IIMC-CRC-2017-10

IIMC C ASE R ESEARCH C ENTRE (IIMCCRC)

I NDRANIL B OSE , G AURAV G UPTA
J UNE 2017

SIMSEPAY AT YES BANK:

CREATING VALUE THROUGH AN UN‘SMART’ INNOVATION
“YES BANK is proud to pioneer this unique solution (SIMsePAY), which will empower all bank account
holders and enhance efficient digital financial inclusion in the most efficient manner.”

- Rana Kapoor, Managing Director and CEO of YES BANK

The SIM-sleeve technology patented by Taisys Corporation enabled mobile payments for feature phones
without the need of any internet connection. The partnership between YES BANK and Taisys had
culminated to a jointly developed mobile payments product called SIMsePAY. This frugal innovation for
the bottom of the pyramid population of India was in sync with YES BANK’s vision to help improve financial
inclusion within the country. A large section of that segment of the Indian population was currently
unbanked or underbanked, and their lack of access to advanced technology like smartphones had
restricted their access to the convenience of anywhere, anytime banking through mobile banking
platforms. SIMsePAY had the potential to solve this problem as this platform was developed with a focus
on an easy menu-based interface, support for multiple regional languages, non-dependency on data
connection, and minimal cost to the consumer. Kapoor reflected:

“Digital is pervasive in every domain of our social existence and economic activities. Banking is no
exception to this New Normal. Rather banks have been pioneers in visualizing, strategizing and
actualizing digital technology to create value for their stakeholders.”

However, several issues intrigued Kapoor. Did it make business sense for India’s fifth largest private bank
to invest in a platform to serve feature phones which were being steadily replaced by smartphones? There
_____________________________________________________________________________________

This case was written by Prof. Indranil Bose and Gaurav Gupta at the Indian Institute of Management
Calcutta. The case was prepared solely to provide material for class discussion. The authors do not intend
to illustrate either effective or ineffective handling of a managerial situation.

This case study is meant for use in the LDP titled “Advanced Program in Data Sciences” requested by Prof.
Indranil Bose of IIM Calcutta starting 1st October 2019. Beyond limited printing rights, copying,
distributing or posting of this case study in any form on any media is strictly prohibited. The limited rights
to use this case is only valid for the duration of the program

Copyright © 2017, Indian Institute of Management Calcutta.

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SIMsePAY at YES BANK

was an enormous untapped base of customers that could be served with this technology. But the digital
technology space was changing at lightning speed. While this technology made sense at this point of time
could it face obsolescence any time soon? Did YES BANK pick the right technology to invest in?

Would the bottom of the pyramid customers that he was focused on find this new technology attractive
and easy enough for adoption? He wondered whether there would be any concerns related to the
security of SIMsePAY? There would be a need to raise the awareness of this section of customers about
the capabilities and strengths of this technology but how could he go about doing that? How should he
plan to roll out the initiative so as to ensure that this technology gathered maximum momentum and
showed a strong return on investment? He looked thoughtfully outside the window of his office into the
bustling and labyrinthine streets of Mumbai.

DIGITAL PAYMENTS IN INDIA

In 2015, 39% of all mobile phone users around the globe with a bank account, used mobile banking which
amounted to a 10% rise over the previous two years1. Although mobile banking has traditionally been
used for doing basic transactions like balance enquiry in India, more users were starting to use it for
relatively complex operations like shopping, bill payment, funds transfer, etc. This growing adoption was
spurred by the increasing proliferation of e-commerce companies which were offering a large bouquet of
products and services online starting from clothing to transportation. In fact, online shopping spends had
grown by more than 50% year-on-year during 2014-162. At the same time, the number of mobile banking
transactions had increased from 98 million in 2014-15 to more than 265 million in 20163. This trend had
led to the replacement of conventional payment instruments like cash, cheques and demand drafts.
Exhibit 1 provides statistics related to growth of digital transactions in India. As of December 2016, the
number of mobile-based transactions reached 602 million, and that was only slightly behind 723 million
cheques cleared during April - Nov 20154. Moreover, this trend was expected to continue with the
meteoric rise of internet-enabled low-cost smartphones. The mobile banking needs of the Indian
customers were expected to increase in future.
But there existed several hurdles to adoption of mobile banking. As per industry estimates, of the over
900 million mobile phones in India, only around 220 million phones were smartphones and less than half
of these were internet enabled5. These devices were incompatible for most mobile banking services on

