Easy Paisa Case Study
Easy Paisa Case Study
Easy Paisa Case Study
managed to double its growth from the previous customers. All the existent players have more or
fiscal year. One of the key factors of a successful less standardized prices for similar type of
and advanced cellular market is the geographical products/services and possibly due to this reason
coverage of land area by the cellular mobile it is unlikely for the companies to maintain any
operators in the country. Pakistan has kind of product distinction, hence buyers have
unparalleled topography ranging from steep adequate options to switch over. The individual
mountains to brutal deserts. Despite such a buyers are larger in numbers and do not have
challenging terrain, more than 92 percent of the competition among themselves but the
land area is under the umbrella of cellular mobile enterprise customers like IT Companies and
services. At the end of March 2012, there were Banks do have.
33,027 cell Sites across Pakistan. Revenue from
Furthermore, buyers have enough information
the Cellular Mobile Services climbed to Rs.
regarding the availability of different packages
262,761 million from Rs. 236,047 million showing
offered by the companies due to increased social
an increase of 11 percent from the preceding
networking, excessive advertising through TV,
year.
hoardings, banners and word of mouth.
operations. OTH has endeavored to achieve this South Africa, the Middle East, South Asia and the
by devoting financial, technical and management Black Sea region in a range of diverse sectors.
resources for supporting its subsidiaries. This
includes network support and installation of GSM China Mobile Pakistan (CMPak) Zong is a 100%
operations, equipment procurement, handset subsidiary of China Mobile commenced a set up
procurement and distribution companies, Value of China Mobile came through acquisition of a
Added Services, and Internet operations. license from Millicom to operate a GSM network
in Pakistan in the year 2008. With a plan to cater
to the fastest growing Pakistani market it is
Pakistan Telecommunication Company Limited
offering extended coverage, voice and data
(PTCL) commenced its operations in January 2001
services as well as a range of tariff options.
under the brand name ‘Ufone’. As a result of
CMPak's has an edge which came from the
PTCL’s privatization, Ufone became a part of the
experience and expertise of running the world's
Emirates Telecommunication Corporation Group
largest telecom service. CMPak Value Added
(Etisalat) in 2006. Since its inception, Ufone has
products are healthful for the individuals,
focused on empowering the people with the
corporates as well as small businesses.
required communication modes claiming of the
lowest call rates, clear sound and a good
Telenor Pakistan is 100% owned by the Telenor
network. Ufone has built a subscriber base of
Group, an international provider of quality voice,
over 20 million in less than a decade. It has
data, content and communication services in 11
network coverage in 10,000 locations and across
markets across Europe and Asia. Telenor Group is
all major highways of Pakistan, currently caters
among the largest mobile operators in the world
for International Roaming to 288 live operators in
with 140 million mobile subscriptions (Q4 2011)
more than 160 countries. Ufone also offers GPRS
and a workforce of approximately 30,000.
& BlackBerry Roaming coverage available with
Telenor Pakistan is the Country's single largest
200 Live Operators across 122 countries.
European foreign direct investments in excess of
US$2 billion. It acquired a GSM license in 2004
Warid Telecom is a joint venture between Abu
and began commercial operations on March 15,
Dhabi Group & SingTel Group. Abu Dhabi Group
2005.
went in a strategic alliance with Singapore
Telecom. Subsequent to this transaction in 2005,
Market Share
SingTel gained 30% percent equity stake in Warid
Telecom, Pakistan, for US$758 million. This
10%
partnership is part of a strategy to support Warid Mobilink
30% Ufone
Telecom's growth and to enhance its market Zong
position. Warid Telecom is backed by the Abu 25% Telenor
Dhabi Group, a business conglomerate in the Warid
facilitative push embedded in the prudential established to service the under banked market
regulations designed for this type of institutions. of Pakistan.
Many microfinance institutions are operating and
their outreach has crossed a million customers. 2.2 COMPETITION
Conventional banking industry is considered
extremely competitive. The financial services
2.1 ENTRY REQUIREMENTS
industry has been around for hundreds of years
Micro Financing is mostly dependent upon
and just about everyone who needs banking
subsidized financial support from Pakistan
services already has them. Because of this, banks
Poverty Alleviation Fund (PPAF) to finance their
must attempt to lure clients away from
lending operations. Under the current legislative
competitor banks. They do this by offering lower
structure, supervisory responsibility for
financing, higher rates, investment services, and
conventional and microfinance banks fall within
greater conveniences than their rivals. The
the legal authority of the State Bank of Pakistan,
banking competition is often a race to determine
while the remaining financial institutions are
which bank can offer both the best and fastest
monitored by other authorities. No MFB shall
services, but has caused banks to experience a
commence business unless it has a minimum
lower ROA (Return on Assets). Given the nature
paid-up capital as prescribed in MFIs Ordinance
of the industry it is more likely to see additional
2001. It shall also uphold capital equivalent to at
consolidation in the banking industry. Major
least 15% of its risk weighted assets.
