, the bank’s operational costs were rapidly growing while customers were forced to go through lengthy processes to resolve their disputes—attracting the growing scrutiny of regulators. As part of a bankwide transformation of the customer experience, the bank decided to deliver a next-generation disputes experience to its customers.

It focused on three areas: dramatically enhancing the customer experience, simplifying the process to improve speed and quality, and reducing costs. The transformation started with a map of internal and external pain points based on customer insights, front-line interviews, and cross-functional focus groups. The bank then redesigned the end-to-end process to reduce steps and to limit the information needed, installed an advanced analytics model to determine the likelihood of dispute payout so that more customers could be given immediate credit, and installed a new operating model in the dispute-research areas. A management system that drives continuous improvement supports the new operating model. These initiatives were piloted with a group of 150 employees for two months before being rolled out enterprise-wide.

The transformation resulted in a 25 percent increase in productivity after two months. About 500,000 customers benefited from immediate credit provision, error rates dropped by 80 percent, and the number of customer complaints resulting from disputes dropped by 20 percent. Invigorated by this success, the management team has leveraged this same approach to transform other key customer processes across the bank.

Making the most of disputes

Transforming the dispute-resolution process can provide banks with an opportunity to solidify bonds with their customers while driving down costs. The benefits can be grouped into three broad categories:

• Strengthening trust. A quick resolution—and provisional funds when appropriate—can turn a negative customer experience into a loyalty-building moment. Loyal customers tend to feel that their bank “has their back”—but it often takes a dispute for them to reach that level of comfort.
• Cutting operating costs. McKinsey estimates that the top 15 US banks spend approximately $3 billion each year, combined, on disputes processing. (About 50 million to 100 million disputes occur annually in the US, with a cost per dispute ranging from $10 to $50.) Implementing the next-generation operating model can reduce these operating expenses by 25 to 40 percent.
• Improving quality. Given the complexities in the dispute-research process and the pressure to resolve disputes quickly, quality can suffer. McKinsey has seen banks in which 10 percent of dispute outcomes were incorrect (both in favor of and against customers). Simplifying and automating the process leads to better decisions.

The disputes process is often overlooked as a chance to build trust with customers. This is a missed opportunity, as the tools and capabilities that will enhance the customer experience can also improve bank outcomes and reduce costs. As banks seek to improve the dispute process, they should look beyond traditional incremental changes and reimagine the process from start to finish. This will not be a simple endeavor, but the rewards can be significant.

David Deninzon is a partner in McKinsey’s New York office, where Vijay D’Silva is a senior partner; Rohit Sood is a partner in the Toronto office.

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Trust Merchant Bank

By: Ramon Casadesus-Masanell, Pippa Tubman Armerding, Dilyana Botha, Salim Dewji

Trust Merchant Bank (TMB), a leading bank in the Democratic Republic of Congo (DRC), needs to decide whether to enter the soon-to-be-liberalized insurance industry. Since its founding in 2004, TMB…

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Trust Merchant Bank (TMB), a leading bank in the Democratic Republic of Congo (DRC), needs to decide whether to enter the soon-to-be-liberalized insurance industry. Since its founding in 2004, TMB has played a pivotal role in reshaping the DRC banking landscape by focusing on retail customers and thus promoting financial inclusion in the DRC. In 2018, the Congolese government decided to open up the insurance industry, formerly a state-owned and mismanaged monopoly. TMB is considering applying for the newly available insurance licenses as the bank is well-positioned to capitalize on its existing banking infrastructure to begin selling insurance. The bank's leadership team is assessing the opportunities and challenges with such a move. What is required of TMB to make this move a success? How will TMB's customers react? How should the bank grow in an increasingly competitive environment?