1
Federal Reserve’s Board of Governors’ Consumers and mobile finance report.
2
Wall Street Journal (https://www.wsj.com/articles/survey-shows-rapid-growth-in-online-shopping-
1465358582).
3
RBI (https://www.rbi.org.in/Scripts/NEFTView.aspx).
4
RBI Payment System Indicators.
5
Counterpoint Research
(http://www.counterpointresearch.com/press_release/indiahandsetmarket2015/)

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traditional platforms. The falling price of smartphones was a major reason for steady replacement of
feature phones, and it was expected to replace them fully in the next five years. Exhibit 2 shows how
smartphones were replacing feature phones among users. The challenges to adoption of mobile banking
were further aggravated by the lack of reliable data connectivity in the rural regions. Moreover, data
connections were still very expensive. This was a key reason for poor penetration of mobile internet
(around 23%) although mobile phone penetration stood at 75% in 20156. Another reason for slow
adoption of mobile banking was the discomfort of the users (especially retail customers) regarding the
security of the platform. Ritesh Pai, Chief Digital Officer - Digital Banking at YES BANK commented:

“When we started, we found that there were more than 1 billion mobile phone users in India out
of which there were only around 250 million smartphone users, and the rest were feature phone
users. And more than half of the smartphones in the market do not subscribe to a data connection,
without which they are as good as feature phones. While everybody is creating nice, sleek apps
for Android and iOS phones, the segment of feature phone users which is almost three times that
of smartphone users is neglected. We can see that 4-5 years is the time in which feature phones
will be replaced by smartphones but 4-5 years is very, very long in the digital world.”

PAYMENT REGULATIONS IN INDIA

With the aim to consolidate and integrate the multiple payment systems and platforms that existed into
a nation-wide uniform standard for all retail systems, the National Payments Corporation of India (NPCI)
was set up as a not-for-profit organization in 2008 under the guidance of the RBI and the Indian Banks
Association (IBA). Early in 2010, it developed the Immediate Payment Service (IMPS) which offered
instantaneous, 24x7 interbank electronic fund transfer service which could be utilized through the mobile,
internet, or ATM channels. It allowed customers to perform any financial transaction independent of the
working hours of the bank branch and also removed the need to wait in queues at the branch. Earlier
services like the National Electronic Funds Transfer (NEFT) and the Real-time Gross Settlement (RTGS) did
not provide this flexibility and were closely linked to the functioning of the physical bank. IMPS was swiftly
adopted and implemented by all banks through their online portals and mobile banking platforms.

Along with that the RBI in a circular released in December 2014 defined three categories of prepaid
payment instruments called wallets. These categories were closed, semi-closed, and open wallets. While
the issuing company could only use the funds available in a closed wallet, those in the semi-closed type
could also be used for transactions at pre-defined merchant locations and the funds in an open wallet
could be utilized for the purchase of goods and services at any card accepting merchant terminal and
could also be used for cash withdrawal at ATMs. The RBI had also defined monetary caps for the amount
of transactions that could be done using these different wallets and the corresponding documentary
proofs needed from the customer to allow them to use it. All of these various standards were adopted by
different payment processors to provide mobile banking services to customers. Exhibit 3 provides

6
Internet and Mobile Association of India (http://www.iamai.in/media/details/4486)

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projections of the expected market size of m-wallets in India. Exhibit 4 highlights some of the major
changes in the payment industry in India. Most banks issued their proprietary wallets to their clients to
allow them to perform low-value retail transactions easily. YES BANK too had its own payment wallet
called YES PAY wallet to enable customers to carry out basic transactions like transfer and request money,
payment of bills, mobile recharge, etc. It had been integrated with various aggregators to facilitate online
and physical transactions with a variety of merchants.