Banks tend to choose to acquire or merge with
other banks than to spend money marketing and
The barrier of entry for the banking industry can
advertising. As far as the Micro Financing is
be trust. Since, the industry deals with other
concerned, the services can be classified as
people's money and financial information
under;
therefore, new banks find it difficult to start up.
Due to the nature of the industry, people are Microfinance banks (MFBs) specialized
more willing to place their trust in big name, well institutions that operate as microfinance
known, major banks who they consider to be banks;
trustworthy. Rural Support Programmes (RSPs): programs
that run microfinance operations as a part of
integrated rural development initiatives;
The banking industry has gone through a
Nongovernmental rganizations/microfinance
consolidation in which major banks seek to serve
institutions (NGO MFIs): nongovernmental
all of a customer’s financial needs under their
organizations that run microfinance
roof .This consolidation furthers the role of trust
operations as part of integrated development
as a barrier to entry for new banks looking to programs or that focus exclusively on
compete with major banks, as consumer are microfinance;
more likely to allow one bank to hold all their Commercial financial institutions:
accounts and service their financial needs. It is commercial institutions involved in
difficult for a new bank to enter the industry microfinance; or government-owned
offering the trust and full range of services as a institutions: institutions involved in
major bank; it is fairly easy to open up a smaller microfinance that are owned by the
bank operating on the regional level, however government.
microfinance bank or institution can be
Mudasser Ali Khan, M. Phil, IoBM 7|Page
Bluest Ocean Strategy for EASY PAISA
Table – 3 Details of Major MFBs/MFIs The main categories of microfinance users are
Heads of households, pensioners, retrenched
Gross Loan Portfolio Gross Loan No. of
Portfolio borrowers workers, small farmers, and micro-entrepreneurs.
with loans Locations include urban and rural areas, but
outstanding penetration of rural areas, where most of the
Khushhali Bank 54,911,820 435,353
poorest live, is more difficult. On the whole
National Rural Support Prog 45,131,081 333,511
women tend to be poorer than men, and
Kashf Foundation 31,212,895 286,443
First MicroFinanceBank Ltd 36,699,473 161,341
therefore to prefer smaller loan sizes. In the rural
ASA Pakistan Limited 16,168,125 146,876 culture of Pakistan, women have less access to
Tameer Micro Finance Bank 66,131,261 144,850 collateral, such as title deeds to land, which also
NRSP Microfinance Bank Ltd 23,832,505 110,849 makes it more difficult for them to secure larger
BRAC – Pakistan 9,773,951 96,567 loans. Users of Micro-financing products are
Punjab Rural Support Prog 9,493,465 73,944 mostly Traders (31%), Agriculturist (24%),
Sindh Rural Support Org 10,425,613 63,340 Manufacturers (7%), Service Sector (7%) and
Akhuwat 7,970,814 63,085 Housing (1%).
Thardeep Rural Development 5,794,064 55,404
Orangi Pilot Project 5,017,865 40,462 The individual doesn't pose much of a threat to
Safco Support Foundation 3,651,340 34,543 the industry, but one major factor affecting the
DA for Mobilization 6,000,083 33,629
power of buyers is relatively high switching costs.
Rural Comm Develop. Society 3,559,422 24,104
If a person has one bank that services their
Kashf Bank 8,873,566 22,035
banking needs, it can be a huge hassle for that
Jinnah Welfare Society 3,229,416 20,178
person to switch to another banking option. To
Orix Leasing 2,113,963 16,231
Community Support Concern 2,207,463 13,882
try and convince customers to switch to their
Asasah 1,412,391 13,662 bank they will often times lower the price of
Aga Khan Rural Support Prog. 1,722 12,288 switching, though most people still prefer to stick
Taraqee Foundation 1,623,518 12,203 with their current bank.
Pak-Oman Microfinance Bank 1,583,428 12,052
Sungi Develop. Foundation 683,573 8,666 2.4 SUPPLIERS
Bank of Khyber 4,091,241 7,852 Capital is the primary resource of any bank and
Woman Co-operative Develop 1,185,978 7,433 there are following major suppliers of capital in
Network Leasing Corporation 8,635,255 3,768 the industry.
Sarhad Rural Support Prog. 242,464 3,121
Narowal Rural Develop. Prog. 283,024 2,716 Deposits & Grants
Save the Poor 1,004 2,000 Mortgages and loans
Gender Awareness Prog. 156,627 1,662 Mortgage-backed securities
Support Working Solution 276,851 792 Pakistan Poverty Alleviation Fund (PPAF)
Apna Microfinance Bank 303,482 696 Loans from other financial institutions.
