Indian Institute of Management Bangalore

STRATEGIC STEWARDSHIP

Submitted To - Professor Prateek Raj

Submitted by:
Group 1

Naveen Verma 2211137

Sushmita Basumatary 2211157

Govind Bhadran 2211384

Debayan Datta Chowdhury 2211235

Likhith Vempa 2211214

Objective of the report
The report aims to develop a strategic vision for our organization, Kaleidofin, by engaging with different
stakeholders and providing practical recommendations on how Kaleidofin can reach that vision.

Introduction to Kaleidofin
Kaleidofin, a B2B fintech, focuses on India's informal, rural sector. Its founders' two-decade inclusive
finance experience led to empowering underserved populations through customized solutions.
Leveraging tech, analytics, and finance, Kaleidofin partners with MFIs like Seva Bank. Post-COVID, it
pivoted to a B2B model, combining savings, investments, insurance, and credit through a user-friendly
mobile platform. Bridging aspirations and reality, Kaleidofin democratizes financial access for a brighter,
secure future.

Figure 1: Diagrammatic representation of the value chain of Kaleidofin

Kaleidofin offers a range of financial products and services to address the diverse needs of its customers,
particularly those who are underserved and lack access to traditional financial services. Some of the
critical products and services include:

i. Goal-based Savings (Ki Goals): Kaleidofin lets users set and prioritize goals like marriage,
education, and healthcare. Unlike traditional banks or informal options often overlooked by
fintech firms, it provides tailored savings plans.
ii. Customer Rating (Ki Score): Kaleidofin employs AI & ML credit rating, using factors like income,
assets, and dependents, despite lacking formal banking history for its non-traditional customers.
iii. Payment Gateway (Kaleido Pay): This provides a B2B platform gateway for MFIs using govt
approved DigiNACH, Bharat bill payment system, and e-mandates. This product may not be
sustainable as this could be a relatively easily imitable resource.
iv. Credit Services (KiCredit): Kaleidofin offers credit options, such as loans or credit lines, to
eligible users based on their financial profiles and needs. Kaleidofin keeps a commission through
its investment in AMCs, which primarily supports its bottom line.
 v. Customized Dashboard (KiView): Using advanced algorithms and data analytics, Kaleidofin
provides a one-stop Tableau-based dashboard where MFIs can view customer financial details
across different banks.

Figure 2: Website view of Kaleidofin (Notice the prominent branding of rural customers)

As per our intensive interviews, the following stakeholders have emerged for this analysis:

i. Consumers
ii. Competition (Ex-Fi, FlexTrade)
iii. Asset Management Companies (AMCs)
iv. Micro Finance Institutions (MFIs)
v. Employees (HO, Field Teams)
vi. Regulatory Bodies (RBI, SEBI, MCA, IRDAI, Media)
vii. Civil Society Bodies (NGOs, Activists)

Core Concept
We will proceed with the report based on our core concept of finding the vision statement at the heart
of the pro-business, pro-market, and pro-society. As we have learned as strategic stewards, other forms
of vision may not be sustainable in the long run.

Figure 3: 3 Conceptual representation of Vision

Statement
Before we do the stakeholder analysis, we would like to define what being pro-market, pro-business &
pro-society means.

Pro-Market: Being pro-market for Kaleidofin involves understanding and adapting to the dynamics of
the financial services industry to address customer needs and remain competitive effectively. One major
limitation is that of ever-changing regulations and short-term focus, as an overemphasis on short-term
market trends might lead to neglecting long-term strategic goals for the company.