GROWTH STORY OF YES BANK

Rana Kapoor, along with his partner late Ashok Kapur had incorporated YES BANK as a new age private
sector bank in 2004 after it received a greenfield bank license from the RBI. YES BANK started with a
limited capital infusion from a few key investors and partners. It established its first branch in Mumbai in
August 2004. It launched with limited capabilities geared toward the wholesale banking segment,
particularly corporate banking. By 2007, YES BANK created its footprint internationally with the launch of
YES-international banking. Exhibit 5 provides details on various milestones in the history of YES BANK.
Unlike many other private banks, YES BANK had undergone several rounds of fundraising in the form of
bonds, long-term debt or through direct capital infusion for its steady expansion. It launched its IPO in
2005 in the form of equity shares to raise capital for its ongoing exponential growth. The Asian Banker
awarded it the Best Managed Bank in India (2011-2013). Over time it matured into a full service
commercial bank with corporate and institutional banking, financial markets, investment banking,
corporate finance, branch banking, business and transaction banking, and wealth management business
lines across the country.

Very early in its life, YES BANK realized the importance of adoption of external innovation for its growth.
This was reflected in its approach towards digitized banking and was driven by partnerships with financial
and technology companies. Kapoor emphasized the importance of reliance on digital:
“It is the ART of Digital Banking and not just the underlying technology which can help banks
navigate through this paradigm shift. If digital promises to be the game changer for banks, then
the ART of Digital Banking paves the way to fulfill that promise through: A – Alliances, R-
Relationships, T – Technology.”

YES BANK had partnered and launched various innovative solutions to serve all of their different business
categories, i.e., B2B, B2B2C, and B2C. For example, it launched a smartbox solution for e-commerce
companies to address the challenges of cash-on-delivery and helped them reduce their operational cost.
Exhibit 6 provides more details on these digital initiatives. YES BANK had been focusing on technology and
innovation since its inception. Pai remarked:

“Our focus has always been on innovative solutions and technology has been our forte. For
example, static passwords were used by everyone in the Indian economy until RBI mandated dual-
factor authentication officially in 2010, but we had implemented it since 2004.”

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Such innovations had helped YES BANK differentiate itself in the medium-sized private bank category in
India and compete with other established private banks in the same category. As of November 2016, it
was India's fifth largest private sector bank with around 950 branches in over 650 locations7. It
commanded close to 1% of the market share in the Indian banking industry and aimed to capture 2.5% of
it in the next five years. Kapoor commented on the rapid pace of change in the world of technology:

“Digital interventions are evolving at such a rapid pace that all involved have to continuously
reorient themselves to stay ahead of the curve or risk losing out to competition due to
obsolescence. Thus when it comes to going digital, banks can no longer rely on their vintage and
pedigree.”

AN OPPORTUNITY IN TAISYS’ INNOVATION

Taisys Technologies, an international telecommunications, and financial service provider was established
in 2005 in Taiwan and had established itself in Taipei, Beijing, Hong Kong, Singapore, India and South
Africa. It held the global patent for SIMoME which it described as a “method for providing additional
service based on dual IC card.” This innovation allowed the traditional legacy SIM card to be issued in a
new form factor that enabled it to work with another SIM card in a single SIM card slot of mobile devices.
Exhibit 7 provides more details about the product features of SIMoME. Through this technology, the single
SIM card slot (which was common and available in almost all mobile devices) became capable of
containing two SIM cards. It allowed decoupling of value-added services from the main SIM and opened
it up for third-party financial institutions, Mobile Network Operators (MNOs) and Mobile Virtual Network
Operator (MVNOs) to add their customized services without needing the customers to alter their existing
services offered by their respective telecommunication service providers. For example, financial
institutions could provide mobile banking services natively using this slim sleeve without the need for any
special arrangements with any MNOs.

