Nocturnal Neo-Banks Wipro: B-Pro 2.0: Aaskat Gera Nivek AV Aryan Kumar Singh

NOCTURNAL
NEO-BANKS
WIPRO: B-PRO 2.0
Aaskat Nivek Aryan

Gera AV Kumar Singh
Chosen Opportunity Sector with Rationale
Digital transformation in banking practices is the next disruption and customers are looking for the convenience of
managing their business from the comfort of their home through devices ranging from wearables to desktops. This
trend is highlighted by the number of consumers leveraging Digital payments in India, the number, a meagre $320
million in 2017 is presently at $925 million and is forecasted to reach $1490 million by 2027. At the global level, the
market size is expected to achieve a record $2048 billion by 2030, from a present-day market size of $47.39 billion.
The major growth in transactions made online is happening due to a boom in the digital commerce segment presenting
good opportunities for commercial partnerships. The present value of these transactions is $133 billion and is
forecasted to increase to $250 billion by 2027.
This significant organic growth in the sector, coupled with Alpha’s core competencies in technology and innovation,
presents an exciting opportunity to foray into the digital banking sector. The market potential for banks that are Digital
leaders and have a vital purpose is also significantly higher at an ROE (Return on Equity) of 12.8% as compared to the
rest of the industry. The price by the book value of the said firm is 1.9, thus signifying public and market support for
the institution and its activities
Opportunity Size and Competition Mapping

An average transactional value in Neo Banking will increase from $4,602 in 2022 to $5,770 in 2027 per user in India
and an overall rise in transactional value from $46.65 billion in 2022 to $122.30 billion which will put more pressure
on the baking system needing more competent players to handle data and ensure the safety of data. Digital payments
are also forecasted to go up by 18% YoY from $133 billion in 2022 to $253 billion in 2027.
A McKinsey study has found that only 15% of the corporations strongly believe that they have either implemented the
core competencies by introducing digital transformation in their value chain. Rest 85% of the companies need to either
build from scratch or embed digital solutions. The priorities of firms have also changed significantly due to the
pandemic, with 56% of the companies claiming that digital transformation is their key priority, followed by
cybersecurity at 50% and cloud migration at 48%. These opportunities are generally in the cloud, agile, and
omnichannel transformations. This presents Alpha with a significant business opportunity to provide a comprehensive
digital solution tailored to the objectives of the business, integrating transformation and cybersecurity in a robust
product offering. This will help build an early mover advantage and can be achieved by leveraging our existing partners
and experience in Information technology and consulting in Neo-Banks. The table below shows the technologies that
our competitors are concentrating upon.
WIPRO ACCENTURE TCS INFOSYS ZENSAR
Core banking Modernising neo TCS BaNCS B2B2X models and non- Omnichannel
as a service banks linear models Experience
Table 1: Digital Concentration of major tech companies
Why Neo Banks and Linear Immersive Models?

Primarily, in neo banks, customers can “build their own bank” by combining services from different banks rather than
searching for one service provider that meets all their expectations. They have no switching cost, and the result is
incremental, more transparent, and more flexible. Leading banks have the chance to develop new strategies that
coexist with the old, allowing them to quickly restructure their business models and product offerings to stay up with
clients and markets that are changing rapidly.
The future can be Banking as a service (BaaS). BaaS provides banking products to companies that seamlessly bundle
them with their offerings or sell them to their customers. The bank offers its regulatory capabilities and balance sheet
to companies, like new age fintech companies, that do not have those capabilities. Here, the bank operates in the role
of a third-party service provider, invisibly in the background on a platform branded by the front-end service provide.
This is where we can come and function as an intermediatory for the banks. We can help them unbundle their products
and partner with other service providers and then re-bundle them as new-age services on a platform.
Path for Growth
Currently, the Indian banking sector has 42% regional rural banks and 34% foreign banks. Most regional rural banks
do not have a digital service or partnership with any BaaS (Banking as a Service) provider platform. Considering the
size, market, and strength of the bank, we can provide services to banks so that they can embrace any mix of these
approaches to increase business model flexibility and differentiate themselves from the competition.
Areas to Focus
Digital payments, mobile banking apps and online banking experiences are universally good, and it is becoming
increasingly difficult for any incumbent or neo bank to use them as a point of differentiation. If we tap into the market
at this moment, we can capture a large potential clientele and disrupt the sector. If we look at the competitive arena,
it has moved to product innovation, with inexperienced players attacking the incumbents in the areas where they are
most exposed, such as:
Digital Banking
We are witnessing customisations in the financial and banking solutions coerced to the customer through the birth of
open banking. Any third-party service provider can access the customer data stored in banks’ databases to build and
manage the customer’s investment and borrowing portfolio, addressing all specific needs at essential phases in life.
The BNPL (buy now, pay later) products and solutions are becoming exceptionally popular. They allow customers to
purchase the products they need now, allowing them to manage their payments conveniently. We can also leverage
hyper-personalisation to integrate a seamless omnichannel experience for the consumers.
AI and ML (Machine Learning)

