PwC Challenge 3.

0: The New Equation

Overview:

There is a paradigm shift in the Banking, Financial Services and Insurance (BFSI) industry. Disruptive
technologies are increasingly putting the control of products and services in the hands of customers.
Technology aided disruption has forced the BFSI sector to innovate in terms of product, customer
convenience, transparency, pricing and customer service. The entire banking value chain – i.e., banking
products and services that consumers can avail and expect, are now accessible through a non-banking
service provider and enabled by its technological prowess & efficient business model. Under these
models, both consumer and corporate banking services are primarily delivered through the internet or
other forms of electronic channels instead of physical branches. These non-banking service providers are
called “Neobanks”. It should be noted that digital banks are not the same as neobanks. Digital Banks are
often the online-only subsidiary of an already existing traditional player. Neobanks, in contrast, operate
100% online without any traditional physical branches.

Neobanks are disrupting the traditional banking models through cost effective operations and offering
distinctive customer-centric service and experiences. Unlike traditional banks, Neobanks are not bound
by legacy systems, tightly integrated value chains, complex administrative structures and stringent
regulatory requirements. This allows them to rapidly tweak their business model to meet customer needs.
Although the concept of neobank is relatively new to India, there are a few existing players like
InstantPay, Niyo, RazorpayX, etc. who are making their mark in this space.

Neobanks are viewed as attractive banking alternatives for MSMEs and underbanked or unbanked
customers such as freelancers, gig economy employees, rural population etc. Due to inherent
accessibility and ease of use, neobanking is viewed as a critical tool for inclusive economic and social
development. Neobanks fill unmet needs in the financial sector and can make banking more accessible.
However, accessibility and usability for rural populations will have to be cultivated through collaboration of
Business, Society and Government.

Case Context:

WayneX, an eCommerce giant has been in the Indian market for more than a decade now and has
established itself as one of the top players in the country in terms of delivery, entertainment and payment
services. It started off as a grocery service delivery provider gradually adding apparel & electronics to its
portfolio and has steadily increased its presence in other areas including entertainment and digital

‘PwC AC Bangalore’ refers to PricewaterhouseCoopers Service Delivery Center (Bangalore) Private Limited, with
offices in Bangalore, Mumbai and Hyderabad. 1
payment services like UPI transactions and gives competition to major online and offline retail players.
For FY21, the company reported a revenue of ₹40 billion.

Table 1: WayneX Statistics for FY21

Monthly Active Contribution to

Division Monthly Transactions
Users WayneX Revenue

Delivery services including grocery, 25Mn 10Mn 40%

apparel and electronics

Entertainment services like travel 60Mn 100Mn 40%

ticket bookings, recharges and bill
payments

Payment services like UPI and wallet 80Mn 300Mn 20%

The CEO of WayneX, Mr. Amit Kapoor, believes that India is rapidly moving towards a digital economy.
He expects RBI to formalize the neobanking policy soon and wants to explore the idea of venturing into
neobanking under the umbrella of WayneX. This proposal was discussed in a recently concluded board
meeting of WayneX. Following are the perspectives of C-suite executives which they shared during the
meeting:

Perspectives from the Chief Finance Officer -

“Agreed, neobanking has a huge potential not only in the metropolitan cities but also the underserved in
the rural areas. Small businesses face a spectrum of challenges including inadequate digital services,
access to a formal credit source and global payments. Through their enhanced technology stack,
neobanks could empower these MSMEs.

We need to consider how we would serve the rural customers who, compared to urban customers, have
lesser resources in terms of digital literacy, availability of good internet connectivity and smartphones.
While catering to the urban/tech-savvy population, we need to consider how we can also serve the
“underserved” rural markets.

Neobanks have lower operational costs as compared to traditional banks. However, the majority of them
are still running in huge losses. While preparing a Go-to-market strategy and assessing the different
offerings, we will also have to look at forecasting the road to profitability.”