From the bank’s perspective, this innovation did not involve huge upfront capital investment (both
financial and human) in setting up specialized infrastructure. This solution was highly modular allowing
easy integration with the bank’s existing core banking infrastructure for payments solutions and with its
existing wallet applications for merchant transactions. Hence, it did not need them to set up and maintain
additional servers for this service. Moreover, per unit cost of the physical units (i.e., SIM-sleeve) disbursed
by the bank to the customers was also very low. The bank also had the option of launching the platform
with a limited set of services initially and adding more services as the platform matures in the market.

The slim SIM solution had already been successfully implemented in countries like Kenya and China for
virtual banking facilities. Since 2008, F-Road Shanghai, affiliated to Taisys and a joint venture with
International Financial Corporation (the investment arm of World Bank) had been providing a ‘virtual

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https://www.yesbank.in/about-us

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banking network’ to its member banks by connecting the banking system to all MNOs in China. It had been
able to successfully provide banking services with local banks of China especially in the rural areas which
lacked adequate financial services and the investment on infrastructure to provide those services was also
expensive. It boasted 15 million users from 27 provinces (out of 31) of China on its platform. In September
2014, the monthly transaction figures using Taisys’ slim SIM solution reached USD 28.36 billion, thereby
leading to a growth of 28% over that for the previous month8. Similarly, in Kenya, Taisys had partnered
with Equity Bank, one of the leading national banks to provide funds transfers, micropayments, and other
mobile financial services to the underbanked population of the country. It had been able to challenge the
monopoly of mobile micropayment provider M-Pesa there successfully.

Taisys launched its Indian arm in 2013. However, even in its short lifespan in the Indian subcontinent, it
had been growing steadily. In India, Taisys partnered with YES BANK to provide mobile banking services
to the unbanked or underbanked population who lacked access to basic banking services like merchant
payment and remittances of small amounts. Kapoor stressed the importance of partnership for banks:

“Banking in our contemporary is also in the midst of a churn. Existing players in the ecosystem not
only have to deal with strong competition but also have to factor in novel ideas that can
fundamentally disrupt the industry. The most optimal way out of this conundrum is to collaborate
and take the best of best worlds., the mature banking domain and the energetic startups. While
Fintechs bring agility, rigor and new ideas to the table, banks can contribute with robustness,
resilience and foresight. When an established financier with deep insights about how the economy
will play out partners a startup with the passion for novelty, it makes for a winning combination.”

THE SIMSEPAY PLATFORM

The SIMsePay platform developed jointly by YES BANK and Taisys Technologies allowed financial
transactions using a SIM Sleeve without the need for smartphones or data connection. It primarily worked
on the basis of the encrypted SMS technology. This solution was device and telecom operator agnostic
and provided low-cost feature phones with the same banking capabilities that were available on internet-
enabled smartphones. Mobile banking services like digital wallets, apps, chatbots, etc. could only be used
on smartphones and required a constant data connection to operate. On the contrary, the SIMsePAY
solution required customers to paste a wafer-thin sticker (called YES SIMsePAY SIM Sleeve) on the back
of their existing SIM card (standard, micro or nano) of any telecommunication operator. It allowed them
to continue using their existing telecommunication services tied to their SIM card. Taisys had integrated
its m-banking platform with YES BANK’s domestic remittance service, YES Money.
Pai elaborated on the joint development effort:

8
https://globenewswire.com/news-release/2015/01/05/695051/10113704/en/Taisys-Publishes-Its-
Slim-SIM-Banking-Monthly-Transaction-Volume-in-China.html

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“YES Money platform was modified to a certain extent to be able to work with the new technology
because it required customizations for this particular product which was targeting a particular
customer segment. Some functionalities which were not there in the YES Money platform were
provided here. For example, bill payment was not present in it. Similarly, there was a certain
pricing module, certain charging mechanism which was present in YES Money, but it is very
different here.”

