MGT415 – Individual Assignment – Business Proposition

BUDGETED PAYMENTS
Moksh Pachisia
1004506466
Part 1: Competitive Environment of your firm

1. Your firm’s business model: How does the firm make money?

The name of the firm is “BUDGETED PAYMENTS”. The business model of

“BUDGETED PAYMENTS” revolved around the idea of personal finance and a one stop
platform for the payment of most services that an individual uses in their daily life.
The main objective is to help young adults plan out their finances. Young adults tend to
overspend and not save. This leads to them having issues with their finances in the short as
well as the long term. “BUDGETED PAYMENTS” is a platform that will help them to
overcome this problem. Every individual will be asked to allot a monthly budget for every
main categorical activity, for instance entertainment, food, rent etc. The application will
realize the fixed costs and keep them as a constant throughout. In terms of variable costs,
the app will be creating buckets based on a weekly cycle that will help in an efficient and
balanced spending. The application will be linked with the bank account of an individual
and the payments will be made through that.
The application itself will be a mechanism to make payments something that will be
inspired by PayTM in India where the bank accounts are linked to the account and one can
make payments or transfers from that application. Upon making a payment or transfer, the
purpose of the transfer will have to be stated and that amount will be subtracted from the
budgeted category.
The application will provide basic analysis upon the completion of every month based on
their actual expenses against the budgeted expense.
The firm will make money through 2 means:
a. Advertisement revenue. In order to generate revenue, the application will have in-
app advertisements in collaboration with Google Ads.
b. If an individual wants additional analysis on their spending trends and how people
with a similar budget expense manage their account efficiently, they can upgrade to
a premium account. This will also eliminate advertisements for more user-friendly
interface.

2. Industry Analysis/Disruption: What specific market does your firm compete in? How many
businesses compete in this market?

BUDGETED PAYMENTS will be competing the financial field. While their operations are
little diverse as they overlook two market segments, our main focus will be in the field of
personal finance management and wealth management for individuals. While there are several
businesses that compete in the market of personal finance management, our distinct ability to
provide the services which include budgeting, analysis and payments at a low cost is what will
have us distinct in the market compared to our competitors.
Upon performing the Porters’ 5 forces, the following is the conclusion for each force
a. Threats of New Entrants – This is very likely as the technology used in this is not very
complex. Therefore, it is essential to develop a strong customer base quickly and ensure
high customer retention
b. Buyers Power – In this industry, the buyer would be the customers. So far, there aren’t
any apps that focus on the personal finance the way BUDGETED PAYMENTS does
as it offers budgeting along with the ability to make payments. So, if executed well,
customers will be satisfied, and they will use the services
c. Suppliers – The suppliers for the firm would be banks in a way as they must approve
transactions which will ensure flow of money into the BUDGETED PAYMENTS
Wallet of the users
d. Industry Competition – They are no firms in the market with the same model, but some
are there with similar models who can adapt to this technology. It is important for
BUDGETED PAYMENTS to be dynamic and keep evolving to stay ahead of the
competitors.
e. Product Substitutes – The substitute for this product would be any blockchain payment
mechanism or even an app that offers budgeting for the users. The unique selling point
of BUDGETED PAYMENTS is that they combine and offer this together to help their
customers.

3. Competitive Advantage: What makes your product unique?

The uniqueness of this product is that it gives the individual an opportunity to have one platform
through which not only can they monitor all the expenses and budgeting but also gives them
the ability to make transactions from that account to minimize disruption of tallying their
budgeting to their actual expenses. Usually, if someone maintains a budget, they must tally it
with their bank account but with BUDGETED PAYMENTS they will be able to make their
transactions which will immediately be reflected in their budget. Apart from that, it will make
an individual control unnecessary expenses and provide a monthly analysis on their expenses
and compare it to people who have similar accounts and their spending habits.
Additionally, once relationships are set up with vendors, they will also get discounts or cash
backs if they use this technology at the vendors’ store.

4. Competitor Analysis: Who are the major players in your firm’s area of business and how are
they different?

The top 5 budgeting applications as per Investopedia in the industry are as follows:
a. Mint
b. You Need a Budget
c. Wally
d. Acorns
 e. Tycoon
The reason why this apps are the market leaders is because they each focus on something
very particular for their target. For instance, You Need a Budget is for Debt Management and
Acorns is for Savings and so on.
The reason why BUDGETED PAYMENTS can differ itself from the top firms in the market
is due to the added ability of it being a payment transfer application. In terms of budgeting,
the top competitor would be You Need a Budget but the costs associated with it are very high
and since we plan to run an advertisement based model, millennials, who are generally more
cost sensitive would be happier to use BUDGETED PAYMENTS due to its low operational
costs for the customers.

Part 2: “Elevator Pitch” about the product

Three steps:
1. You know how university students or recent graduates are heavy spenders and do not keep
track of their expenses?
2. Well, we have come up with a solution that will help them live within their budget with the
help of our application which includes a payment mechanism to track all their expenses
3. So that they lead a more sustained life and can enjoy today with a more relaxed eye on the
future or uncertain times. Doesn’t that sound very relaxing in such difficult times?

Part 3: Product Analysis (amend as applicable to AI/Blockchain)

1. Customers:

The main target audience of this business are young adults. People who are in their late teens
to the age of 35. This create value for them based on the need to save for the future and live a
disciplined life. Among the target, the main audience would be university and college students
most of whom are already in debt and need to manage their expenses accordingly.

