Archive for the ‘Uncategorized’ Category

Overdraft Protection – Another Hot Opportunity For BPOs?

Friday, August 18th, 2017

Consumer advocates ranted about overdraft protection fees in 2008, saying the service was forced down upon consumers.

While the uninitiated can Google “overdraft protection” for a prosaic definition of the term, Stanley Bing offers the following tongue-in-cheek description for this money-spinner service of US banks:

“No matter what you spend with your debit card, even if you have no money in your account, the guys at the bank will make sure that you’re not embarrassed. They’ll pay your tab!”

To appease consumers, the US government passed Reg. E that required banks to seek customers’ opt-in for overdraft protection.

Banks went after their customers aggressively to do this. I’d called out marketing campaigns for enrolling consumers for overdraft protection (ODP) as a big opportunity for Indian BPO industry at the time. More on this in my post entitled Overdraft Opt-In Presents A Huge Opportunity For BPOs.

Seven years later, US Banking industry’s overdraft protection business has bounced back to 2009 levels. According to Wall Street Journal, “overdraft fees totaled $33.3 billion in 2016”.

Consumer advocates are now back with a fresh raft of complaints.

In a new lawsuit filed recently, the consumer protection regulator CFPB has charged TCF National Bank with “tricking consumers” into overdraft services by using misleading language that enrolled “people who said yes to a question over the phone about wanting their debit card to continue to work as it had been.” The CFPB further claimed the bank asked new customers about opting in “immediately after a series of mandatory items the consumer had to agree to in order [to] open the account…most consumers fell into the rhythm of initialing the terms of the agreement and signed on.”

A survey by overdraft regulation proponent Pew Charitable Trusts found that 52% of consumers who have paid a debit-card overdraft fee don’t recall opting in to this service.

Meanwhile, there’s the usual outrage on Twitter:

IMO these rants are groundless and deserve to be be dismissed summarily. Maybe sensing this, the guy I trolled on Twitter has deleted his tweet.

Because it really doesn’t matter how consumers signed up for overdraft protection or whether they remember doing so.

If they’re incurring overdraft protection fees today, it’s because their bank account ran out of funds while they were paying their latest (say) telephone bill. Not because they enrolled for their bank’s overdraft protection service several years ago. If their bank hadn’t covered the shortfall, their bill would have remained unpaid. Their TELCO would have slapped a late payment fine or even disconnected their phone.

This is the true context of overdraft protection.

But that won’t stop the furore. Thanks to the Great Financial Crisis, the reputation of banks has taken a massive beating on Main Street. Unjustifiedly so, in my opinion, for credit rating agencies are ones really culpable for what happened in 2007. More on that in Credit Rating Agencies & The Financial Meltdown. But I digress.

Consumer advocates are making bank-bashing hay while the GFC sun shines.

Some banks are responding proactively with measures to warn customers of the likely occurrence of overdraft. According to the Wells Fargo spokesperson quoted by WSJ, her bank has already provided low-balance alerts and is in the process of introducing a zero-balance alert that will be sent intraday when a customer’s available balance is zero or negative.

That won’t suffice.

I expect the regulator to ask banks to provide evidence that consumers who are being charged ODP fees had indeed signed up the service. I’m sure banks captured customers’ opt-in confirmations in their systems and will be able to pull out the required proof from their databases quite easily.

But I suspect it won’t end there.

I expect the regulator to require banks to take the customer’s approval for every overdraft transaction. The way ODP works today, once a customer opts in for overdraft protection – a onetime action – the bank automatically covers every incident of overdraft without any reference to the customer. Under the new paradigm, the bank will need to notify customers each time they’re overdrawn, ask them whether they want the specific incident of shortfall to be covered, and go ahead only if the customer says yes.

Considering that retail payment systems are highly automated and handle extremely high volumes, it might seem impossible to seek a transaction-by-transaction approval.

But that’s not true any longer.

Technologies like 2-way SMS Alerts are already available that can help banks to manage individual overdraft transactions.