By embedding modern technologies such as cognitive intelligence (virtual assistance for quick access to the knowledge
base), machine-first automation (routine actions like data input, accessing other applications, and performing required
activities) and artificial intelligence (AI) backed analytics (contextual next-best-action recommendations), banks can
move toward ‘zero-ops’ or ’no-ops’ (zero manual operational effort through extreme automation) digital banking
models and deliver an immersive experience.
Corporate Finance
Digitisation in corporate finance works in favour of the seller and those who can sell more units. Point-of-sale (POS)
lending has seen massive growth over the years. Financial institutions can integrate APIs over marketplace lending,
supply chain financing, and POS-based lending products to their micro, small and medium enterprise (MSME) partners
and build ecosystem partnerships with corporates. Tapping into cash inflows of MSME customers will improve pricing,
underwriting, and collections. For example, in April 2020, Goldman Sachs launched MarcusPay, a POS financing tool
that helps users pay for larger purchases over time with highly competitive interest rates.
Key Benefits
• In Neo-Banks the bots can manage about 80% of customer inquiries
• Over 10,000 questions can be answered by the virtual assistants for major corporates
• Over 2 million new customers are willing to shift to Digi bank in India, hence a vast market to tap
• An agile solution to the banks which will greatly improve the consumer experience on a new platform
• Create new propositions to the users through service and bundling of products and services
Recommendations
• Minimize overhead and costs by selecting only the payment options likely to increase conversion
• Provide an all-in-one platform for multi-linear experience through omnichannel presence on a single platform
• Create a personalised payment process that adapts to a customer’s profile
• Partner with new age fintech and banks to bridge the gap as an intermediary between the two
Annexure
1. All the relevant figures have been taken from Statista.
2. All the future tech information has been sourced from whitepapers of Accenture, Infosys, Zensar and Wipro.
3. https://www.accenture.com/us-en/insights/operations/future-ready-banking-operations
Fig 1: Emerging Banking features and values
Figure 2: Banking Transformation
Figure 3: Incorporation of Technologies in Banking

Figure 4: Projected Banking growth
Figure 5: Functioning of bundling and rebundling
Figure 6: Market size of Neo Banks
Figure 7: Spending of banks on Digital transformation

Figure 8,9: Adoption of technologies and revenue by segment
Figure 10,11: Transactional Values and Average Transactional value in Neo banks
Figure 12,13: Future changes by business models and Priorities of IT companies
Figure 14: Digital Payment users by segments

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NOCTURNAL

WIPRO: B-PRO 2.0

Aaskat Nivek Aryan

Opportunity Size and Competition Mapping

Why Neo Banks and Linear Immersive Models?

AI and ML (Machine Learning)

Fig 1: Emerging Banking features and values

Figure 2: Banking Transformation

Figure 3: Incorporation of Technologies in Banking

Figure 5: Functioning of bundling and rebundling

Figure 6: Market size of Neo Banks

Figure 7: Spending of banks on Digital transformation

Figure 12,13: Future changes by business models and Priorities of IT companies

Figure 14: Digital Payment users by segments

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