STATE OF THE FINTECH UNION 2022 - Balance between Sustainability, Innovation & Regulation
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STATE OF THE FINTECH UNION 2022 Balance between Sustainability, Innovation & Regulation August 2022 Fintech Landscape - Mission Critical for Indian Economy 1
State of the Fintech Union Report 2022 2
Boston Consulting Group partners with leaders in business Early stage investors targeting companies in the Indian
and society to tackle their most important challenges and consumer and enterprise market. Matrix Partners began
capture their greatest opportunities. in Boston in 1977, and today invests actively in the USA,
India and China. Matrix Partners India was established in
BCG was the pioneer in business strategy when it 2006, and invests across a variety of sectors including
was founded in 1963. Today, we help clients with total consumer technology, B2B, enterprise & SaaS, and Fintech,
transformation—inspiring complex change, enabling among others. We look for the best and brightest founders
organizations to grow, building competitive advantage and and teams. In our experience, the quality, passion and
driving bottom-line impact. To succeed, organizations must commitment of a company’s core team are more important
blend digital and human capabilities. Our diverse, global than any other element.
teams bring deep industry and functional expertise and a
range of perspectives to spark change. We invest in between seed and series B initially in each
company. We like to get to know founders early, ideally
BCG delivers solutions through leading-edge management well before they are ready to raise capital, with a focus on
consulting along with technology and design, corporate companies primarily targeting the Indian market. We prefer
and digital ventures—and business purpose. We work to be the lead investor. We often invest on our own but also
in a uniquely collaborative model across the firm and co-invest with other investors.
throughout all levels of the client organization, generating
results that allow our clients to thrive. Founders are always first in our eyes, whether you have
just a nascent idea or are already running a business, let us
help you turn your ideas into reality and grow your business
Fintech Landscape Today: Too Big to Fail! 3
State of the Fintech Union 2022 4
TABLE OF CONTENTS
01
Fintech
02
Profitability, Innovation
03
Action
Landscape and Governance Agenda
Mission Critical for Breaking the Unlocking the
Indian Economy compromise full potential
08-21 22-83 84-88
Fintech Landscape - Mission Critical for Indian Economy
Executive Summary
T
he Indian Fintech landscape has their financials and enable cost controls as Communicate early & proactively with
reached a scale to establish a strong needed, to be able to continue innovative regulators to shape enabling provisions
position in the Global financial investments and scale for new business model
services market and be benchmarked for
• Win your customer’s trust – Be known for
its speed of innovation, customer inclusion Our survey with 125+ Founders/CXOs of
taking hard decisions because they are
and growth. Clocking over $800 Bn+ annual top Fintechs and Incumbents revealed that
right
payments transaction value, Fintechs product expansion, ARPU and monetization
have made a strong contribution to Indian are the key priorities and biggest challenges • Tap domestic capital markets – Debt
economy, and play a powerful role in the for the industry today. More than 70% of investor contribution, corporate treasury,
provision of full-fledged financial services to respondents believe most Fintechs may not hedge funds, etc. Repivot to domestic
all Indians. We see this collective segment be profitable in the next 2-3 years. While capital and equity partnerships with large
to be mission critical for the $5 trillion Indian scale is an important driver of profitability, incumbents when global forces dry up
economy early stage focus on ‘unit economics’ is a
• Grow together – Build a strong
critical orientation needed. With the race
partnership DNA and leverage incumbent
We have a game changing 5 years ahead for customer acquisition, and surging
knowledge and expertise in the innovation
of us - the financial services landscape is funding over the last 5 years, profitability
journey
expected to have many strong actors on and compliance has been an after thought
the stage – large Incumbents, niche as for many players. As the industry matures Incumbents have an important role as well:
well as diversified Non-Banks, new-age and regulatory controls strengthen, “Fin” in
and mature Fintechs, Aggregators and Fintech will become big and bold.
Financial Service Providers, integrated
multi-industry Ecosystems and Technology As we move ahead, there are a few key
& Data partners. COVID has pressure tested imperatives for our Fintech founders:
the business models and balance sheet
strength of Indian Fintechs. While some • Profitability from Day 2: “Fin” as
businesses went through closure, a sizeable important as “Tech” – While customer
number of Fintechs have survived and acquisition and growth is important,
demonstrated their “immunity” to withstand deeper understanding of banking
such adverse events. Funding inflows revenue pools and designing for
went through a plunge of nearly 40-50% profitable operations from the get-go
when COVID hit, driven by weaker Foreign will be critical to success
investor funding, but the rebound post
• Embrace compliance by design, not as
that (70-80%+) has given some runway
an afterthought! – While profitability
to Fintechs. As we see a ‘funding winter’
will give runway, compliance will help in
coming, Fintechs will need to re-evaluate
creating sustainable growth models.
State of the Fintech Union 2022 6
• Joint innovation and mentorship – for the global financial services industry.