Perspectives from Head of Strategy -

“SARS-CoV-2, has brought many changes in consumption patterns of people. Consumers are now
moving rapidly towards digital consumption. Neobanks utilize high end technology to operate and provide
customized offerings. We need to leverage emerging technologies to create a differentiated product for
prospective customers. Another aspect we need to understand is the impact WayneX can have on Data
security, privacy and governance. Lastly, we need to find a way to win “trust” of the Indian customers and
assure them of safety when it comes to their wealth and financial needs.”

Perspectives from Head of Product -

“We need to explore different consumer segments including B2Bs and B2Cs and use cases that are
present in the market. There are different needs, different demographics and different consumer
behaviors in these markets. For both rural as well as urban markets, we have various options in hand
including but NOT limited to:

‘PwC AC Bangalore’ refers to PricewaterhouseCoopers Service Delivery Center (Bangalore) Private Limited, with
offices in Bangalore, Mumbai and Hyderabad. 2
 ○ For a certain use case surrounding B2B clients like MSMEs, we can explore the digital
lending route

○ For customers of our legacy business, we can develop a SuperApp and provide them
multiple services in a single app

○ Option to expand into brokerage services is also on the table

“One of the challenges global neobanks face is customer engagement & retention. While the currently
operating neobanks have great offerings, they are still figuring out how to actively increase customer
acquisition and engagement. Indian customers will find it hard to find value in a neobank as their holdings
have been in traditional banks in all of these years.”

As for the next steps, the entire C-suite executives of WayneX would like to conduct a feasibility study of
neobanking business and prepare a market launch strategy of their neobanking arm in the Indian market.
In lieu of this, they have decided to work with PwC to help them with this assessment.

Summary of Deliverables:

The Engagement team (you) will be helping PwC Partner in this project by coming up with a presentation
carrying PwC’s analysis of the situation and the deliverables which can help WayneX make the right
decision around their new business opportunity.

1. As WayneX looks to enter the Indian neobanking space, provide an industry outlook for
neobanking services and discuss parameters like the total addressable market, market growth
potential and opportunities, competition landscape, risks & challenges, etc.

2. Arrive at a view of proposed product offerings (portfolio) by WayneX and list the target customer
segments for the proposed neobank. Support your hypothesis with a financial model using
parameters such as but not limited to revenue, margins, profitability analysis (5-year forecast),
customer base, etc.

3. For the targeted segments and customized product portfolio, devise a strategy for customer
acquisition, engagement and retention.

4. Neobanks need to have cutting edge technology to survive and thrive. What are the emerging
technologies that WayneX can potentially leverage to differentiate itself from other neobanks and
its potential impact? (For example, to ensure high system availability, to provide customized
offerings, to provide higher security, to provide an interactive user experience, etc.)

5. Explain your views on how WayneX can contribute to India's inclusive economic growth, social
development through “trust building” and realize the dream of “banking for all”.

General Instructions for PPT:

1. Please use the following format for the presentation:

a. Executive Summary - Mandatory and should not exceed 2 slides.

b. Body - Do not exceed 10 slides for the main body of the deck (excluding executive
summary and appendix). Use your own judgement to decide the number of slides for
each deliverable.

c. Appendix - Appendix should not exceed 50 slides.

‘PwC AC Bangalore’ refers to PricewaterhouseCoopers Service Delivery Center (Bangalore) Private Limited, with
offices in Bangalore, Mumbai and Hyderabad. 3
 2. To keep the content readable, do not go below a font size of 10. Preferably, use 12 or above.
Slide headers & content use font type - Georgia and Arial respectively.

3. Please make assumptions wherever required. Also state them clearly in the footer section.

4. In case of quoting data from external sources, please mention references in the footer. Use
American Psychological Association (APA) style referencing.

‘PwC AC Bangalore’ refers to PricewaterhouseCoopers Service Delivery Center (Bangalore) Private Limited, with
offices in Bangalore, Mumbai and Hyderabad. 4