To see how this would work, let me continue with the example of the aforementioned consumer whose account didn’t have enough balance to cover their telephone bill. As soon as the bank covered the shortfall, it would send out a text message to the customer saying “Your account was overdrawn and we made it good. We charged you $XX fee for doing this. Do nothing if you want this transaction to stay. Reply back with NO if you want to cancel this transaction. If you cancel, your telephone company may slap late payment charges or even disconnect your service”. If the customer doesn’t respond, the bank does nothing. Both the original payment to the TELCO and the ODP fee debited to the consumer stay. If the customer replies with NO, the bank reverses the payment to the telephone company and credits back the ODP fee to the consumer’s account.

The Indian banking industry offers a good example of the use of 2-way SMS Alerts in retail payments. For the past five years or so, everytime a consumer uses their credit / debit card, they get an SMS notifying them of the transaction. As of now, this SMS is one-way: If a consumer wishes to report the transaction as fraudulent, they have to phone the bank that issued their card. Phone means wait time, hold music, phone tree and, eventually, a live agent who has no clue about the purpose of the call. This poses tremendous friction, especially when the consumer is in an agitated state of mind, having just experienced a fraudulent transaction on their card. As a result, most cardholders don’t feel confident of being able to report a fraud. To address their concern, the Indian banking regulator Reserve Bank of India has recently stipulated that customers should be able to report fraud by replying to the SMS message they get from their banks. To do this, banks will need to upgrade their card transaction notifications to 2-way SMS Alerts.

To implement the 2-way SMS Alert technology, the bank needs to know the customer’s mobile phone number. This is not a big caveat in countries – like India – where people give out their mobile numbers freely and it’s virtually impossible to open a bank account without disclosing your mobile number to the bank (See Privacy Does Not Equal Security). However, it’s not common for customers to share their mobile numbers with their banks in the USA.  So banks will have to find a way to coax mobile numbers out of their ODP-enrolled customers. Given that privacy is a big thing stateside, this step might prove as difficult as getting the customer to opt-in for overdraft protection in the first place!

Marketing campaigns to collect customers’ mobile numbers might become another hot opportunity for the Indian BPO industry.

Forget Frugal Marketing. It’s Time For Frugal Engineering

Friday, August 11th, 2017

The asphalt road outside my house was getting concreted last year. When I was walking down on the road one day, I noticed that a narrow gully of around two feet width was left untouched on one side of road.

When I saw this, I thought there was a massive goof-up somwhere. In all probability, so went my cynical thinking, Pune Municipal Corporation – the local authority that is responsible for all public works in the city – must’ve placed an order for concreting of 100 feet width whereas the road construction contractor might’ve found out while executing the order that the actual width was 102 feet, hence the two feet strip went unconcreted.

Life went on and I forgot about this over time.

Until I saw the gully being dug up a month or so later.

From one of the workmen, I found out that the gang was laying a natural gas pipeline. This is pursuant to replacement of LPG cooking gas cylinders by piped compressed natural gas (CNG)  in certain parts of Western India including the city of Pune where I live.

In the good old days, the road contractor would concrete the entire road and go away. The pipeline contractor would come a month later and dig up the brand new road.

And not just in Pune / India. As Janette Sadik-Khan, ex-Commissioner of New York City Transport Department, says in her foreword to the New York City Department of Transportation Streetworks Manual:

Nearly every New Yorker seems to have a story about a work crew digging up a freshly surfaced city street.

Whereas what possibly happened this time was, the road contractor was instructed to leave the gully unconcreted for the gas pipeline contractor to lay the pipe a month later. Far from the goof-up I suspected, this reflects solid coordination between these two contractors.

The UK government has invested hundreds of millions of pounds in streetworks regulation, processes and technology to achieve this kind of coordination between different “public utilities” that excavate city streets for laying various types of piping, cabling, etc. In fact, the specific feature that prevents repetitive digging of the same stretch of a road one after the other by two different utilities is called “pinchpoint avoidance”. As far as I know, the local authority in Pune doesn’t have such a software. Despite that, it has achieved this favorable outcome.