The SIMsePAY wafer was linked to a Prepaid Wallet or a Prepaid Card issued by YES BANK (which could be
loaded up to INR 50,000) to perform various types of transactions. This sticker installed a SIM Tool Kit
(STK) based application that could be accessed by the consumer for their various banking needs like
NEFT/IMPS based fund transfer, balance enquiry, generation of mini statements, payments to merchants
for small and large value purchases, bill payments, recharges, etc. Exhibit 8 describes the capabilities of
the STK and Exhibit 9 provide a schematic diagram to explain how the SIMsePAY platform works. The
intuitive, menu-driven user interface of the application was handset independent and designed for ease
of use. Exhibit 10 provides a snapshot of the SIMsePAY interface as it would appear on the user’s feature
phone. The transaction charge was very low (about INR 0.2) compared to data based mobile banking. The
affordability of the solution came from its dependency on low-cost SMS gateways and there were no
special SMS charges. All transaction related traffic was encrypted and sent over regular SMS gateways of
individual telecommunication operators. Pai explained:

“Our solution is independent of telecom service provider since we are doing an abstraction there.
We are just utilizing the SMS channel which these telecom service providers are anyway providing
to everybody. From an architecture perspective, we have built all the architecture and server level
components at YES BANK’s data centre. It is a completely secure, hardware security module
mechanism through which transactions are routed internally as well as externally. It leverages YES
BANK’s existing network with NPCI, with RBI, and with bill payment service providers to complete
the transaction.”

Further, the addition of a hardware-based authentication mechanism based on the SIM sleeve was
considered to be a superior alternative to software-based two-factor authentication like one-time-
password. Pai highlighted the enhanced security of the platform:

“This provides higher security than our mobile apps today because the encryption is being done
through the hardware and there is a specificity that is involved in that particular hardware. All the
communication between phone and server is done through this hardware encryption, and hence
it has much lesser chance of being compromised as compared to an app based mechanism which
is a software-based encryption. The bank account or any details as such don’t get compromised at
all.”

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YES BANK expected that the SIMsePay platform would cater to the large section of the Indian population
that remained unbanked or underbanked due to lack of access to smartphones and mobile internet. About
the state of digital banking in India, Abhishek Saxena, Managing Director of Taisys India remarked9:

“Even in a metro city if you were to transfer money to the neighborhood vegetable vendor, chances
are he may not accept cashless app-based payment for lack of a smartphone. SIM sleeve disrupts
this status quo by providing a transaction application on feature phones. Now feature phones too
can initiate transactions as well as can be the merchant POS.”

From a business perspective, this was a huge unserved market need, and hence a lucrative target market
for SIMsePAY. Kapoor optimistically remarked:10

“We foresee millions of transactions on this system across all segments of the income pyramid
which will also boost financial inclusion and reduce cash based transactions.”

YES BANK aimed to garner a user base of 500,000 for its SIMsePay solution by the end of 201711. Although
the transaction size would be small for each transaction and the transaction charge would be low, but a
large customer base would allow YES BANK to earn ample revenue from this initiative. Pai commented on
the value proposition of SIMsePAY:

“We will charge them (customers) per transaction which will be our main revenue line (for
SIMsePAY). The idea is to play the volume game instead of the unit game. However, the primary
focus is enabling customer access to mobile payments.”

Currently, YES BANK maintained a network of nearly 40,000 banking correspondents who could help with
adoption of this innovation by the population at the bottom-most strata of the society. However, adoption
of SIMsePAY by those customers would require the adoption of this service by various merchants relevant
to the customers, as well. It would require the creation of ample awareness of the service in rural societies,
initial training for introduction and continued feedback and troubleshooting for potential customers.
Merchants would have to be educated about the potential gains to their business and provided ample
support during both onboarding and regular usage subsequently.