2. Customer Relationships

Customer relationships will be key in this as millennials tend to be relatively impatient and
expect service of the top class. To deal with this, there will be customer support that will be
available for assistance around the clock. Additionally, since this is a venture heavily focused
on technology, a technician and a FinTech expert will also be readily available in case of any
disruptions in the payment mechanism.
The costs associated with this may be high in the initial phase, but it is imperative for the firm
to be very attractive in the incubation stage.

3. Channels
The user interface must be very simple and easily understandable. The target audience prefer
spending little time to set up and manage such errands in their day to day life. The set-up time
and linking the bank account are steps that must be completed easily from their phones at their
convenience and comfort. Apart from that, an attractive proposition can be to offer cashback
offers for each transaction made through the application.
Since target audience are millennials, the main avenue of reaching out to customers is by social
media advertisements and making commercial videos which are relatable for the target. Apart
from that, we will also focus on setting up stalls in the university to create more awareness
about the application and its uses.

4. Value Proposition

The value proposition that “BUDGETED PAYMENTS” focuses on is:

a. Enabling the users to live a comfortable and disciplined life in the present while
ensuring the same for the future.
b. Using technology to improve the user experience.
c. Providing high security and safety for all the transactions and personal information.
The main objective is to solve the problem of lack of control over expenses and to monitor
their spending category and provide them with the information to make an informed decision
about their budgeting. To make things easier, the payment mechanism will be set up through
the application which will enable a good sense of budgeting and following the restrictions set
forth by the customer themselves.

5. Key Activities

The value proposition requires constant updating and adaptation of lifestyle of the users and
use that data to provide valuable suggestions to them about the spending patterns. This requires
collection and careful analysis of data in the first few months of month to be accurate with the
suggestions. Apart from that, risks dangers such as security and fraud are very likely, and it is
imperative to be proactive and ensure data protection of the customers.
To maintain customer relationship, we must keep things simple and ensure that all programs
are kept up with the trends of millennials who keep changing and address them. The target
audience do not like to waste time on trivial stuff like changing the address or other such
information and therefore, changing information and data should reflect immediately on their
account while ensuring the safety and protection protocols.
For revenue stream activity, heavy focus must be on actively promoting our services actively
and focus our outreach to universities and colleges to attract more individuals.

6. Key Resources

The required resources in the incubation stage of the start will be a data centre with high
security to ensure data protection. Apart from that, a team of developers will be required to set
up with the app and ensure that the blockchain technology used for the payments must be secure
and no payment trail can go incorrect. We will also need to survey the target audience to get
an idea of their expenses and develop a few prototype plans based on the responses which may
be selected by the users. A very important factor in this model is development of relations with
the banks to ensure that they do not block any transaction as all customers will transfer money
into the BUDGETED PAYMENTS Wallet from their bank accounts. Developing relations
with partnered vendors is important as they can agree to providing discounts in the initial
phases of the firm to attract more customers to use our services.

7. Cost/Benefit

The most expensive activity in this set up will be ensuring a high level of security. For this,
high level encryption codes must be developed to ensure that customer information is not
leaked. Along with that, a data centre must be set up for the storage of all information and the
maintenance of that centre as well.
Another addition expense will be marketing and outreach. Since it is a new development and
although there may be demand for it, if there is no awareness for it, people will not use it. It is
imperative for customer acquisition is this model. This is a technology that will work better
when there are more users in within the set up although the option of Application to Bank
transfer will also exist, the more convenient method of payment would be C2C or C2B or B2B
when all the customers use this blockchain technology.
The revenue streams are:
a. Advertisement revenue. In order to generate revenue, the application will have in-app
advertisements in collaboration with Google Ads.
b. If an individual wants additional analysis on their spending trends and how people with a
similar budget expense manage their account efficiently, they can upgrade to a premium
account. This will also eliminate advertisements for more user-friendly interface.
Of these, the advertisement revenue is projected to be the highest revenue generator.

8. Technology

Since the main objective is to promote budgeting and management of personal finance, it is
important to have the application available to users. This application must be easy to use and
operate to ensure user retention. Apart from that, to make the payments which will be
monitored by the account to see which category are the spending it from, the payment
mechanism must be set up and maintained. This wallet that will be set up will have the ability
to pay bills and even receive money from someone who owes you money. It will balance out
all the categories created as per the budget constraints set by the user and give them analysis
of their spending patterns. The technology that will be used involves the set up of an application
and blockchain payment mechanism. The working of a blockchain is when a transaction is
made and verified, it is entered into a “block”. Upon verification, it is given the hash which is
the unique identifying code assigned to a transaction. Once it passes through several blocks
and is approved, the transaction is complete.
The main market trends for this technology is for payment processing, which means that it will
be able to make payments across the board to accounts who use similar technology; and Title
name transfers which means if any property or asset is under the name of an individual, using
blockchain, where all the information is stored of the users, they can transfer the rights to some
other individual. This helps to reduce paper trail and increases security measures on ownership.
Bibliography

https://bstrategyhub.com/paytm-business-model-how-does-paytm-make-money/

https://help.attendstar.com/hc/en-us/articles/200585155-How-WePay-Works-The-Benefits-
of-Wepay-#:~:text=WePay%20is%20a%20way%20to,or%20given%20as%20a%20check.

https://www.investopedia.com/personal-finance/personal-finance-apps/