A Dwindling Indian Payment Bank Received Customized Research Solutions by Research Nester to Promote Sustainable Growth and Profitability and Rebuild its Customer Base.

A payment bank startup found itself in a deep mess after it faced backlash from its customers owing to fraudulent transactions through a few card skimming instances. It caused the company to lose customers and also damaged its reputation. The company authorities turned to Research Nester consultants to provide strategies to foster winning back customer trust and market credibility.

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An overview:

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A payment bank built as a startup was designed to facilitate real-time and instant bank-to-bank and person-to-merchant transactions.

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It reached remarkable growth and popularity amongst the classes and the masses till its name got involved in a card skimming fraud.

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However, it faced heavy criticism owing to its poor handling of the scam. This led to a loss of reputation and customer base.

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Moreover, the risk and uncertainty involved thereafter dented its market position and hampered its growth.

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The company leadership sought the services of Research Nester consultants to provide a customized solution for mitigating the risk and utilizing the opportunities.

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The Story

The startup was the brainchild of two Indian individuals who realized the necessity of streamlining the online payments industry. On the 24th of November 2014, the Reserve Bank of India issued guidelines for establishing payment banks. It allowed the opening of saving accounts and current accounts but restricted the banks from issuing credit cards and accepting deposits of more than 1 lakh from a customer. When the start-up was incorporated in 2015, just 40% of the country’s population was connected with the banking sector. The rest 60% included lower-income people, people working in the unorganized sector, and the rural population. The major objective of incorporating the start-up was to tap the small savings accounts of SMEs, and low-income households ensuring their financial inclusion and providing payments and remittance services to workers of the unorganized sector and migrant laborers. When the company was initiated there were very few payment banks, and hence the bank’s share in the landscape was around 30%. But in a few years’ time, the landscape expanded significantly. Moreover, commercial banks also entered the payment sector providing services to people who did not have a bank account. The client bank initially saw rapid growth enabling payments and banking solutions for a number of businesses, SMEs, and large scale too. Moreover, it found high popularity among migrant workers and semi-literate rural populations. However, in March 2020, all hell broke loose when a card skimming fraud was reported. It was followed by two more such instances in the same month. The debit card details and ATM numbers were illegally captured and used to carry out fraudulent transactions. Since the COVID-19 protocol restricted regular activity, the bank was not able to carry out a thorough internal and external investigation. The bank could not compensate the affected customers promptly and took around 9 months to process it. This led to dissatisfaction among them and damaged the credibility of the bank. In June 2021, the bank authorities reached out to Research Nester analysts to help it re-work its strategy and gain back its reputation and trust.

Our Solution:

The company had lost its reliability specifically due to a lag in its security implementation practices. It needed to strengthen its fraud detection and control systems. Research Nester consultants offered a customized solution in the form of the Online Payment Fraud Detection Market Report. It provided in-depth research on fraud analytics, authentication, prevention, and detection strategies which would help the payments bank company in managing any similar future setbacks. Research Nester analysts further suggested the following measures to improve the company’s reliability and facilitate trustworthiness among the customers-

  • Communication with customers
  • Ensuring compliance with security standards
  • Conducting regular security audits
  • Implementing additional and effective security measures such as upgrading payment card technologies, and implementing tokenization, or encryption methods.
  • Enhancing monitoring to detect and prevent the risk of fraud in the future.
  • Implementing best practices for enhancing customer experience
  • Providing prompt refunds and compensation to affected customers in case of fraud.
  • Proactively spreading awareness and educating customers through websites, mobile apps, etc., to stay vigilant and identify and report suspicious activities
  • Having an efficient customer support cell for swift addressing of grievances and issues.
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Results

When the bank was incorporated, in 2015, it saw astounding growth, since it was one of the few exclusive payment banks. The revenue jumped from ~Rs 321 Crore in 2016 to ~Rs 510 Crore by the end of 2018. The growth remained almost steady although not at the same pace considering the increasing competition and reduction of the bank’s market share. In March 2019, when the Pandemic was engulfing the entire world, three unprecedented skimming frauds occurring in quick succession, resulted in further plunging of the market share of the bank. The revenue nose-dived down to ~USD 162 Crore as of 2020. With the stepping in of RNPL analysts, in mid-2021, the company managed to re-strategize its policies and processes. Gradually by mid-2022, its revenues reached a value of ~Rs 623 Crore. Presently, the company is working through the same strategies, integrating user-friendly measures and incorporating technology to prevent and mitigate any unauthorized transactions. It is gradually building back its trustworthiness and its growth has finally found momentum.

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Swara Keni

Head- Global Business Development

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