Jointly innovate in compliance and As we move towards a maturing fintech
governance areas (e.g., cyber security), landscape, these “4C’s & a B” of policy
while also guiding and mentoring enablers will go a long way in supporting
Fintechs the industry:
• Set-up to live in a two-speed world • Consistency: Improve clarity and
– Build partnership BUs, enhance consistency across regulating bodies
and simplify operations, technology (e.g., KYC norms),
and processes, while maintaining
• Communication: Continue active
governance and risk controls
dialogue through fintech ‘sounding
• Proactively participate in open network board’, while keeping pace with ongoing
models – Embrace data democratization, innovations, ambiguity and challenges
open credit enablement (OCEN), Fintechs are facing
Account Aggregator models. Invest in
• Collaboration: Easing restrictions,
layering private innovation on public
building clear market standard
features to drive economic and strategic
interfaces to facilitate collaborative
advantage
business models, and simplifying go-to-
• Contribute to a more inclusive policy market of these models
framework – Active involvement with
• Calibration: Differentiated regulatory
regulators as they develop and advance
approach for ‘early-stage’ vs ‘scaled-up’
financial sector, to promote engagement
Fintechs for regulatory supervisioning,
with Fintechs and ease collaboration
introducing ‘Reg labs’ for controlled
India’s regulatory policy framework and environment operations and testing
infrastructure has been a poster child
• Benchmarked to Global: Capture
learnings that enabled growth in Global
markets and ensure we are moving in
tandem and not behind the curve on
innovation, policy and infrastructure
advancements
Executive Summary
Fintech Landscape - Mission Critical for Indian Economy
077
01/03
Fintech Landscape
Mission Critical for Indian Economy
Stateofof
State thethe Fintech
Fintech Union
Union 2022 Report 2022 8
10
Fintech Landscape - Mission Critical for Indian Economy 9
Indian Fintech Industry: Leaping forward fast
India: #3 in Fintech strength Significant strides in UPI
USA 22,290 16%
$800 Bn+ UPI Transaction Value for CY212
UK 8,870 15%
India 7,460 20%
35 Bn+ UPI Transaction Volume for CY212
Canada 2,770 7%
97% UPI Transactions Value growth2
Australia 2,640 9%
China 2,530 10%
# Fintechs as on Jun’221 CAGR of number of Fintechs over CY 2019-2022
Source: 1. Traxcn data as on Jul’22 2. UPI data from NPCI, CAGR represents value increase from CY19-21
State of the Fintech Union 2022 10And occupying a significant space in the Global Fintech Landscape
USA UK China India Canada Australia
Funding ($)
129 Bn 40 Bn 37 Bn 29 Bn 7 Bn 5 Bn
(Jan’17 - Jul’22)
14%
share of Global
# Deals
5,843 1,951 794 2,084 282 429 Fintech Funding
(Jan’17- Jul’22)
#2
on Deal volume
#Listed FinTechs
174 52 60 37 51 59
as on Jul’22
#4
in Unicorn
strength
#Unicorns
172 30 36 23 6 4
as on Jul’22
Source: Tracxn data as on Jul’22, Cumulative data from Jan’17 to Jul’22
Fintech Landscape - Mission Critical for Indian Economy 11Rapid surge in new Fintechs over the last 5 years
# Fintechs in India 8,000
Unicorns as of Jul’22, placed on their start date
Groww, Acko, Digit
PhonePe, Zeta
PayTM, Zerodha 6,000
Policybazaar Razorpay, One Card
OfBusiness
Mobikwik
Coinswitch, Cred Avenue, 4,000
ChargeBee Open, Oxyzo
Bill Desk
BharatPe, Coin DCX,
Slice, CRED
Pine Labs 2,000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1
0.1 0.2 0.1 0.2 0.1 0.2 0.1 0.1 0.4 2.2 0.8 4.0 2.1 4.2 3.2 9.8 3.4
Annual Equity Funding ($Bn)
Many large fintechs had started operations from 2008, with Neobanks being the recent entrants. While the number of
fintechs scaled up between 2014 and 2021, funding was low till 2015 after which the sector received rapid funding boost.
COVID further boosted payments space, leading to 210% spike in funding between CY 2020 and 2021. With rising funding
and valuations, we have a seen an acceleration in the rate at which Fintechs have become unicorns vs the past
Source: Traxcn data as on Jul’22
State of the Fintech Union 2022 12With many of them moving up the valuation pyramid
Thriving ecosystem couple with a surge in digital adoption has
catapulted the market to a high growth and valuation trajectory
Indian Fintech Indian Fintech
landscape in 2020 landscape in 2022
Decacorn (>$10 Bn) 1 1
Unicorns ($1-10 Bn)
7 22
Soonicorns ($0.5-1 Bn) 5 12
Century Club FinTechs
($100-500 Mn) 39 41
Minicorns ($1-100 Mn) 200 380
Source: Tracxn data as on Jul’22 ,excludes early stage Fintechs which have valuation below $1Mn
Indian fintechs are reaching scale and industry is moving towards becoming mission
Yashraj Erande critical, thus having a national role to play in achieving India’s pursuit of 5Tr economy.
Managing Director & Fintechs and conventional players will co-exist as the need to work together is
Partner, BCG becoming imperative to provide a holistic experience to customer with best of both
Erande.Yashraj@bcg.com worlds. Having good compliance systems will smoothen the process of collaborating
as willingness of partners to collaborate with compliant fintechs will be higher.
Fintech Landscape - Mission Critical for Indian Economy 13And creating their niche, by driving inclusion
LendingTechs PayTechs WealthTechs
NTC coverage UPI Adoption Activating clients
Market share in Market share in active
New-to-credit customer share
UPI transaction value broking clients
36% Fintechs 93% Fintechs 80% Fintech
broking
22% Banks 7% Banks 20% Traditional
broking
Source: Invest India report 22’, BCG Analysis
State of the Fintech Union 2022 14Breakthrough customer coverage, garnering investor interest
Fintech customers in India
2021 Growth Rate 2022
Digital payments (MAU - PhonePe1)
125 Mn+ 32% 165 Mn+
Digital investments (MAU - Groww2)
4.5 Mn+ 100% 9 Mn+
Neo-Banking (#Customers - NiyoX3)
2.5 Mn+ 60% 4 Mn+
1. Phone Pe’s (market leader) MAUs for Jun’21 and Apr’22 2. Groww’s (market leader) MAUs for Mar’21 and Mar’22 3. NiyoX’s registered base for Aug’21 and Jul’22
Source: 1. PhonePe’s report Apr’22, Press search 2. Credit Suisse - Sensor Tower Data - Mar’22 3. Press Search
Fintech Landscape - Mission Critical for Indian Economy 15Fintech industry has received a booster funding shot – Maturing,
but still in high growth phase
Equity funding and deal count in While Series D+ funding has grown,
India has been on a rise ~60% is still in Angel, Seed & Series A-C
Funding series split in India (%)
521
7% 6%
14% 19% 18%
372
302
48% 44% 52%
228 58%
26% 86%
9.8
45% 38% 42%
4.0 4.2 3.5 23%
CY 17 CY 19 CY 21 CY 22 H1 CY 14 CY 16 CY 18 CY 20 H1 CY 22
# Deals Deal Amount ($Bn) Angel & Seed Series A,B,C Series D+
• Equity funding into Indian fintechs has grown at a CAGR 26% over last 4 years, but more rapidly so from 2020
onwards, fueled by the post-pandemic impact of high growth via increased digital services adoption.