Pro-Business: A pro-business approach for Kaleidofin signifies prioritizing innovative strategies that lead
to sustainable growth, profitability, and operational excellence. In this category, Kaleidofin is facing 2
significant bottlenecks:

i. Behavioral Challenges: Kaleidofin primarily targets customers who have never or rarely been
part of formal banking system due to traditional banks' rigid and inflexible approach. It's solving
this by holding multiple awareness sessions nationwide and piggybacking on consumers' trust in
MFIs. Interestingly, one company executive said, "We are not trying to build trust at all because
that is a losing game. We are instead using the MFIs as a more efficient, trusted link to reach out
to consumers, as some of them have been operating in the region for more than 30 years!"
ii. Small ticket size: As per company executives, the average ticket size ranges from ₹ 500 – 1000.
With such a small ticket size, it's facing the challenges of scale. It is solved by leveraging
technology to optimize the decisions and the partnership model with MFIs and NGOs.

Pro-Society: Being pro-society for Kaleidofin means promoting financial inclusion, literacy, and social
impact within the communities it serves. For example, per our interviews with the Kaleidofin team, the
company provides a savings rate of 6-7% (almost double what traditional banks offer) with no lock-in
period. This ensures that consumers are at the heart of the business model. This comes with the
limitations that it must be balanced with ensuring the company's financial sustainability to avoid
negative consequences on its ability to operate and that addressing societal challenges requires a
nuanced understanding of cultural, economic, and social dynamics, which may not always have
straightforward solutions.

Stakeholder Analysis
As we embark on this exploration, we delve into the diverse stakeholders that converge within the
realm of Kaleidofin. From the end-users who leverage its digital platform to shape their financial
destinies to the regulatory bodies shaping the contours of fintech's evolution, each participant brings a
unique perspective and purpose to the tableau. By dissecting these stakeholders' roles, expectations,
and influences, we illuminate the dynamic interplay that defines Kaleidofin's approach to financial
inclusion.
 Figure 4: 4 Stakeholder interaction for Kaleidofin

i. Consumer

The consumer is central to Kaleidofin's business model. We view consumers through the lens of
externalities – both positive and negative – and their impact on our model, as well as their needs, wants,
and desires.

Positive Externalities: Through MFIs and collaboration with Kaleidofin, rural consumers gain
access to financial services, enhancing financial inclusion and enabling better money management. This
partnership also diversifies assets, reducing reliance on traditional savings and loan sharks, ultimately
helping build wealth.

Negative Externalities: The indirect interaction might hinder direct engagement, leading to
potential misunderstandings and limiting informed financial decisions. Communication barriers between
Kaleidofin, MFIs, and consumers might arise, affecting access to investment information. Dependency on
MFIs could also limit consumer autonomy.

Influence: Consumers heavily influence Kaleidofin's model, demanding flexibility that traditional
banks lack. Offerings like adjusting installments during financial crises exhibit this flexibility.

Needs: Trustworthy relationships with transparent financial institutions, user-friendly solutions,

safety for savings, and adaptable offerings cater to consumers' needs.

Wants: Consumers seek higher returns, convenient local financial services, and access to
financial literacy programs for informed decisions.

Desire: Consumers aspire for financial control, planning for future needs like education and
healthcare, and contributing to community development through financial products.

ii. Asset Management Companies (AMC)

Kaleidofin collaborates with AMC to invest funds collected from MFIs into diverse assets like debt
mutual funds. As an intermediary, Kaleidofin serves underserved individuals with asset management
expertise, offering them access to investment opportunities that align with their financial goals.

Positive Externalities: Kaleidofin's success in introducing underserved individuals to investments

expands the asset management firm's customer base and ROI. AMC's push for financial inclusion yields
positive social impact, enhancing literacy and well-being. Partnering with Kaleidofin boosts the asset
management firm's reputation, especially with socially responsible investors.

Negative Externalities: Kaleidofin's challenges impact collaboration and investment strategies

due to increased financial market scrutiny. AMC relies on Kaleidofin for funds and disruptions could
affect investment management and returns.

Influence: The returns promised by Kaleidofin highly depend on the financial performance of the
assets invested in by the AMCs. They hold significant influence over Kaleidofin's funds collected from
Microfinance Institutions (MFIs) through their investment expertise.
 Needs: AMCs desire precise investment guidelines in line with expertise, collaborative talks on
goals, risk tolerance, and outcomes, fostering a beneficial partnership. Efficient fund allocation,
disbursement, and reporting are also priorities.

