The Opportunity

The Opportunity

In this paper, I will focus on the opportunity to develop and service a mobile platform that provides basic banking (deposits only not credit) services and life insurance service to the last mile in India via the Indian Postal Department. Indian Postal Department is one of the largest providers of financial services in the country with an account base of around 220 million. Also, it has a network of 1,55,000 post offices which reach the last mile in India. There are many remote locations in rural India where the only connectivity with the outside world is via the Post Office. Hence, Indian Postal Department is the best vehicle to reach the unbanked and un-serviced population of India.

Assessment of the market dynamics and the opportunity

Competition: Medium - The target market is the unbanked and uninsured population in rural India. There are no existing competitors who provide banking depository and life insurance service to this section of India's rural population. However, existing banking and insurance service providers can extend services to this customer base in the future.

Threat of new entrants: Low - The entry barriers are very high as most firms don't have the infrastructure to reach the last mile locations in India as these areas are often not accessible by roads. Also, due to lack of critical mass and high cost of servicing to the last mile, it is very difficult to make a profit hence private firms don't have incentives to service this population.

Threat of substitutes: Medium - Microfinance institutions are not a direct substitute as they provide credit and not deposit/insurance service. But, they provide a similar sense of financial security to the rural population and hence can be considered as substitutes.

Bargaining power of customers: High - Since we are focusing on one customer - The Indian Postal Department, the customer has high bargaining power as the product is customized to meet its requirement.

Bargaining power of suppliers: Low - Low bargaining power as this is an un-serviced area without the presence of any competitive firms. So there are no existing suppliers.

Value created for market participants - financial inclusion, social empowerment

The market participants are the rural population that is outside of the formal financial services system. They will have access to critical basic banking and insurance services that have been elusive for them thus far.