• The increasing number of late-stage financing rounds is another indicator of increased maturity of Indian fintechs
Source: Tracxn data as on Jul’22
State of the Fintech Union Report 2022 16Global investors taking a strong seat at the funding table
Overall
funding in 2021
$9.8 Bn
$3.5 Bn
Global investor $6.3 Bn
funding in 2021 Indian investor
funding
• Indian Fintech growth story continues to hold strong, with ~150 deals/quarter & $9.8 Bn funding in 2021
• However, last few quarters have seen multiple shifts, largely owing to macroeconomic conditions, i.e., impending
possibility of recession and high inflation globally
Note: Indian Investor funding refers to deals in which each investor is headquartered in India and Global Investor funding refers to deals in which each investor is headquartered outside India. Offshore arms of
foreign entities set up in India are tagged as Indian. Deals in which there is a mix of Indian and Foreign Investors have been split in respective categories using the same ratio as for regular Indian & Global deals
Source: Venture Intelligence data for CY 21, Tracxn data CY 21
Fintech Landscape - Mission Critical for Indian Economy 17Valuation profile tilting from Payments to Lending & WealthTech
India Fintech Valuation split by segments (%)
FY211 FY25E 2
PayTechs 50% 22%
LendingTech 13% 35%
WealthTech 15% 18%
Neobanking 6% 10%
InsurTech 11% 10%
With PayTechs having caused disruption in most areas, Lending & WealthTechs are now next in line
Note: Valuation profile does not add up to 100% as the remaining sits in SaaS
Source: 1.Tracxn, Valuation 2019 onwards 2. Capital IQ, Tracxn, Press Search, projections done considering the growth rates by segments and further expected trends
State of the Fintech Union 2022 18Winter around the corner coupled with Tech Nationalism
COVID-19 driven income Rising demand for Looming liquidity Geopolitical tensions
inequities- bias for data protection to retreat drying up to enhance bias for
consumer protection increase compliance funding inflows localization
over innovation costs
• Backlash against • ~$2.2 Mn average • Q1 FY22 witnessed • Data localization
BNPL, PPI cards total cost of a data largest decline in policies have
breach1 quarterly funding doubled from 67 to
• Reg. concerns re
since 20181 144 in last 5 years
“excess” algorithmic • High cost of
unsecured lending techno-legal solutions • 45% valuation • Increasing barriers to
for preventing data decline (QoQ) for cross border scale/
misuse Indian fintechs in data flows2
Q1 CY221
Source: 1. In 2021, World Bank Report, IBM Report, Inc 42, LNRS Report 2022, Reuters, UN Report 2. Winter Wardrobe, BCG PICUP Conference 2022 presentation
Fintech Landscape - Mission Critical for Indian Economy 19Recent funding headwinds seen Globally and in India
Global equity funding declined by 28%, While in India, dip has been a bit
with an equivalent decline in deal flows steeper at 36% decline
991 1,019 142
912 874 846 128 124 133
723 127
95
-28%
3.8 -36%
53.4 54.4
47.4 48.1 45.5 2.7
27.9 1.7 1.9 1.6
1.6
Jan-Mar’21 Apr-Jun’21 Jul-Sep’21 Oct-Dec’21 Jan-Mar’22 Apr-Jun’22 Jan-Mar’21 Apr-Jun’21 Jul-Sep’21 Oct-Dec’21 Jan-Mar’22 Apr-Jun’22
#Global deals Global deal amt ($Bn) #Deals India deal amt ($Bn)
• Over the last 9 months1, $35.6 Bn has been pulled out by FPIs from Indian markets’, rupee is depreciating and at all
time low of INR 79/$, prompting FPIs to withdraw money before further devaluation.
• A steep drop in funding of 36% from Q4 CY21 to Q2 CY22 is seen in India, which is in line with Global dip.
• The amount of dry powder with institutional investors (PE/VCs) has grown by $3.2 Bn in last 6 months2, indicating the
potential flow of capital with improvement in macroeconomic fundamentals.
Source: Preqin, Tracxn data as on Jul’22, BCG analysis , 1. Oct’21-Jun’22, 2. Dec’21-Jun’22
State of the Fintech Union 2022 20While most firms struggle, few firms flourish during downturns
14% of companies improved growth and margin …and the performance gap
in downturns, while 44% declined in both... between them is substantial
Increasing sales growth Revenue growth Change in
A (CAGR)2 EBIT Margin2
8.8%
+14pp
14% 14%
2.9pp
Shrinking Expanding +7pp
EBIT Margin EBIT Margin
44% 28%
-4.7% -4.4pp
B A B A B
Falling sales growth
1. Average across last four U.S. downturns since 1986; based on performance compared to three-year pre-downturn baseline for U.S. companies with at least $50M sales 2. Annualized revenue growth during the
downturn period 3. Compared to three-year average pre-downturn EBIT margin | Source: S&P Compustat and Capital IQ, BCG Henderson Institute
Fintech Landscape - Mission Critical for Indian Economy 2102/03
Profitability, Innovation
and Governance
Breaking the compromise
State of the Fintech Union 2022 22Fintech Landscape - Mission Critical for Indian Economy 23
Indian Fintech industry has reached COVID herd immunity
Rapid digital transition, driven by customer pull
3x Increase in UPI payments in
2021 vs 2019
Covid has accelerated
things - Internally
processes have
changed, backend
operations are more
streamlined
1.8x Increase in retail digital lending from $110 Bn in
2019 to $200 Bn in 2021
— MD, Bank
‘High digital portability’ of Fintech business models made
COVID a growth catalyst
Pushed industry towards many new innovative product Covid has pushed
launches the industry towards
digital payments and
launching of multiple
innovative products
Drove uptick in adoption of Fintech products and services
by broader customers segments like SME, Insurance, etc.
— CXO, Fintech
Unlocked new incumbent partnership opportunities, and
eased collaboration due to accelerated digitization by
traditional players
Source: BCG Matrix SOFTU Survey’ 22, BCG analysis
State of the Fintech Union 2022 24Certain segments stress tested more than others
Many business models challenged during COVID
Lending players have closed one or more
20% business lines.