Wants: AMCs seek expertise from firms like Kaleidofin for insights into sectors like microfinance.
They desire customer profile visibility and risk appetite details to optimize investments, fund
management, and performance monitoring based on specific preferences.

Desires: AMCs seek stable, transparent partnerships like Kaleidofin for funding diverse
investments. Transparency elevates their standing, while strategic discussions inspire innovative,
impactful financial solutions. Recognition for inclusive contributions aligns with Kaleidofin's mission,
boosting their visibility as valued partners

iii. MFI (Micro Finance Institutions)

In reaching underserved populations, last-mile connectivity is a significant hurdle. MFIs, with established
trust and rural presence, tackle this challenge. Kaleidofin partners with MFIs to enhance impact,
addressing digital illiteracy. This synergy brings remote communities into the digital age, fostering
financial inclusion and resilience.

Positive Externalities: Kaleidofin's push for rural financial literacy can trigger positive effects on
MFIs. A more financially literate audience seeks tailored investment options, sparking financial industry
innovation and new MFI revenues.

Negative Externalities: Overreliance on Kaleidofin's digital platform could risk disintermediation,

impacting the personalized, community-focused approach of MFIs. Digital exclusion and data misuse
concerns arise, potentially alienating clients and exposing them to privacy risks.

Influence: MFIs wield significant influence over Kaleidofin. They share client creditworthiness
data, vital for reducing defaults. Kaleidofin relies on MFIs for last-mile product delivery, leveraging their
unique bond with rural clients, distrustful of traditional finance.

Needs: While MFIs have a strong customer base, they lack the resources to analyze the data
available. This analysis allows for significant reductions in operational costs and better monitoring of
their assets and liabilities. Another need of the hour is a reliable credit rating system for the rural
clientele.

Wants: Given the particular nature of the MFI clientele, they want products tailored to the
needs of the rural population. Furthermore, they want the general population to be more financially
literate so that they utilize their products more. They also want their employees to improve their digital
literacy and operational efficiency.

Desires: MFIs seek a data solution for improved client and account management. They aim to
enhance credit evaluation and risk assessment, utilizing technology to expand reach and deliver financial
and digital literacy. Customized rural-centric financial innovations are also desired to serve their
customer base effectively.

iv. Regulatory Bodies

Regulatory bodies are crucial in overseeing and ensuring financial systems and markets' stability,
integrity, and fairness. As the fintech ecosystem is relatively new, there is visible turbulence in the
regulatory framework associated with it. Even recently, the RBI ban on loading Prepaid Payment
Instruments from credit lines caused multiple businesses to pivot or shut down.

Positive Externalities: Digitizing the vast amounts of data available at the hands of MFIs can
help improve regulatory oversight over these institutions. Furthermore, they may even begin the
adoption of technology as a model for enhancing operational efficiency.

Negative Externalities: FinTech companies introduce a whole new range of financial

intermediaries that need to be regulated. This is further complicated by the digitization of data and
hence its permanence. The collection and utilization of client data can lead to privacy and security
concerns. Conversely, too much regulation can hinder innovation in the highly dynamic FinTech industry.

Influence: Regulatory bodies have the power to make or break businesses. In a dynamic new
industry such as the FinTech industry, the firms are constantly kept on their toes by the regulatory
authorities. Companies need to stay up to date with the rules and even predict potential new
regulations in order to have an edge over their competitors.

Needs: Regulators seek assurance of Kaleidofin's consumer-focused operations, safeguarding

underserved populations against predatory practices with transparent and fair financial services.
Monitoring mechanisms ensure compliance, upholding market integrity and consumer protection.
Robust risk management, especially for vulnerable groups and innovative solutions, is essential.
Responsible handling of client data, aligned with privacy and security standards, is crucial for preventing
breaches.

Wants: Regulatory bodies desire transparent insights into Kaleidofin's operations, financial
health, client interactions, and partnerships to ensure clarity. Collaboration between regulators and
Kaleidofin could foster information exchange, enhancing fintech understanding and innovation
awareness.