Buksh Foundation 82,081 565
Rozgar MicroFinance Bank 10,469 52
By utilizing these major supplies, a bank can be
Farz Foundation 13,641 -
sure that they have the necessary resources
Source : Statebank of Pakistan, Data as on 30th June 2012 required to service their borrowing needs while
2.3 MICRO FINANCE USERS maintaining enough capital to meet withdrawal
expectations. Power of the suppliers is largely
Mudasser Ali Khan, M. Phil, IoBM 9|Page
Bluest Ocean Strategy for EASY PAISA
2.5 SUBSTITUTES
Some of the banking industry's largest threats of
substitution are not from rival banks but from
non-financial competitors. The industry does not
suffer any real threat of substitutes as far as
deposits or withdrawals; however insurances,
mutual funds, and fixed income securities are
some of the many banking services that are also
offered by non-banking companies. There is also
the threat of payment method substitutes and
loans are relatively high for the industry. Often
times these non-banking companies offer a lower
interest rates on payments then the consumer
would otherwise get from a traditional bank loan.
alerts, low-balance warnings, and overdraft other tasks. The increasing sophistication of
warnings, and consumers can use them to get mobile phones increases the possibilities for
immediate account information at any time. financial providers to use them to interact with
their customers for more complex purposes, such
Ubiquitousity. Mobile phone usage is as check depositing and fraud detection.
ubiquitous all over the world, and people
increasingly are relying exclusively on wireless 3.3 BENEFITS FOR A BANK AND
phones for their calls. In 2010, 27 percent of U.S. TELECOM OPERATOR
households had only wireless phones and no Financial Institutions have the potential to:
landline. Unlike internet access at home, mobile
• Drive increased financial capability: Timely
access is consistently high across demographic
access to account information through
and socioeconomic groups. In addition to placing
alerts, reminders, and more can empower
calls and sending text messages, people use
consumers to make more informed choices
mobile devices to take pictures, check email,
about how and when they spend, borrow,
manage appointments, access maps and traffic
and save.
information, edit documents, and much more.
• Offer greater convenience: One of the most
Personalization. Because the mobile phone is significant benefits of mobile financial
often the primary way people reach friends and services is the added convenience of using
family, users feel an emotional connection with Banking tools.
their phones. Moreover, these devices house a
great deal of information about the people who • Lead to improved security and fraud
use them—location, purchasing behavior, protection: All consumers, but especially
interests, health, contact with friends and family, those who are under banked, may benefit if
and much more. A MasterCard survey found that security advances lead to a higher level of
more than half of consumers believe a person’s trust between consumers and financial
phone reveals more about them than their providers.
wallet.7 Similarly, many experts note anecdotally
that consumers are quicker to miss a lost phone As mobile financial services grow more
than a lost wallet. This suggests that financial sophisticated, these tools may eventually:
providers can connect with their customers more • Transition consumers from cash to
personally through a mobile device than through electronic transactions: Turning cash
other channels. transactions into electronic transactions
could benefit consumers with added
Multi-modal. In addition to placing calls and convenience and potentially lower cost,
sending text messages, people use mobile while enabling providers to generate
devices to take pictures, check email, manage additional fee revenue on electronic
appointments, access maps and traffic transactions.
information, edit documents, and much more.
• Improve access to basic financial
With these multi-modal devices, people can
accounts: Mobile devices may eventually
download applications to maintain a budget,
become a distribution channel for financial
track diet and exercise, access social media tools,
products, creating new access for the
play games, and complete a growing number of
underserved.
Mudasser Ali Khan, M. Phil, IoBM 12 | P a g e
Bluest Ocean Strategy for EASY PAISA
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Number of Brancher per 100,000
Individuals
8.4
5.06
3.34
Population of Pakistan
7
6
5 Conventional 5.10
Banking
4
Easy Paisa
3
2 EASY
Offerings
1 PAISA –
0
Factors of Competition
5.9
Webroot survey (UK/US 2011) reported that out Large market for the people who are un-banked
of 1200 mobile users 40% have security but have a mobile phone. Generally only 12% of
applications and 50% do not lock phones. Pakistani adults have any form of bank or MFI
Possible Threats for Easy Paisa and mitigation account. Typically 500% more phone owners than
tools can be classified as under:- the banked population; this equates to 60M to
70M individuals who could benefit from such
Threat Mitigation services. Besides the competition given by UBL
Inadequate fraud Strong password to
Omni, launch of Mobilink Mobi-Cash and Zong’s
controls access phone
Timepey exactly at the time of writing of this case
Unauthorized access to Multifactor authentication study lead to transforming the Mobile Phone
device of financial data Banking from Blue Ocean to a conventional Red
Ocean Market.
Poor mobile device Remote devise
security deactivation
References:
Mobil device lost or Remote wipe and lock
Easy Paisa, Pakistan, website www.easypaisa.com.pk – Accessed
stolen
November 2012
Limit and monitor
Download virus, infected transaction
Kim, W. Chan and Mauborgne, Renée (2005). Blue Ocean Strategy.
application or malware Boston: Harvard Business School Press
Use alerts to notify
customer of suspicious Pakistan Telecommunication Authority, Annual Report 2010 &
activity 2011