Unsecured lending took greatest hit due to
Collection effort on
ground was disrupted.
In India tele-collection
deterioration of asset quality
is challenging
Headwinds experienced in some areas
— MD, Bank
Caused a brief deterioration in asset quality coupled with
disruption in on-ground collection efforts
Credit risk has
Forced business model re-imagination in high credit risk & increased- via rise
people intensive Fintech business models in insurance claims/
default due to death
Created concerns on investment climate, tightened
availability of funding. Capital shift towards profitable unit
— CXO, Fintech
economics reducing runway for new Fintechs
Source: BCG Matrix SOFTU Survey’ 22, BCG analysis
Profitability, Innovation and Governance - Breaking the compromise 25Long road to profitability for Fintechs
Fintechs not going to
Outlook more positive for Paytechs turn profitable any time
soon. Fundamentally,
business drivers are
not in the right place –
InsurTech 20% not easy to pivot from
growth to profitability
20-30% Neobanking 21% — CXO, Bank
% Respondents
who believe
Fintechs will be
WealthTech 24%
profitable in next Fintechs are operating
in the mode of getting
2-3 years Lending fintechs 24% customers and then
creating a business
model
PayTechs 32%
— CEO, Fintech
Note: Q: Do you believe most fintechs in your sector will operate profitably in the next 2-3 years?
N=102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
The last few months have been challenging for Fintechs in general with the “funding winter” approaching and pressure on demonstrating
profitability, besides customer acquisition. Fintechs that have a proven value proposition and business model will need to be prepared
to operate in the new environment and in a different context to sustain and thrive.
State of the Fintech Union Report 2022 26Product Expansion and Hiring are top priorities
What are the top priorities for you and your business?
Top 3 priorities Bottom 3 priorities
Product expansion Fundraising
82% 36%
% Respondents
mentioning this as a
priority
61% 75% 44% 44%
Improving Hiring right talent Cost reduction Internal controls
customer service
Note: Q: What are the top priorities for you and your business? (Rank in order)
N=102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 27Fintech-Incumbent collaboration requires
some unlocks
Challenges in fintech and incumbent collaboration The issue is to be able to
extend our oversight into
the partner. Regulation
(% Respondents who agree) should extend to Fintechs
in principle, not on paper
— CXO, Bank
57% 54% 53% 51%
A lot of incumbents want to
partner but are not ready.
Incumbents are slow to push
the boundary of customer
experience
— CEO, Fintech
Low tech Operational Regulatory Misalignment
maturity of complexity hurdles/ of incentives Lack of alignment on key
uncumbent challenges measurable goals - Incumbents
track profitability, Fintech
focuses on valuation & scale
Note: Q: What are the challenges in fintech and incumbent collaboration? — Founder, Fintech
N= 102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Incumbents are perceiving Fintechs as partners and complementary capabilities. collaboration is seen as a powerful tool to bring
together, reach, innovative products and seamless customer experience. However, there are many challenges seen. Regulatory clarity
on what Fintechs and incumbents can do comes across as a strong enabler of efficient collaborative models. Other challenges to
collaboration seen are low capacity of incumbents, preparedness of incumbent tech stack, low trust factor, risk sharing, data sharing
and customer ownership
State of the Fintech Union Report 2022 28Regulations highly effective in safeguarding risks and providing
level playing field
Strong positive sentiment on ...however, few areas of
regulatory environment along... enhancement felt
% who agree/neutral that % who disagree that
regulations regulations
Regulators are
also adjusting and
understanding the new
82%
models. Have been
Safeguard risks 72% 40%
Are consistent 35%
fairly supportive in
audit situations, it’s a
learning curve for all
Provide level
Provide flexibility
playing field
— Co-Founder, Fintech
Note: Q: What are your thoughts on the regulatory environment in your business area?
N=102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 29However, industry can benefit from clarity and harmonization
Top areas with greatest need for harmonization and clarity
% respondents who believe in need % respondents who
of harmonization across sectors believe in need of clarity
Data management guidelines
are absolutely needed. They
91% 63%
will be a larger version of
Customer data data localization and have to
management gradually evolve
— CXO, Fintech
KYC 97% 50% Half the battles are won if KYC
is sorted fully digitally. Country
level regulators can come
together and decide a common
framework. Simplification and
harmonization are needed
Cloud and data
localisation 72% 30% — CXO, SFB
AA is the step in the right
direction towards open
Account Aggregator
91%
banking. Needs policy push for
cross-sector adoption
framework
— President, Fintech
Note: Q: Which areas of regulations need clarity? (Multi-select); Q: Cross-sector harmonization across the following regulations will unlock value (Agree-disagree)
N=102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
State of the Fintech Union 2022 30Indian Regulators have introduced many progressive moves
Respondents view on Top 3 Progressive Regulatory moves
AA will be a game changer
Top 3 - will open up a lot of
progressive things. Needs policy
push and some form of
regulatory compensation structure to
Allowing
moves Account National
bureau
be incorporated though
Aggregator Health — CXO, Fintech
access to
model Stack
Fintechs
% respondents
with positive
93% 85% 81%
Bureau access will enable
outlook product innovation and
process efficiencies going
forward
— CEO, Fintech
Note: Q: What is your outlook on the following regulations and their impact on the industry?
N=102 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
• Account Aggregator framework touted to be a baby step towards open banking and a powerful cross-sector enabler and a
consent-based architecture.
• NHS hailed to create the UPI moment for health distribution, with opportunities for InsurTechs to create interfaces and apps for
customers to access records, health services, thereby facilitating innovation in underwriting using this new data.