9
http://www.news18.com/news/tech/cash-crunch-yes-bank-simsepay-enables-cashless-transactions-
without-smartphone-or-internet-1318536.html
10
https://www.yesbank.in/media/press-releases/fy-2015-16/yes-bank-partners-with-taisys-leading-
digital-empowerment-of-mobile-payments-in-india
11
https://www.yesbank.in/media/press-releases/fy-2016-
17/yes_bank_launches_simsepay_industry_first_innovation_to_empower_all_citizens_to_broad_base_
digital_banking

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CHALLENGES FOR THE SIMSEPAY PLATFORM

Although the business potential of SIMsePAY was high, there were quite a few challenges for tapping this
market effectively. Even during the design of the jointly developed solution, there were quite a few
challenges that stumped the teams from both the organizations. Saxena elaborated:

“It was very challenging to write the use cases initially and even YES BANK was trying very hard. It
took us some time to define the use cases. After we defined one, we used to do market survey and
then did a lot of changes accordingly. We also spent a lot of time to understand convenience for
the users.”

It was expected that initial adoption of this technology by the feature phone owning users might be
challenging. Pai commented on the difficulty:

“YES BANK has positioned itself primarily at middle class, upper middle class and an upper-class
segment from a retail standpoint. Also, being one of the youngest full service bank, the retail
branch footprint is about 900+ branches when compared to the larger public sector banks which
have few thousand branches.”

YES BANK would also have to consider uncertainties related to obsolescence of technology. Pai elaborated
on some of the challenges in this domain:

“While we are gung ho about feature phones lasting for around 3-4 years, there is every possibility
that it can happen much faster. There is also this other threat that a better way of doing such
transactions, some other disruptive solution might come up to threaten this solution.”

Some predicted that there could be hiccups related to the usability of the solution. For example, the SIM
sleeve solution required physically sticking a sticker to the base of the existing SIM. This might be difficult
for users as this was the first time (s)he had to do something like that. It was possible that customers
would be reluctant to experiment with a new product. Saxena was optimistic about the simplicity of the
solution and said:

“The product requires physically sticking a smart sticker on the SIM and based on some of our
learnings in the past, we have come up with a very good innovation where the user can do the
sticking part very easily without making any mistake. We have a card where they can stick the
existing SIM and then can follow the guiding outlines to have a perfect fit. Further, we have used
very simple language which is easy to understand. We have spent a lot of effort on that. We now
have a very simple product.”

Worries about the security of the platform could impede adoption by this customer segment. YES BANK’s
marketing efforts would need to focus on diffusing concerns of security of transactions through the

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platform from various types of fraud. Any possibility of such an eventuality would significantly increase
customer discomfort with the technology. Pai reflected about the challenges related to adoption by
customers:

“The biggest challenge will be user understanding of our product. For us, the moment of truth will
be how the individual reacts. Luckily for us, of all the modern means of communication that the
human being has designed, mobile phones have caught up very quickly with everyone. So we are
betting big time on the collective wisdom that exists in the society that we will know how to
operate a payment.”

LAUNCH THROUGH PARTNERSHIP

With all these challenges in their current business proposition, YES BANK would have to formulate a
business strategy for this financial inclusion initiative very carefully. The business potential of mobile
banking for feature phones for the next few years was evident, but YES BANK’s lack of a retail footprint in
that segment could be a bottleneck. Pai commented:

“On the urban side, we have a customer base of around 2 million and on the rural side we have
around 12 million. Further, we have around 5 million unique customers on the YES Money platform
itself who transact on it at least once or twice a month. If they are provided with this solution, they
might not need to walk to the business correspondent outlet to do their remittance and could do
their transactions directly.”

There was a need to scale up the adoption by not restricting it to YES BANK’s own customers but to open
it for customers of other banks. Prospective candidates could be the co-operative banks in India which
could use the SIMsePAY platform to provide enhanced value-added services to their customers. Pai
explained the opportunity:

“We can provide this solution to our retail customers, but our existing customers do not belong to
the feature phone segment. We would have to acquire such customers directly. Existing YES Money
users can use this solution by connecting it to their wallets. Alternately, we can partner with rural
co-operative banks, state cooperative banks, etc. and provide them with mobile payment solutions
which can be utilized by their consumers since all of them have a strong lineage with these for all
sorts of transactions. We will issue co-branded prepaid wallets which will be issued to the
consumers of these banks. Money can be loaded by consumers of these co-operative banks into
these prepaid wallets, and from these wallets, the transactions can be done. YES BANK can charge
a fee from the customer for each transaction passing through the SIMsePAY platform.”