Desires: Regulatory entities aspire to see Kaleidofin's activities drive positive societal outcomes,
like financial inclusion, poverty reduction, and economic empowerment. They aim to encourage
financial sector innovation while upholding oversight for stability. A flexible regulatory framework is
sought to accommodate fintech uniqueness, ensuring consumer protection and market integrity.

v. NGOs

Kaleidofin and NGOs forge a potent partnership, merging fintech innovation with grassroots reach. This
synergy empowers underserved communities, making digital finance accessible through trusted
relationships. Together, they have a transformative path, bridging gaps and turning financial aspirations
into tangible opportunities for all.

Positive Externalities: Collaborative NGOs with Kaleidofin receive increased reach through
digital platforms, increasing the impact of financial inclusion. Access to Kaleidofin's technology improves
operational efficiency, allowing non-governmental organizations to serve marginalized populations
better.
 Negative Externalities: Collaborating NGOs must consider potential externalities: dependency
on Kaleidofin's tech, mission drift, digital divide impact, resource shifts, regulatory/ethical scrutiny, and
privacy concerns. Clear communication, expectations, and proactive strategies ensure positive outcomes
in fintech collaborations like with Kaleidofin.

Influence: Civil societies and NGOs influence Kaleidofin through alignment with social impact,
operational insights, community engagement, partnerships, ethical standards, regulatory advocacy, and
technology implementation, creating a mutually beneficial relationship for financial inclusion.

Needs: NGOs benefit from Kaleidofin's digital solutions for underserved communities, aligning
with their empowerment mission. Technical support aids in integrating digital tools and improving
operational efficiency and reach. Access to data-driven insights enables tailored interventions.

Wants: NGOs seek Kaleidofin's customized solutions aligned with community needs.
Collaborative learning fosters knowledge exchange and sharing of best practices. Access to impact
measurement tools aids program assessment and tracking of financial inclusion progress.

Desires: NGOs seek Kaleidofin's collaboration for sustainable financial empowerment, social
innovation, policy advocacy, and gaining recognition as valued partners in financial inclusion efforts,
enhancing long-term resilience for underserved communities.

vi. Competition

Competition includes those who provide microinsurance, small loans, specialized savings/investment
plans, digital banking services, and financial education to underprivileged communities compete in the
marketplace to enable individuals to achieve financial stability and progress.

Positive Externalities: Kaleidofin and rivals expanding access to inclusive finance can foster a
competitive market, driving innovation and better solutions for marginalized communities. Collaboration
uplifts service standards through shared knowledge and practices.

Negative Externalities: Intense competition strains resources, affecting operations. Affordable

services squeeze margins, risking financial sustainability. High impact draws regulatory scrutiny, leading
to compliance concerns. Market saturation confuses product selection for marginalized users.

Influence: Rivals impact Kaleidofin's relevance through innovation and customer focus.
Kaleidofin sets benchmarks, inspiring competitors to enhance offers, propelling industry growth.

Needs: Kaleidofin's data informs rivals, fostering industry-wide progress. Partnerships amplify
reach and impact, benefiting marginalized communities.

Wants: Fair competition and favorable regulations are sought. Kaleidofin's transparency sets
best practice standards, nurturing a competitive yet cooperative environment.

Desires: Advocacy for inclusive policies and collaborative efforts are requested. Ethical practices
enhance industry credibility, reflecting Kaleidofin's commitment to unmet needs.

vii. Employee

Kaleidofin's workforce is a dynamic blend of two distinct segments, each contributing uniquely to their
mission. The field team engages with MFIs and end consumers, forging vital connections and extending
financial solutions to the grassroots. On the other front, their headquarters house a team of strategic
minds driving innovation. With expertise in financial options, marketing, and administration, they sculpt
their path to success. Their diligent efforts behind the scenes enable vision of financial empowerment to
thrive.