Learning Objectives

• Understanding how to set up a Blue Ocean Strategy to go after existing and new customers for a new business. - Learning how to decide whether to move into a completely new sector, i.e., insurance. - Understanding what to consider when entering a sector that has just become demonopolized / opened, challenges and opportunities. - Assessing the pros and cons of operating in a market that no one else is in, i.e. low-end retail banking in the DRC. - Assessing the challenges and opportunities in being an entrepreneur in an emerging market and creating value through an informal venture. - Understanding the success factors for overcoming a corporate crisis and turning a company around.

May 16, 2020

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Geographies:

Democratic Republic of the Congo

Industries:

Banking and investment industry, Financial service sector, Insurance industry

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Managed IT for Ocean Merchant Banking Services Case Study

A fully outsourced virtual it team, an infrastructure built from scratch and a thriving professional services business.

Client: Ocean Merchant Banking Services Sector: Professional Services Services: Managed Infrastructure,   IT Consultancy,  Microsoft software & services , Security & compliance Location HQ: London, UK – Ocean Merchant Banking Services needed a modern, robust and scalable IT infrastructure, telecoms and full IT support on which to build their brand and business.

The team is very professional, efficient, polite, extremely knowledgeable, and hugely accessible for someone who is not a tech expert.

Pedro Errazuriz, Business Founder

Ocean Merchant Banking Services works with medium and large industrial enterprises across Europe. Based in London the business develops long-term relationships to resolve issues faced by its clients such as optimising capital employed by shareholders and the facilitation of restructuring, growth and acquisitions.

Blue Saffron has enjoyed a long-term working relationship with founder Pedro Errazuriz since 2003, providing voice and data services at his previous post in a corporate bank, before he launched Ocean Merchant Banking Services.

The business needed a modern, robust and scalable IT infrastructure, telecoms and full IT support on which to build their brand and business. They also needed to enable secure collaboration between staff based in the UK, Belgium, France and Spain.

The business needed these solutions built to deliver their goals from scratch, with no inhouse IT team. It was time critical that they hit the ground running.

Our Approach

Blue Saffron knew it was important to put an infrastructure in place that could grow with the client. They audited the business’ IT needs and then set about developing and delivering an IT foundation that could help it to prosper. The final install took one week, with every last thing outsourced, and no IT team internally within the business.

Pedro, the founder, went from full internal IT support in his previous post to choosing a fully outsourced IT infrastructure for Ocean Merchant Banking Services and he hasn’t looked back.

Solutions Delivered Included

• One cloud-based telephony solution which provides a host of benefits including business continuity, mobility and cost-savings across multiple locations
• Consolidation of 12 different vendor relationships, delivering disparate hardware and software, into one efficient partnership
• Managed IT services and Microsoft Office 365, which has given the team cloud email and file storage, allowing secure mobile working and easier collaboration, all whilst meeting compliance regulations
• A managed physical firewall to support robust security
• Microsoft-based cloud security tools
• Macs, PCs and desktops for all staff
• SQL and Visual basic hosting and database management support
• Migration of a key application from a physical server in their old business to a cloud server in Microsoft Azure which is compliant with financial regulations

Significant Benefits Seen by Ocean Merchant Banking Services include

• Support ticket volumes are running at 50% below the industry standard
• 100% response times equal SLA compliance
• System availability is running at 100%

Great Client Feedback

“Blue Saffron is a one-stop-shop for technology. IT is essential for a business and being supported by professionals on the field is essential. If you plan to outsource, it needs to be with a professional firm like Blue Saffron that can cater for all IT issues. “Everything was seamless from day one. The transition was good, the handover was good, they were great at chasing our existing and former suppliers. The team is very professional, efficient, polite, extremely knowledgeable, and hugely accessible for someone who is not a tech expert. “They communicate very well and are approachable IT experts. Above all, they are a very nice bunch of people.”

Pedro Errazuriz | Business Founder | Ocean Merchant Banking Services

Further Information

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If you plan to outsource, it needs to be with a professional firm like Blue Saffron that can cater for all IT issues.