• Access to credit bureau information seen to positively impact industry via better risk assessment and reduced cost in procuring
alternate data points
Profitability, Innovation and Governance - Breaking the compromise 31Global Learning Exhibit #1: Data - India’s AA framework is a step ahead
in enabling secured sharing, democratization and sachetization
India China Singapore Korea Australia
Singapore Pursuant to
Centralized Account
Financial Data Customer Data
sharing of Aggregator MyData
Exchange (SFDX) Right and Open
customer data (AA)
Banking Regs
Customer Routed through
consent for data licensed agency
sharing
Mandatory Joining AA Joining is Joining is
sharing of ecosystem is voluntary , but voluntary , but Joining is
customer data voluntary , but mandatory mandatory voluntary
by incumbent mandatory sharing sharing of data sharing of data
lenders to 3rd of data by members by members by members
party
But, can change
Fintech and
under draft data Direct sharing Banks seek
other financial
protection bill. of data with Subject to to access to On accreditation
institutions
Consultation financial Personal Data customer data from regulators
partnership to
paper favors data institutions Protection Act from FinTechs
share customer
retention with banned
data
regulated entities
• AA framework enables consented data sharing & empowers all players in the ecosystem to enhance penetration
• To win increased consumer awareness & high participation from players is necessary
• Operationalization with encrypted data sharing, strong access controls & accountability systems will be crucial
• It opens doors to additional services- portfolio management, wealth & insurance, taxation provided by players within ambit
of RBI, SEBI & IRDAI
Source: Credit Suisse
State of the Fintech Union 2022 32Fintechs need to bring more attention to governance
Top suggestions to
strengthen governance
% Respondents who Some form of
believe Fintech governance compliance
at par with Incumbents Board certification can be
independence evolved for fintechs.
& composition Scale based audit
mechanism can also
be thought about,
Attention based on revenue,
customers etc.
to internal2a
Lending
State of the Fintech Union 2022 34Lending
Hiring Talent and Product expansion are top priorities
% Respondents mentioning
this as a priority
Hiring right talent Product
expansion
79% 76%
Regulatory
impact on Geographical
business model expansion
58% 53%
Note: Q: What are the top priorities for you and your business? (Rank in order)
N=38 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 35Lending
Unsecured lending poised for further disruption
% Respondents who believe this
area will be disrupted
Cards/BNPL
29%
Unsecured loans
28% Unsecured lending features
as the biggest area likely to
Which areas be disrupted, whereas a small
set of players believe the
of lending are same will happen for secured
most likely to Supply chain financing
loans like Gold Loan and
be disrupted? 27% Mortgage
Gold/housing loan
8%
Note: Q: Which areas in Financial Services are most likely to be disrupted? (Select top 5)
N=50 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
We have seen rapid disruption in unsecured lending over the last few years, along customer experience,
Nisha Bachani analytics based credit decisioning and cost to serve. As we advance coverage across NTC, while more
can be done in strengthening risk algorithms, there is immense opportunity to disrupt the secured
Principal, BCG
space as well. Digitalization of physical assets, dematerialization of financial assets and implementing
Bachani.Nisha@bcg.com
standard operational protocols for E2E process (e.g., marking lien real time via third party platforms) can
enable growth in this space, reduce systemic risks and also facilitate quick access via LSPs.
State of the Fintech Union 2022 36Lending
CAC and Asset quality are the biggest challenges for
players today
Top challenges Fintechs Incumbents
% Respondents who believe this is a top challenge
66% 33%
CAC is a big concern now -
Regulations trying to bring customers
through partnerships than
direct acquisition
Asset quality 50% 89% — CXO, Bank
CAC
50% 56% Next 2 years are going to be
tough on the borrowing cost
37% 22%
perspective. Interventions
Competitive by Central bank and inflation
intensity are going to be areas to
watch out
34% 22%
Scalability — Co-Founder, Fintech
of business
models
Note: Q: Which of the following areas pose a challenge to sustainability in your sector?
N=16 Incumbents: N=34 Fintechs as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Fintechs have been crisis tested over the past few years, which has resulted in increasing asset quality and collection practices at par
with incumbents. Leveraging technology like AI/ML seen important to help get risk-based pricing models right in a country with diverse
customers and customer needs. In addition, availability of risk capital is a challenge and opening up debt markets and building debt
securitization frameworks to enable Lending Fintechs to borrow beyond equity markets will help drive sustainable growth
Profitability, Innovation and Governance - Breaking the compromise 37Lending
Collaboration between Incumbents and Fintechs brings
greater value
Top areas with potential for incumbent- Top areas where Regulations can be more
fintech collaboration supportive of collaboration
% Respondents who believe % Respondents who believe few
this area has high potential areas need further enhancement
Technology & data services Collection
78% 41%
Sourcing & distribution Underwriting and Credit scoring
76% 39%
Underwriting & credit
40%
Collection
40%
Note: Q: Which areas have maximum potential for fintechs and incumbents to collaborate? Are current regulations supportive of collaboration between incumbents and lending fintechs in the following areas?
N=50 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Fintech abilities lie in distribution, technology and alternate data. But with respect to collections, those with physical reach
may have an edge. While regulations provide opportunities to licensed fintechs to tap the fast growing market in India, three key
enablers seen to further their growth journey - 1. Having a level playing field vs incumbents, 2. Opening up opportunities to raise risk
capital, and 3. Providing more latitude for smaller fintechs to innovate, in controlled sandbox environment if needed.