Positive Externalities: Kaleidofin's influence enriches its employees beyond their immediate
roles. The company's dedication to financial inclusion and technology provides a fertile ground for skill
diversification. Employees gain expertise in fintech, enhancing their career prospects by remaining
competitive in a swiftly evolving job market. The tangible impact on underserved communities cultivates
a profound sense of purpose and fulfillment, transcending traditional work satisfaction.

Negative Externalities: The rapid industry dynamics can lead to increased stress due to
heightened workloads and uncertainty. The push for ambitious goals may contribute to burnout,
potentially affecting both physical and mental well-being. Fostering a balanced and supportive work
environment becomes crucial to mitigating these challenges and ensuring the team's well-being.

Influence: Employees significantly shape Kaleidofin's direction through their expertise,

dedication, and insights. Their skills drive innovation, tailored solutions, and meaningful connections
with MFIs and consumers. Feedback refines strategies, enhancing the company's reputation and mission
impact.

Needs: Kaleidofin's employees require skill growth, work-life balance, clear communication,
recognition, and a supportive environment. Health programs, job security, competitive compensation,
values alignment, innovation opportunities, and professional development enhance their satisfaction
and contribute to company success.

Wants: At Kaleidofin, employees prioritize growth through professional development and

advancement. Challenging tasks offer personal achievement, while collaboration fosters camaraderie.
Flexible work arrangements and recognition for hard work enhance job satisfaction. Contributing to
impactful innovation aligns with their aspirations.

Desires: At Kaleidofin, employees yearn for work that aligns with their values and a sense of
purpose. Effective leadership and autonomy in decision-making are desired, alongside seamless work-
life integration. Mentorship for growth, recognition, and advancement opportunities reflect their
commitment to both personal development and the company's mission.
 Figure 5 Summary Stakeholder Map

Resource and Capabilities

Kaleidofin's resources and capabilities offer a sound basis for building its strategy. It provides a primary
basis for defining its identity and design. Its foundational pillars, ranging from technology to expertise,
fuel its drive for financial inclusion. In this exploration, we delve into what empowers Kaleidofin.

Resources Strategic Importance

Human Capital Kaleidofin boasts a skilled, diverse team spanning finance, tech, analytics, and
social impact. Their expertise fuels innovation and custom financial solutions.
Technology The company has built a robust digital platform that leverages cutting-edge
Infrastructure technology to deliver financial products and services efficiently.
Partnerships Kaleidofin partners with MFIs and asset managers, leveraging their networks
and expertise for fund distribution, expanding reach and impact.
Data and Insights Kaleidofin collects and analyzes data from its interactions with clients, enabling
informed decision-making, customization of products, and continuous
improvement based on customer needs and behaviors.

Capabilities Strategic Importance

Product Innovation The company excels in innovating tailored financial solutions for rural and
marginalized communities' distinct challenges.
Customization Kaleidofin's ability to customize financial products based on individual
customer profiles and aspirations ensures that clients receive offerings that
align with their financial goals.
Technology Kaleidofin's tech-integrated expertise ensures user-friendly, efficient product
Integration delivery via digital platforms, boosting accessibility for remote areas.
Ecosystem The company's collaboration with MFIs and asset management firms
Engagement demonstrates its capability to engage and leverage partnerships to maximize
the impact of its offerings.
 Figure 5:6 Kaleidofin Resource and Capability Profile