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Blue Saffron is not your average, award-winning provider of communications and technology. We have worked hard to earn a 98% customer satisfaction rating . This is based on our belief that it’s your business needs which must lead our solutions and delivery.

Our passionate and professional team has worked together for more than a decade to make sure we are one of London’s most progressive, independent suppliers.

Our name is built on reliability, efficiency and making our customers lives easier. Whether you are looking for fixed or mobile telecoms, internet access, or services such as data backup, security, email, or desktop and server management, we can help. We can supply all your technology services or happily fill gaps which can optimise your business functions. We package, price and bill our services clearly and directly, with a commitment to intelligent customer service.

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Merchant Banking In India

• Harvard Case Studies

Harvard Business Case Studies Solutions – Assignment Help

In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken.

To make a detailed case analysis, student should follow these steps:

STEP 1: Reading Up Harvard Case Study Method Guide:

Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important.

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STEP 2: Reading The Merchant Banking In India Harvard Case Study:

To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant.

When having a fast reading, following points should be noted:

• Nature of organization
• Nature if industry in which organization operates.
• External environment that is effecting organization
• Problems being faced by management
• Identification of communication strategies.
• Any relevant strategy that can be added.
• Control and out-of-control situations.

When reading the case for second time, following points should be considered:

• Decisions needed to be made and the responsible Person to make decision.
• Objectives of the organization and key players in this case.
• The compatibility of objectives. if not, their reconciliations and necessary redefinition.
• Sources and constraints of organization from meeting its objectives.

After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case.

STEP 3: Doing The Case Analysis Of Merchant Banking In India:

To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused.

Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for Merchant Banking In India and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader.

After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin.

STEP 4: SWOT Analysis of the Merchant Banking In India HBR Case Solution:

• Pest analysis

SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for Merchant Banking In India is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management.

This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal-External Analysis.

In the strengths, management should identify the following points exists in the organization:

• Advantages of the organization
• Activities of the company better than competitors.
• Unique resources and low cost resources company have.
• Activities and resources market sees as the company’s strength.
• Unique selling proposition of the company.

WEAKNESSES:

• Improvement that could be done.
• Activities that can be avoided for Merchant Banking In India.
• Activities that can be determined as your weakness in the market.
• Factors that can reduce the sales.
• Competitor’s activities that can be seen as your weakness.

OPPORTUNITIES:

• Good opportunities that can be spotted.
• Interesting trends of industry.
• Change in technology and market strategies
• Government policy changes that is related to the company’s field
• Changes in social patterns and lifestyles.
• Local events.

Following points can be identified as a threat to company:

• Company’s facing obstacles.
• Activities of competitors.
• Product and services quality standards
• Threat from changing technologies
• Financial/cash flow problems
• Weakness that threaten the business.

Following points should be considered when applying SWOT to the analysis:

• Precise and verifiable phrases should be sued.
• Prioritize the points under each head, so that management can identify which step has to be taken first.
• Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.
• Make sure that points identified should carry itself with strategy formulation process.
• Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses.

STEP 5: PESTEL/ PEST Analysis of Merchant Banking In India Case Solution:

Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future.

Pest analysis is very important and informative.  It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies.

To analyze the business objective and its opportunities and threats, following steps should be followed:

• Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization
• Analyze the opportunities that would be happen due to the change.
• Analyze the threats and issues that would be caused due to change.
• Perform cost benefit analyses and take the appropriate action.

PEST FACTORS:

• Next political elections and changes that will happen in the country due to these elections
• Strong and powerful political person, his point of view on business policies and their effect on the organization.
• Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.
• Change in Legislation and taxation effects on the company
• Trend of regulations and deregulations. Effects of change in business regulations
• Timescale of legislative change.
• Other political factors likely to change for Merchant Banking In India.