This is very impressive.

And it’s not an isolated incident. There are many more instances where government / public sector organizations are using technology to deliver superior citizen / customer experience without spending too much time or money:

  • A friend went to the passport office to renew his passport. By the time he reached back home around 45 minutes later, he got an SMS saying his passport had already gone for printing and lamination. Sure enough, he got the renewed passport the next evening.
  • Indian Railways provides very responsive service on Twitter. More on this in my blog post entitled Why Social Media Has Become My First Port Of Call For Customer Service. I believe that this initiative by @RailMinIndia is handled by a team of around 20 people aided by a few open-source sentiment analysis tools. This is an amazing feat, given the huge network size, massive volumes, 24/7/365 operations and ultrafast response times.
  • The demonetization of high value currency notes in November 2016 caused a severe cash crunch in India during the last two months of 2016. The government began promoting digital payments to replace cash. In response, many banks released A2A mobile payment apps based on Universal Payment Interface (UPI), the payment system launched by the nation’s retail payments body National Payments Corporation of India (NPCI) a few months earlier. Within days, there was a proliferation of UPI apps – at peak, a Play Store search for “UPI” yielded 23 apps. The average citizen was thoroughly confused about which UPI app they should download. Realizing that the chaos could torpedo #CashlessIndia – the Twitter hashtag for the move to digital payments in India – NPCI swung into action and released a single UPI app. Called BHIM, the app could be linked to accounts in any one of dozens of participating banks. Customers of all banks now got one single UPI app to download, install and use. End of confusion. Start of adoption. BHIM was launched in barely 45 days. For comparison, development of the equivalent PayM app in UK took almost a year.

I’m convinced by these events that some kind of digital revolution is going on behind the scenes. As my friend said, it looks like government agencies are achieving a lot by reengineering their backend for a small cost.

I call this “frugal engineering”.

IT product and services companies in India have traditionally clamored for “frugal marketing”.

Well, it’s now time for them to embrace frugal engineering.

That said, mere reengineering of the backend can drive adoption only of government systems where users – citizens, employees of government agencies, local authorities and public utilities and others – are compelled to use the systems regardless of the frontend and the overall user experience.

For commercial systems, adoption requires true digital transformation, which combines the latest in forms, social, mobility, analytics and AI technologies with best practices in UI, UX and CX. On that count, there’s a lot of scope for improvement in many applications, as I’d pointed out in the Redefine Digital section of Indian IT – Turning Crisis Into Opportunity: Part 2. To achieve the desired end state, a lot of work needs to be done around usability, uptime, education and marketing. I doubt if that will happen with a frugal approach but only time will tell.

Taking Persona Based Marketing To New Heights With Persona 2.0

Friday, August 4th, 2017

In Use And Misuse Of Personas In Marketing, I’d defended personas from being lampooned by some misguided marketers.

That doesn’t mean I believe everything is hunky-dory with personas.

There are at least three problems I see in the way personas are created and used in Persona Based Marketing (PBM) campaigns today.


I read the following comment on an article about personas:

‘There’s too much focus on “Who is the buyer?”. Marketers should rather focus on “What does her company want?”’.

This is very true, especially in B2B products and services where purchase decisions are made by committees. Since a committee comprises of people with varying personalities, it tends to place the company’s needs above any individual’s persona. Ergo, persona based marketing has its limitations. That’s the best case scenario. In the worst case scenario, PBM based on simplistic personas of the committee members can actually backfire.


Traditional personas are too macro, can’t be updated in real time, and suffer from other issues highlighted by Venkat Nagaswamy, Co-founder and CEO at Mariana, in Kiss your personas goodbye (and say hello, AI)!.

We couldn’t agree more. As a result of their unchanging nature, personas widen the already-gaping chasm between sales and marketing.


Personas are currently obsessed with human beings. As a result, they may become irrelevant in the digital world.


While the current generation of personas are still useful in PBM, they face the risk of becoming obsolete in the near future. We need a new generation of personas that address the above maladies.