Most co-operative banks had a good customer base in their region but were unable to provide the
convenience of mobile banking to their customers. The cost of implementation, which formed the

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greatest entry barrier for this initiative, was not well justified for the small customer base that these banks
had. Moreover, such rural co-operative banks were typically old and traditional banks whose technological
capability was not as developed as the new-age banks using the latest technology. They depended heavily
on vendors or service providers for satisfying their technology related needs. Most importantly, for any
bank to provide mobile banking to its customers, it needed to have the mobile banking license from the
RBI. Until recently, only about 20 out of 1500 plus co-operative banks in India had this license. However,
with SIMsePAY, they could easily overcome this obstacle.

The transactions over the SIMsePAY platform would be treated as mobile payments and not as mobile
banking transactions. The money could not be debited from the co-operative bank customer’s account
directly. It would be debited from the prepaid wallet issued by YES BANK. From a regulatory perspective,
YES BANK would be issuing these wallets, and hence the transactions would be processed at their data
centre. This solution would require these customers to load cash into their prepaid wallets through the
network of business correspondents or the co-operative bank branches to perform any transaction
through this platform. Operationally, YES BANK would be using the co-operative bank’s existing customer
base to capture the market to launch their product. Pai explained the win-win proposition:

“There are multiple benefits for them (Co-operative banks) through this. First is that they are
enabling all their customers for mobile payments. They get to have a differentiated product
offering in comparison to their competitors. Second, they can reduce the costs of servicing
customers. If a customer is doing a self-service transaction, it will cost only about 1/100 th of the
cost of what it would be if it would have been through branch channel. In the long run, they get to
save a lot of money by enabling their customers to do digital transactions as well.”

The customers of these co-operative banks had some direct benefits with this solution too. They would
no longer have to go to the bank to do their transactions. They could do it any time (even beyond the
bank’s hours of operation) at the convenience of their home and at a fraction of the cost of assisted
banking at the branch. This solution was also cheaper than other data based mobile banking solutions. In
case they faced any issues while using it, they could contact their respective banks with whom they had
developed a close relationship over time. These banks could also reach out to YES BANK if needed.

However, adoption of this innovation by the general masses would require some focused marketing. To
create incentives to use the system YES BANK could either offer a subsidy to do these transactions in the
form of cash back. Alternatively, it could reverse subsidize it by increasing the cost of transaction at
physical branches similar to what most private sector banks had done. YES BANK would also have to run
campaigns for awareness and education of the customers of co-operative banks about SIMsePAY.

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WHAT'S NEXT?
Kapoor was still thinking about YES BANK’s progress on this initiative. The technology integration of Taisys’
platform with the YES Money platform was complete. Launching this product quickly seemed important
as any delay would be at the cost of its total life span which was closely linked to feature phone
replacement in the market. Apart from that, uncertainties like the threat of new technology, regulations,
etc. might further shorten the effective life span of this technology. How could YES BANK factor in for such
uncertainties in its business strategy for this innovation?

YES BANK could accelerate the launch of the SIMsePAY platform if it positioned this product for its own
retail banking business using its network of business correspondents to onboard feature phone using
customers. If he decided to do that how could YES BANK ensure optimal utilization of its business
correspondent network for the effective roll out of this product that could capture maximum value? Co-
operative banks had already started showing interest in the platform but should he depend on the co-
operative banks for launching this technology among its customers or should he intervene in some
manner. He, along with his team, needed to identify an effective launch strategy that would not
cannibalize any existing products for retail banking.

Although they had an exclusive partnership with Taisys, how should they react if other banks developed
similar products? Had they created enough barriers to entry to prevent their competition from imitating
the technology. Moreover, how could YES BANK leverage long term strategic advantage from this
initiative? Was the level of sophistication in technology enough or should he have gone for a more
advanced solution. Saxena had put forward his views about the future of SIMsePAY:

“We can introduce more security through the chip. We would also like to extend our relationship
with YES BANK for which Taisys is also making YES Money applications on top of the existing
solution. In future, we can do the NFC payment through that chip. We are also exploring offline
payments through our platform.”