ECONOMICAL:

• Position and current economy trend i.e. growing, stagnant or declining.
• Exchange rates fluctuations and its relation with company.
• Change in Level of customer’s disposable income and its effect.
• Fluctuation in unemployment rate and its effect on hiring of skilled employees
• Access to credit and loans. And its effects on company
• Effect of globalization on economic environment
• Considerations on other economic factors

SOCIO-CULTURAL:

• Change in population growth rate and age factors, and its impacts on organization.
• Effect on organization due to Change in attitudes and generational shifts.
• Standards of health, education and social mobility levels. Its changes and effects on company.
• Employment patterns, job market trend and attitude towards work according to different age groups.

case study solutions

• Social attitudes and social trends, change in socio culture an dits effects.
• Religious believers and life styles and its effects on organization
• Other socio culture factors and its impacts.

TECHNOLOGICAL:

• Any new technology that company is using
• Any new technology in market that could affect the work, organization or industry
• Access of competitors to the new technologies and its impact on their product development/better services.
• Research areas of government and education institutes in which the company can make any efforts
• Changes in infra-structure and its effects on work flow
• Existing technology that can facilitate the company
• Other technological factors and their impacts on company and industry

These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources.

STEP 6: Porter’s Five Forces/ Strategic Analysis Of The Merchant Banking In India Case Study:

To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market.

porter’s five forces model

These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:

• THREAT OF NEW ENTRANTS:
• as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
• Barriers to entry that includes copy rights and patents.
• High capital requirement
• Government restricted policies
• Switching cost
• Access to suppliers and distributions
• Customer loyalty to established brands.
• THREAT OF SUBSTITUTES:
• this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
• Price performance of substitute
• Switching costs of buyer
• Products substitute available in the market
• Reduction of quality
• Close substitution are available
• DEGREE OF INDUSTRY RIVALRY:
• the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
• Competitive advantage
• Continuous innovation
• Sustainable position in competitive advantage
• Level of advertising
• Competitive strategy
• BARGAINING POWER OF BUYERS:
• it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
• Bargaining leverage
• Switching cost of a buyer
• Buyer price sensitivity
• Competitive advantage of company’s product
• BARGAINING POWER OF SUPPLIERS:
• this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
• Input differentiation
• Impact of cost on differentiation
• Strength of distribution centers
• Input substitute’s availability.

STEP 7: VRIO Analysis of Merchant Banking In India:

Vrio analysis for Merchant Banking In India case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the Merchant Banking In India company’s activities and resources values. RARE: the resources of the Merchant Banking In India company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE: the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE: resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like Merchant Banking In India)  must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate.

STEP 8: Generating Alternatives For Merchant Banking In India Case Solution:

After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:

• Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.
• as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive
• it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.
• Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable.

Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company.

STEP 9: Selection Of Alternatives For Merchant Banking In India Case Solution:

It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:

• Improve profitability
• Increase sales, market shares, return on investments
• Customer satisfaction
• Brand image
• Corporate mission, vision and strategy
• Resources and capabilities

Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study.

STEP 10: Evaluation Of Alternatives For Merchant Banking In India Case Solution:

If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints.

STEP 11: Recommendations For Merchant Banking In India Case Study (Solution):

There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.

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Merchant Banking Operation: A Case Study of Selected Merchant Banks in Bangladesh

2017, Asian Journal of Finance & Accounting

In Bangladesh the establishment of merchant bank added value to the stock market which plays a vital role in the progress of economic development. This study tried to analyze the performance of Lanka Bangla Investment Ltd., Prime Finance Capital Management Ltd., IDLC Investment Ltd. and Uttara Finance and Investment Ltd. Seven trend equations have been tested for different activities of the selected merchant banks. It is observed that the selected merchant banks were able to achieve a stable growth of investment in securities, margin loan to clients, brokerage commission, capital gain/loss from securities, portfolio management services, issue management fees, corporate advisory fees and underwriting commission during the period of 2011-2015. Among them the trend equation of investment in securities, margin loan to clients, and corporate advisory fees are positive incase of all the selected merchant banks. Square of correlation coefficient (r2) has also been tested for all trend equa...

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