Good news is tools and technologies are already available to develop the future-proof Persona 2.0.


According to CEB Marketing, B2B purchase committees comprising of members with varying personalities manifest a so-called “Interpersonal Persona”.

Ignoring group dynamics and continuing to run PBM campaigns on the basis of individual personas can backfire. Therefore, B2B marketers need to replace their simplistic personas with Interpersonal Personas. But this can take time.

In the immediate term, we recommend supplementing PBM with Marketable Items, which package product features and service capabilities into compelling reasons to buy that resonate strongly with the target market’s pain areas and hot topics. As you can see from the examples of Marketable Items we’ve created for several technology product and services companies, a Marketable Item vibes with the buyer company’s needs. This helps marketers overcome the shortcomings caused by PBM’s sole concern with the “who is the buyer” question.


Marketers can use a combination of social media and AI to add online behavior and many other attributes to the current generation of personas, thus making them dynamic and actionable. Such personas will help marketers extract more bang for their PBM buck.


Algorithms are playing an increasing role in the purchase of stocks, media and other products. Robo-advisors are exhibiting human-traits like conflict of interest. Personas can’t remain exclusively focused on human beings.

To stay relevant in today’s digital world, personas must cover bots. By doing that, they will help PBM target algorithms, robo-advisors and other non-human buyers.

Persona 2.0 created by using the aforementioned tools and technologies can overcome the shortcomings of the current generation of personas and take PBM to new heights.

Indian IT – Turning Crisis Into Opportunity: Part 2

Friday, July 28th, 2017

The ink on my previous post Indian IT – Turning Crisis Into Opportunity has hardly dried when two Indian IT majors Infosys and Wipro have announced better-than-expected quarterly results. Much as I’d like to attribute their superior performance to the guidance given in my post (!), these IT veterans have been doing all this and more for a long time.

The pall of gloom over the industry’s prospects has temporarily lifted. The industry can get rid of it permanently by taking the following measures:

  1. Go up the value chain
  2. Target the CMO organization
  3. Set up component factories
  4. Extract additional revenues from fixed price deals
  5. Redefine digital

I covered the first two imperatives in Part 1 of this post.

In this follow on post, I’ll cover the next three measures.


There’s a lot of buzz around assembling software from prebuilt functionality instead of developing it from scratch. In my two decades’ experience in the industry, the pressure for reuse keeps cropping up whenever the economy goes through uncertain times, like now. In Why Is Software Still Built From Scratch?, I’d shared my thoughts on how to crack the Holy Grail of assembling software from reusable components. To recap, it requires a repository of components and a business model that together let customers

  • discover software components in an open catalog
  • find out their specifications and select which components they need to assemble their system with
  • buy the selected components outright without onerous licensing terms or dependency upon any form of first- or third-party IP
  • be assured of getting the same functionality throughout the life of the software, and
  • modify components without having to share the source code with external entities.

Product companies won’t like to get involved in this endeavor since it goes against the grain of their license / subscription-based business model.

On the other hand, this is right up the alley of services companies. Indian IT Services industry should take the lead to set up component factories for making reusable code. A few enterprising services companies have already done this – I know a fintech that set up a component factory for producing electronic billing components and used co-visioning to assemble eBilling solutions from these components instead of building each solution from scratch.

For help with spec’ccing resuable components and developing business models like co-visioning, please contact us.


According to common wisdom, the value of a fixed price deal is frozen at the time of signing the contract. Accordingly, the notion of extracting more revenue from a fixed price deal may sound like an oxymoron. But that’s only because a combination of delivery pressures and a general lack of commercial acumen in the delivery organization makes most Indian IT project managers forget clauses like “Fixed Price for Fixed Scope” and “Change Control” that form a part of a fixed price contract. And savvy customers like Dilbert’s pointy-hair boss have found nice ways to hasten the memory-loss!