State of the Fintech Union Report 2022 38Lending
While certain regulatory moves are lauded by all,
some enablers needed as well
% respondents
with positive
Regulation outlook Perspectives of respondents
• 70% players believe this will adversely impact innovation
Digital Lending
• 75-80% believe it will curtail bad lending practices and
40%
Guidelines
improve portfolio quality
• Need regulatory framework enabling healthy
partnerships, with guardrails to check systemic risk
Respondents believe this will enable -
Credit Bureau access to • Better Risk assessment (87%)
82%
NBFCs and Fintechs
• Reduced cost in procuring alternate data points (72%)
• Enhanced customer onboarding experience (67%)
• 50% respondents believe this will improve credit card
New credit card penetration
36%
guidelines • 35% fintechs keen to apply for a CC certificate of
registration
• However, 75% believe restricting transaction data
sharing will negatively impact co-branded cards model
Note: N=50 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 39Global Learning Exhibit #2: Regulators restrict Fintech’s
balance sheet lending to protect consumer interest
APAC regulators leverage interest capping, fund sourcing restrictions and limiting credit enhancements
India China Singapore Australia
Lending on Without Without
FinTech’s balance lending lending
sheet? license license Presence of
unregulated &
FLDGs partially regulated
restriction Through
Ability to licensed players can lead
(WIP);
offer credit agencies NA to increased the
loading PPI
enhancement to (insurance, fin
through systemic risk
lending partners guarantee)
credit lines is
banned
Exhaustive
Cap on For specific & periodic
lending rates products
reporting, coupled
with effective
• Late payment • 30% loan retention for online
penalties lending Platform supervision,
• Restricting access • No one-click purchases tailored to the
Other lending to credit bureau to Fintech’s scale can
• Ban on plaltform branding for
related restrictions regulated entities NA NA
3rd party product cross sale help minimize risks
• Prohibiting • 25% cap for Banks on
FinTechs from sourcing from single online
branding as platform
banks/‘Neo banks’
Source: Asia Fintech Sector Report, Credit Suisse, Central Banks, Press Search
State of the Fintech Union 2022 40Profitability, Innovation and Governance - Breaking the compromise 41
Lending
Perspectives on enabling a growth path ahead
Expand access to alternate forms of capital, through India’s debt and securitization market:
Fintechs should demonstrate clear value to debt investor, price risk effectively and enhance
governance and reporting standards to achieve high velocity of debt funding. Frameworks that will
enable discovery and funding of these new borrower entities will be required to make this happen
Unlock value of partnerships: Clear guardrails for fintech-incumbent partnerships on customer
experience, risk management and governance can unlock significant value by combining the expertise
of incumbents with innovation of Fintechs
Accelerate Industry enablers - Data democratization and open finance: Account Aggregator
framework and OCEN are set to transform lending. Acceleration of AA adoption by the ecosystem and
expanding to other data sources beyond banks will unlock industry ability to drive better access and
algorithmic risk-based lending through open market platforms like OCEN
Data management and compliance by design: Proactive compliance, customer data management can
help fintechs alleviate RBI’s consumer risk protection concerns. Fintechs can seek an opportunity to
set benchmarks for tech driven compliance by design
Scale based guidelines for Fintechs: Opportunity to create scale-based guardrails for fintechs
(similar to NBFC construct); Smaller fintechs in early stages of innovation/product testing may need
more latitude to operate and innovate while fintechs reaching scale should be subjected to the right
standards of regulations and governance
Vikram Vaidyanathan Profitability in lending is not a post-facto thought. Key is to get the basics right:
continuously improve underwriting models, leverage tech to reduce opex and have a
Managing Director, Matrix Partners
clear plan to reduce cost of funds with scale. Fintechs are battle-tested survivors of
Vikram@matrixpartners.in
multiple debt crises, will continue to learn and emerge out of them stronger
State of the Fintech Union 2022 42Lending
Perspectives on enabling a growth path ahead
Need to get to a meaningful scale for sustainability and
profitability and justify upfront investment in tech and infra;
One important factor to help scale is access to wider capital
markets
— VC Investor
Framework for debt securitization and ratings is the need
of the hour to drive velocity/throughput that attracts
retail investors, corporate treasury and debt hedge funds.
Need a wider debt syndication marketplace
— Co-Founder, Fintech
In a diverse market like India, key is to match right-priced
borrower risk to investor/lender risk. Using technology
effectively, can get access to data, reduce associated cost of
credit and losses, which thereby improves the overall quality
of portfolio
— Co-Founder, Fintech
Lending space, especially the unsecured space, is growing at a rapid pace with scaling up of digital operating
Vipin V models, alternate data based underwriting etc. and fintechs are well positioned to ride on this growth. Moreover,
credit models of fintechs have been stress-tested during Covid phase and the good ones have been able to bring
Partner, BCG
down their delinquencies to pre-covid levels. Next few years present a great opportunity for Fintechs to penetrate
V.Vipin@bcg.com
the market by focusing on underserved segments with the strong backing of Bank/ NBFC partnerships. Fintechs
might outpace many leading NBFCs/ banks in terms of lending volumes over the next few years
Fintech Landscape
Profitability, Innovation
- Mission
and Governance
Critical for Indian
- Breaking
Economy
the compromise 432b
Payments
State of the Fintech Union 2022 44Payments
Product expansion and Hiring talent are top priorities
% Respondents mentioning this as a priority
Product expansion 95%
Hiring right talent 77% Opportunity to
innovate as more and
more guardrails are put
by regulators; market
access and share
Regulatory impact on business model 59% comes out and can also
be a good opportunity
to charge premium
— CXO, Fintech
Cost reduction 50%
Improving Customer Service 45%
Note: Q: What are the top priorities for you and your business? (Rank in order)
N=22 Payment as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
PayTechs seem to be focusing on product expansion and cross-selling as it is challenging to create sustainable profits, given the
current regulatory regime. Even globally, it is natural for payment companies to extend into other product lines. Growing monthly
active user base and thinking about cost reduction, with primary driver as technology are the other top priorities heard
Profitability, Innovation and Governance - Breaking the compromise 45Payments
Disruption expected in P2P and P2M payment flows, less
on acquiring
Which areas in Payments are most likely to be disrupted
% Respondents who believe this area will be disrupted
P2M 29%
UPI has been a big disrupter in the
Indian Payments landscape.. The
Payment SaaS 28% next wave of disruption is expected
to come from rapid explosion of
digital merchant payments (as 75%
merchants are now covered via QR)
and through greater penetration &
P2P 27% UPI enablement of Credit cards
RBI’s 2025 payment vision targets
a 3X growth in digital payments
POS/PG 12% transactions, and value of digital
payments turnover to be 8X vs
GDP, with a fundamental reduction
of cash in circulation.
Prepaid & gift cards 12%
Note: Q: Which areas in Financial Services are most likely to be disrupted? (Select top 5)
N=29 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
State of the Fintech Union 2022 46Payments
Cost of compliance, CAC and Competitive intensity are
the top challenges
Top challenges Fintechs Incumbents
% Respondents who believe this is a top challenge
Regulations 73% 57% Long wait on decision on
the Payment Aggregator
68% 43%
License, decision could
Competitive provide clarity to move
intensity forward
— Strategy Head, PayTech
CAC
55% 71%
27% 43%
Scalability Challenge is more from BU
of business perspective. UPI makes no
models money, but overall Bank
makes more money in the
longer run due to digital
23% 71%
High
transactions. LTV of the
compliance
customer increases
cost
— CXO, Small Finance Bank
Note: Q: Which of the following areas pose a challenge to sustainability in your sector?