Kapoor agreed with this proposition. He reflected:

“Digital transformation in financial services is a function of the impact of technology. Banks have
to consider the futuristic technology innovations which can significantly influence their business.”

The tradeoff was between the level of sophistication of technology which would make SIMsePAY more
future ready and the usability of the product which demanded something so simple and so useful that the
bottom of the pyramid customers of the co-operative banks whose needs were limited and technological
sophistication was low would adopt it in large numbers. However, he wondered if users will see value in
the ‘unsmart’ innovation. To win the battle he had to start with some quick wins. His initial success could
pave his way towards creating disruption, differentiation and dominance.

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 IIMC-CRC-2017-10
SIMsePAY at YES BANK

EXHIBITS
Exhibit 1: Traditional banking versus digital banking transactions in India.
Source: RBI Payment System Indicators.

2014-15 2015-16 Percentage change

-2500.0 -2000.0 -1500.0 -1000.0 -500.0 0.0 500.0

793.1
Cheques -8.0
729.3

Online payment 59.3

7.9
RTGS 64

Retail electronic 890.4

115.9
clearing 1922.3

Mobile 133.9
198.1
wallets 399.1

Mobile 97.7
107.9
Banking 203.1

0 500 1000 1500 2000 2500

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 IIMC-CRC-2017-10
SIMsePAY at YES BANK

Exhibit 2: Smartphones are gradually replacing feature phones in India.

Source: Boston Consulting Group.

Smartphone users Non-smartphone users

Active bank accounts

467
304

625
162

629
525
434
388

364
343

291

195
FY14 FY16 FY18 FY20
(P) (P) (P)
Figures in million users

Exhibit 3: M-wallet market size (in INR billion).

Source: RBI, RNCOS.

1512.5

541.5

1.5 6.7 23 69.3 188.8

2016 2017 (p) 2018 (p) 2019 (p) 2020 (p) 2021 (p) 2022 (p)
Financial Years

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 IIMC-CRC-2017-10
SIMsePAY at YES BANK

Exhibit 4: Changes in the Indian payment industry over time.

Source: BCG experience and research.

2012 and before 2013 2014 2015/2016

Payzapp by HDFC
Pockets by ICICI
Kaypay by Kotak
Bank led Movida by HDFC SBI Buddy by SBI
Axis Ping Pay
Lime by Axis
Ziggit by IDFC

Aircel ICICI Bank

Airtel Money
Telco led Mobile Money Vodafone m-Pesa
Idea MyCash
TATA mRUPEE

Money on Mobile Paytm

Paymate MobiKwik Mowa
Prepaid/ Oxicash
ITZ cash American Express Chillr
Wallet Qwikwallet
Oxigen ezeClick Freecharge Wallet
Y-Paycash Payumoney
Freecharge
Olamoney
Mobiswipe
E-commerce/ Momoe Flipkart Wallet
Prizm Payment mSwipe
Technology Snapdeal BookmyShow
Services
iKaaz
Ezetap
Airtel
FINO
Paytm
Aditya Birla
Payment Banks
Idea
Reliance
India Post
Vodafone m-Pesa

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 IIMC-CRC-2016-xx

SIMsePAY at YES BANK

Exhibit 5: Major milestones in the history of YES BANK.

 IIMC-CRC-2016-xx

SIMsePAY at YES BANK

Exhibit 6: YES BANK’s innovative digital banking solutions.

Source: YES BANK.

Exhibit 7: Product features for SIMoME by Taisys.

Source: Taisys India.
 IIMC-CRC-2017-10
SIMsePAY at YES BANK

Exhibit 8: Capabilities of the SIM Toolkit (STK).

Source: Taisys India.

Exhibit 9: Transaction flow for the SIMsePAY platform.

Source: YES BANK.

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 IIMC-CRC-2017-10
SIMsePAY at YES BANK

Exhibit 10: Application homepage for SIMsePAY.

Source: YES BANK.

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