Small businesses and retailers

Small business@Digital
Findings from FICCI – BCG Survey
FIBAC 2014 | 16 September
Question 1
?
What percentage of small enterprises use internet and business
email at their place of work?
MSME
Shopkeepers /professionals
• 90-100%
• 90-100%
• 75-90%
• 75-90%
• 50-70%
• 50-70%
• <50%
• <50%
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
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Present online but operate offline
Present online
Conduct business offline
% of respondents
98
96
68
68
57
53
32
9
Have internet
access at
workplace
Use business
email
Maintain
business
website
MSMEs
8
5
4
Collect
Collect business
orders online payments online
13
Not aware of
PB’s digital
channels
Shopkeepers / professionals
Comparable internet access across metros and
non-metros
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2
Question 2
?
What are the preferred payment modes for small enterprises? –
Rank order
• Cash
MSME
• Cheque
• RTGS / NEFT
• POS
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
Shopkeepers /
professionals
3
Transactions are dominantly physical – but
MSMEs prefer RTGS / NEFT too
% volumes
Cash
Cheque
RTGS/NEFT
POS
Payments
15%
56%
29%
0%
Collections
15%
54%
29%
2%
Payments
66%
27%
7%
0%
Collections
73%
18%
7%
2%
MSME
Shopkeepers /
professionals
MSMEs: >70% of Tx by value is cash or cheque
Shopkeepers /professionals: >90% Tx by value is cash or cheque
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
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Question 3
?
Who do the small enterprises consider as their primary point of
contact in the bank?
• Call center
• Relationship manager
• Branch manager
MSME
• Cashier
• Loan officer
• Collections officer
(cheque / cash pick-up)
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
Shopkeepers /
professionals
5
Physical channels remain important –
more for small retailers than MSMEs
Shopkeepers /professionals visit
branches 40% more than MSMEs
36
53
Less than
once per week
RMs are POC for MSME
Cashier for Shopkeepers / professionals
34
35
Branch
manager
44
Cashier
15
RM
Others
17
29
32
26
9
6
Branch
visits per
week
10
MSME
Shopkeepers /
professionals
1.5
2.1
Note: POC = Point of contact
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
Once per week
2-4 times
per week
Once a day
or more
38
10
6
MSME
Shopkeepers /
professionals
= Primary POC
6
Question 4
?
So does digital matter?
MSME
• Yes
• No
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
Shopkeepers /
professionals
7
What they say
Will you switch primary bank for better digital products (%)
90
53
44
6
Will not switch
4
Not sure
MSMEs
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
3
Yes
Shopkeepers
8
What they do: digital – the secret weapon
Number of products from primary bank
MSME
Shopkeeper/ professionals
8
6
4
2
No. of digital channels used by customer
0
0
1
2
3
Digital channels used
(descending order of use)
1. Online banking machines
2. ATM
3. Cheque deposit
machines
4. Call center
5.
6.
7.
8.
9.
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
5+
Banking products used from
PB (descending order)
Mobile banking
Cash deposit
POS machines
Passbook printers
Self service kiosks
Note: N=500 for MSME and 500 for shopkeepers
Source: FICCI – BCG Survey 2014
4
1.
2.
3.
4.
Personal savings account
Current account
Online payments
Working capital finance
management
5. Credit cards
6. Term loans
7. Trade finance
8. Insurance
9. Wealth
10. Online share trading
PB = Primary Bank
9
Digital appetite » scale & education
By number of
employees
By business size
27
44
48
40
38
43
By education of
proprietor
30
54
67
77
41
46
70
58
59
56
77
82
68
45
40
29
4
6
<50
lakh
23
15
50
1 to 3
lakh - crore
1 crore
2
3-10
crore
3
>10
crore
1
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
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Less than 5
Less than 3 digital channels
44
1
5 to 10
More
than 10
3 to 5 digital channels
3
15
School X pass
drop out
20
3
5
11
XII Graduate Post
pass
graduate
More than 5 digital channels
10
Case for digital (x-sell) – Rs. on the table
Banking relationship across
products (% of Shopkeepers /
professionals)
Banking relationship across
products (% of MSMEs)
100
Current account
63
Personal savings
Credit cards
23
37
100
Current account
72
100
Personal savings
75
15 38
Credit cards
Insurance 7 20 26
Insurance
Overall primary bank
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
27
72
25
100
8 35
13 8 21
Others
11
Question 5
?
What will it take – what are the hurdles?
• Safety risk perception
• Cost of transaction
• Ease of use
• Lack of awareness
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Convenience and then cost
Top reasons of dissatisfaction with
Primary Bank's digital offerings
(% of dissatisfied MSMEs)
62
Top reasons of dissatisfaction with
Primary Bank's digital offerings
(% of dissatisfied shopkeepers /
professionals)
31
24
17
Not very
convenient
to use
13
11
Do not trust
safety and
security
High online
transaction costs
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
High online Not very Do not trust
transaction convenient safety and
costs
to use
security
17
Does not
provide
relevant
and timely
information
13
Say it – 9 times
Relation between number of digital channels
adopted and frequency of POC explaining
digital (% of MSME)
Relation between number of digital channels
adopted and frequency of POC explaining
digital (% of Shopkeepers /professionals)
19
20
20
45
32
56
86
57
78
75
78
65
55
43
23
2
5
1
Many
times
Once
No. of responses
147
113
83
Avg. no. of digital
channels used
3.4
3.3
2.7
4
Do not Not at all
remember
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1
Many
times
Once
157
93
57
79
271
2.3
4.1
3.1
1.5
1.6
Less than 3 channels
Note: POC = Point of contact
14
3-5 channels
Do not
Not at all
remember
More than 5 channels
14
Considerations for digital agenda
Reality of small enterprises
Implications for digital agenda
MSMEs are resource and time
crunched – often a one-man-army
Digitize 'everyday banking' Tx as selfservice
• Give back time to MSME customers
Low on technology maturity
Digitize 'advanced banking' Txs but
keep the human touch
• e.g. RMs with Tabs, Online tools with
Call center support
Add value to MSMEs through digital
• e.g. Cashflow projection app, SME
networking community
Typically bank service experience is
inconsistent
Digitize processes to ensure
consistency in service
Digital banking solutions have a
'cardboard' feel ...
... different from the digital experience
in personal life (Facebook, Apple,
Google, Flipkart, Amazon etc.)
Use Human Centered Design approach
• Ethnographic need
• Minimum viable proposition
• Fit-for-purpose technology (tab, smart
phone, mobile, laptop)
YASH ERANDE- FIBAC - MSME Panel - vF.pptx
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Thank you
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