N=9 Incumbents; N=20 Fintechs as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
PayTechs feel that card regulation can be clearer as there are interpretation gaps between RBI & fintechs. Zero MDR regime believed
to have impacted sustainable profits, especially with lot of cashbacks, discounts being given away to combat current intense
competition. In addition, restrictions in credit linked to payments is seen as another pain point challenging the viability of business
Profitability, Innovation and Governance - Breaking the compromise 47Global Learning Exhibit #3: Payments - Regulators cap
and reduce MDRs to propel product offering expansion
MDRs/interchange fees across markets have been capped and have been trending downwards
India China Singapore Korea Australia Malaysia
Upto RM5K:
P2P Fee NIL 1
NA NIL NA NIL>RM5K:
50 cents
Varied with
commercial
arrangements
P2M/ S$0.2 to ~0.5 %
Corporate NIL1 NA S$0.5 per NA (Chargeable
fees tnx by acquirer)
MDR Cap is based
Credit Consultation on merchant sales Interchange
cards in progress 0.45% No cap Cap: 0.5%
Cap: 0.675%
1.5-1.8% Ranges from 0.5%
to 0.9%
Rupay MDR:
NIL No cap Interchange
Debit Cap: Rmb Subject to Interchange Cap:0.14%/0.21%
No cap Cap: 0.08%
cards Other MDRs: 13/0.35% commercial (domestic/
0.4- 0.9% agg. international)
MDRs and Fee in most cases are capped atPayments
PayTechs looking to lending as holy grail for monetization
Are you exploring any
alternate revenue source What other revenue source are you exploring?
Lending emerge to be the clear winner as an alternative revenue source
7%
25%
43% 46%
58% 64%
~70%
Paytechs are looking 75% 36%
17%
to tap into alternate
50% 27%
revenue sorces
25% 18% 9%
Lending Selling Ad Insurance Wealth
Technology Revenue Distribution Management
solution Distribution
Pursuing Considering Non considering
Note: Q: Are you exploring any alternate revenue sources? What other revenue sources are you exploring?
N=29 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 49Payments
While tokenization seen in a positive light, players
need support on other regulatory moves
Few players have a positive outlook on recent regulations
% respondents with Respondents’ perspective
Regulation positive outlook on implications
34%
Zero MDR 80% believe banks and PSPs most
impacted
21%
Restricting BNPL Models Constrains innovation in space
31%
Credit Card and Debit Card – Issuance and Limits role of non-bank and fintechs in
Conduct Directions driving penetration
Helps minimize data leaks & brings
66%
Tokenization of card transactions
transparency but increases compliance
cost and cancellations
Note: N=29 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
State of the Fintech Union 2022 50Profitability, Innovation and Governance - Breaking the compromise 51
Payments
Perspectives on enabling a growth path ahead
Monetization of payments: Need to enable economic attractiveness for Fintechs to continue
to invest in payment innovation. Currently economic models are highly restrictive and zero
MDR regime puts pressure on Paytechs to focus on alternate sources of revenue and limits
investment in innovation
Credit on payments: Credit embedded within payments is key to drive growth and penetration of
payments in a sustainable way. UPI has disrupted peer to peer and peer to merchant debit payments
and with the enablement of credit cards on UPI, it is set to turbocharge credit card industry further
with a manifold expansion of the acceptance reach
Widening of P2M acceptance: While UPI has kicked off a digitization wave of payments, significant scope
for further penetration in P2M payments; need to reach larger merchant base and continuously drive
formalization and digitization of additional value chains
Monetization beyond core: Payment service providers role has expanded beyond core processing to
lending, book-keeping, cash flow management, etc. to drive sustainability. PayTechs will continue to
unlock value through other value-added services
State of the Fintech Union 2022 52Payments
Perspectives on enabling a growth path ahead
Identifying where the lazy money is lying and becoming
the preferred choice of the consumer for transaction is
the way for profitability. Lazy money is in credit right now,
so have to find seamless ways of giving credit
— Co-Founder, Fintech
Intersection between payments, tech and consumer is the
area where huge revenue pools are going to be available.
Play between payments and data coming together to open
opportunity across the world
— Co-Founder, Fintech
Monetization is a key challenge faced by paytechs. Paytechs
should tap into alternate revenue sources and continue
thinking about cost reduction, primary driver being technology
— CXO, Fintech
India has attained word leadership in payment innovation through UPI, QR
Vivek Mandhata acceptances, etc. We have several fintechs setting the standards at scale. However
there are still many areas where significant potential exists to increase digital
Partner, BCG
payments penetration especially in the P2M space. Enabling more merchants,
Mandhata.Vivek@bcg.com
formalization will also unlock the potential of finance embedded in payments. Greater
flexibility in economic models can turbo charge investments into payment innovation
Profitability, Innovation and Governance - Breaking the compromise 532c
Insurance
State of the Fintech Union Report
2022 2022 542c
Insurance
Hiring talent and product expansion emerge as top priorities
% Respondents mentioning this as a priority
87% 73% 60% 53%
Hiring right Product Geographical Regulatory impact
talent expansion expansion on business model
Note: Q: What are the top priorities for you and your business? (Rank in order)
N= 27 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Product expansion, especially in Health claims processing solutions and Managed care are touted for growth. Current tech solutions and
innovation has been limited in these areas, focusing largely on distribution. However, as players expand, tech led solutions is expected
to drive greater penetration. Similarly, better experience and VAS such as wellness linked products will be the key differentiators of
winners vs laggards
Profitability, Innovation and Governance - Breaking the compromise 55Insurance
Health Insurance most ripe for disruption
Which areas in Insurance are most likely to be disrupted?