Strategies for Kaleidofin

a. Acquire NBFC: All FinTech companies seek to get into lending as that is where the lion's share of
the profits is. Kaleidofin could acquire an NBFC which would allow them to undertake in Balance
Sheet lending, which in turn will enable new avenues for revenue and greater profits on lending.
b. Pivot to a credit rating agency: Kaleidofin can invest significantly on R&D in their credit rating
product, KiScore. This would involve investing in optimizing their ML algorithms and faster
processing devices, with the objective of creating a credit scoring system that can potentially
replace the likes of Crisil.
c. Pivot to an AI ML based collection agency: Kaleidofin can concentrate on using their technical
acumen to improve the collection systems of MFIs by serving its end consumers directly through
digital platforms and mobile apps. They can also make use of ML algorithms to improve
collection rates by sending customized nudges to their customers.
d. Partnership with the GOI to incorporate rural employment plans: Kaleidofin can partner with
the government of India to seamlessly integrate rural employment schemes with direct-payroll
deductions. This would make it easier for rural workers to access financial services.
e. Pivot to the marketplace for AMCs: Kaleidofin can pivot to become a marketplace for Asset
Management Companies (AMCs). This would allow Kaleidofin to offer its clients a wider range of
investment options and foster collaboration within the financial ecosystem.
f. Use KiView for onboarding MFIs and use the data for KiScore: Kaleidofin can ramp up
marketing of KiView, which is in demand among MFIs, to onboard as many MFIs as possible. This
can later be leveraged to train their ML algorithms involved in KiScore to create a stand-alone
credit rating product for new-to-credit customers which can be sold to financial institutions.

Strategy Table
Current Mission & Vision of the Company

Kaleidofin's current mission is to "democratize access to financial services by building a platform that
connects consumers with a wide range of financial products and services." Its vision is to "become the
leading digital financial services platform in India."

The vision statement is too broad and aspirational, and it is not clear how Kaleidofin plans to achieve it.
Despite leading the pack on Inclusive Finance, the vision statement does not mention the impact that
Kaleidofin wants to have on society. They only talk about Kaleidofin's business goals, "becoming the
world's leading technology company in financial services." There is no mention of how Kaleidofin wants
to use its technology to make a positive impact on the world.

Our Proposition

After having done an extensive study of various stakeholders involved in the business and the various
resources and capabilities of the firm, we were able to identify some key strengths of Kaleidofin and
possible opportunities within the FinTech industry that could be leveraged to create strategies for
expansion of their business. We concluded that the current mission statement captures the objective of
the organization in a succinct manner whereas the vision statement left much to be desired. Our
understanding of the needs within the industry combined with the resources and capabilities of the
firm, along with a healthy dose of our own ideologies, led to the birth of the following vision statement
for the firm.

Vision:

“A world where everyone has the opportunity to reach their full financial potential, regardless of their
background or circumstances”

This mission and vision statement is pro-business because it recognizes the importance of access to
financial services for businesses to grow and thrive. It is also pro-market because it supports the free
flow of capital and competition in the financial services industry. Finally, it is pro-society because it
promotes financial inclusion and economic opportunity for all.

With a definite vision in place, it was now time to choose one of the many strategies devised above that
is best suited to the vision and mission of Kaledofin. We identified MFIs as a key player in achieving our
goal of financial inclusion. MFIs have the trust of the rural population which is the result of decades of
good will, an inimitable resource. Empowering these MFIs was identified as the fastest route to financial
inclusion. Hence we have chosen the pro-business, pro-market and pro-society strategy - Use KiView for
onboarding MFIs and use the data for KiScore. Increasing the adoption of KiView is a pro-market move
as it will lead to other innovations along the lines of improving efficiency of MFIs through digitization.
Today, we have noticed that NBFCs have been quick to adopt digitization and other technological
advancements to aid their business. MFIs have been lacking in this aspect, which could be down to
various factors including the lack of capital and technological accessibility of their clientele. While the
first step is to market KiView, the primary goal is to improve the accuracy of KiScore and create a stand-
alone credit rating system for customers without a formal credit history. This will increase access to
formal sources of credit for those customers who have been in the financial shade and help empower
rural India from the clutches of predatory loan sharks and debt collectors, thus making it a pro-society
strategy. Furthermore, the KiView and KiScore are stand-alone products with a unique USP that can reap
profits for the organization, thus making it pro-business.

India is a nation with a sizable stratum of population that has a strong need for credit but is hindered by
access and availability. Kaleidofin, through its unique products and market position, are in a position to
make long strides in pushing the economy forward by improving the financial health of people who have
been in the red for far too long.