% Respondents who believe this area will be disrupted
Top new avenues
respondents believe should
be allowed:
Data based pricing in Health
Health Life Motor & Life >> 84%
Value added services such
as wellness linked products
>> 75%
45% 16% 14%
Enable white labeled
insurance products >> 73%
Pay per use motor
insurance pricing >> 71%
Note: Q: Which areas in Financial Services are most likely to be disrupted? (Select top 5)
N= 27 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Anish Patil 2022 can be the watershed moment for Insurtechs in India. Heightened consumer
awareness post COVID, new product innovation and increased regulatory support are
Associate Vice President, clear tailwinds for insurers and insurtechs alike. Low CAC, strong underwriting and a
Matrix Partners solution-first mindset will be key for insurtechs to win in the long run. Expect significant
Anish@matrixpartners.in growth in health, commercial and contextual insurance products
State of the Fintech Union 2022 56Insurance
Regulations, CAC and Scalability are the key
challenges today
Top challenges Fintechs Incumbents
Business models are still
% Respondents who believe this is a top challenge complex – CAC is high,
digital acquisition not
adopted in a big way
Regulations 92% 58% — CXO, Bank
CAC
83% 67% Regulations are stringent.
But they are not impeding.
Regulation isn’t the primary
58% 25%
Scalability blocker
of business
models — CXO, FinTech
Loss ratios
50% 58%
Insurance regulator is
thinking rightly about
42% 67%
launching insurance
Competitive
companies – new licensing
intensity
models might come up like
banking
— Co-Founder, FinTech
Note: Which of the following areas pose a challenge to sustainability in your sector?
N=12 Incumbents; N=15 Fintechs as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
Profitability, Innovation and Governance - Breaking the compromise 57Insurance
Significant opportunity for Fintech-Incumbent collaboration
Sourcing/distribution, underwriting, wellness Easing of investment restrictions
services - most preferred areas for collaboration would facilitate better collaboration
Sourcing/
Distribution 100%
UW using
alternate
data (HI/Life)
96% ~70%
respondents
agree that relaxing
Wellness
services (Health) 93% investment
restrictions of
insurers ability to
invest in insurtech,
Risk based will lead to more
pricing (Motor) 85% collaboration
Retirement
Planning (Life) 78%
Note: N=27 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
State of the Fintech Union 2022 58Insurance
Regulations supportive of Fintech-Incumbent
collaboration in most areas
Areas where regulations % Respondents Areas where regulations % Respondents
are supportive who believe so can be more supportive who believe so
Sourcing/Distribution
67% Risk based pricing (Motor)
42%
Tele consultation (Health) 50% Underwriting using alternate
data (Health & Life) 42%
Note: Q: What are your thoughts on the regulatory environment in your business area?
N= 27 as on 15th June 2022
Source: BCG Matrix SOFTU Survey ‘22
Overall, regulations are perceived to be supportive in most areas, except wellness services and underwriting using alternate data.
While incumbents have a more optimistic view on regulatory support, Fintechs believe potential to create more supportive frameworks
in retirement planning, tele consultation and risk based pricing besides the above two.
Profitability, Innovation and Governance - Breaking the compromise 59Insurance
Strong positive sentiment on recent regulatory moves
% respondents with
Regulation positive outlook Respondents’ perspective on implications
70%
Easing new insurer application Reduction in minimum capital to help
fintechs, micro-insurers
71%
Pay per use pricing in Motor Allows larger play of InsurTechs in product
structures and distribution
84%
Data based pricing in Health Will unlock growth and value-based
pricing; Enables efficiency and profitability
Creates new opportunities for InsurTechs
75%
National Health Stack like technology interfaces for records
access, ecosystem connection
infrastructure, underwriting innovation
Has enabled growth of innovative
67%
Sandbox products but needs relaxation of
guidelines (E.g.- Quick approval, ‘use &
file’ for products/services)
Note: N=27 as on 15th June 2022
Source: BCG Matrix SOFTU Survey’ 22
State of the Fintech Union 2022 60Insurance
Forward looking regulatory moves creating growth
unlocks
Guideline Potential impact
Introduction of new age add-ons for Motor Own Expected to accelerate insurance penetration
damage cover 3+ year vintages PV, 2W
• Pay as you drive (switch-on/switch-off
insurance according to need)
• Pay how you drive (the better you driver
lesser the premium)
Usage based • Floater policy for 2-wheelers and private
insurance cars belonging to the same owner
Insurers across product lines (Life, GI, Health) Accelerates the product introduction timelines
allowed to use and file products
Greater flexibility launch innovative products
with differentiated features, pricing - in line
with evolving demands of the customer, and
Simplified assist in increasing insurance penetration
product filing
guidelines
Insurers can directly empanel hospitals for Insurers can expand the network of hospitals
cashless treatment without registration with (PPN - preferred provider network) providing
Registry of Hospitals in the Network of Insurers cashless facilities, thereby improving access
(ROHINI) to quality health-care and best medical
Flexibility in the infrastructure.
empanelment
This initiative will help in expanding the network
of cashless
especially in Tier-2+ locations
hospitals
Source: IRDAI, web search, BCG analysis
Profitability, Innovation and Governance - Breaking the compromise 61Insurance
Perspectives on enabling a growth path ahead
Embracing a new regime through partnerships and collaboration: InsurTechs and Insurers, with deep
integration, can build highly efficient and scalable operating models, and drive growth. Besides distribution,
data-based UW, AI/ML based claims prevention and management are key areas for collaboration
Leveraging changing regulatory landscape: IRDAI is introducing several significant regulatory changes to drive
greater penetration, digitalization, and improved customer service. This will have large implications on how
insurers and InsurTechs collaborate. Responding to these changes swiftly will be the key to leverage these
changes
Going beyond insurance, to services and solutions: Gradual shift from pure-play insurance to more
comprehensive “one-stop” solutions, providing ecosystem and holistic plays to customers. This is also leading
to emergence of B2B plays, where InsurTechs need to build solutions for Insurers to offer services in a plug-
and-play manner
Unlocking the “UPI” moment in retail health: National health stack at scale can unlock significant potential
for insurers, customers and providers with better experience, better products, lower costs (frauds) and
can transform reach of retail health. InsurTechs will have a significant opportunity to utilize the platform for
creating innovations and integrating with the insurers
Product flexibility: Product simplicity has long been an ask of customers especially in health and life;
InsurTechs can play a significant role in driving flexibility in product structures and pricing for better
economics as well as for customer value
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