For the uninitiated, a fixed price contract means that the vendor agrees to deliver a fixed scope of work for a fixed price. Normally, any fixed price contract has a change control clause that allows a vendor to charge separately for additional work not covered in the original scope. In medium to large software development projects executed over several months or years, the scope rarely remains fixed. Changes to scope happen in the form of new functionality, additional support, unforeseen training needs, sudden requirements for data migration, and so on. They’re driven by factors related to business, regulations and overall program. As and when the scope changes, a fixed price contract allows the vendor to raise Change Requests to provide additional services for an additional price.

To take an example, one of the go-live requirements of the program mentioned in point #1 of my earlier blog post entitled Indian IT – Turning Crisis Into Opportunity was reconciliation of payment transactions between the said bank’s existing mainframe-based accounting system and the new payment scheme. Before the program began, the Bank had entrusted the development of the reconciliation module to the owner the accounting system. However, midway through the program, the application owner was diverted by a rush job from another program. Since mainframe skills were in short supply, the application owner threw up its hands and regretted its inability to deliver the reconciliation module within the pre-agreed timelines. This threatened to derail our program. We stepped in and developed the RECON module and billed ££££££ for this additional work.

This is how vendors can make more money from fixed price deals.

Of course, doing so in actual practice requires business skills on the part of a vendor’s delivery organization because people like Dilbert’s pointy-hair boss can be found in all companies – hence the term “extract”. When we presented our solution for the RECON module, the Executive Sponsor and MD of the bank cooly turned around and said, “How can a payment system not have reconciliation functionality? Don’t expect me to pay for such a basic feature”. Some day, I’ll tell you how we overcome this objection and turned this Change Request into a source of revenue – instead of buckling under pressure and letting this additional work cause a fixed price project to bleed. Spoiler Alert: We not only earned additional revenues in the process but also won brownie points from the bank’s C-Suite for keeping the program on track.


When asked how much digital contributes to Infosys’ revenues, its CEO Vishal Sikka quipped, “100% of our business is digital. We don’t write software for analog computers anymore.”

While Mr. Sikka may have said this in jest, many IT vendors seem to perceive digital as nothing more than good-old computerization; in other words, their version of digital involves typing information into a computer form instead of writing it on a paper form by hand.

When a vendor does digital transformation based on this paradigm, a substandard solution results. At best, the software matches the paper-based process but lacks intelligence or personalization. At worst, the software is so cumbersome that it drives users back to the paper-based process.

I came across several examples of poor digital transformations in government and the private sector while someone in my family applied for 20+ products / services in the last year viz.:

  • Apply for Income Tax PAN card
  • Register for courses at a private college
  • Apply for a new connection with a private sector Mobile Network Operator
  • Open a fixed deposit at a private sector bank.

Barring one or two exceptions, I preferred paper. Most digital processes had lousy CX. To give you an example, one of them asked me to upload a photograph complying with the following specs: 3.5 x 5 cms, 300 DPI, PDF, <50Kb. There’s no way an average user of this service would be able to create such an image file. I took me an hour or two but I managed the feat since I had access to a scanner and a couple of image manipulation tools. After jumping through several hoops, I hit the submit button, only to be informed that I was not eligible for the online route. The website told me to print the application form and snail-mail it to a postal address. I couldn’t help noticing that it was so much easier to paste a passsport-size photograph on the paper form compared to the hassles I went through to upload the image file on the website.

Vendors doing such substandard digital transformation work will have a tough time persuading customers in mature markets that they’re the right partners in their customers’ digital journey. Not surprisingly, Indian vendors are “struggling to capture a large share of the new digital market” in the USA and Europe, as highlighted by Peter Bendor-Samuel, CEO of outsourcing advisory firm Everest Group.

Indian IT should pause to rethink its approach to digital. Digital transformation is not just computerization – that ship sailed several decades ago. True digital combines the latest in forms, social, mobility, analytics and AI technologies with best practices in UI, UX and CX to deliver modern solutions that elevate customers’ revenue, profits and customer experience to the next level.

When applied to the above example, going truly digital would mean redesign of the software such that it has (a) a microservice that automatically creates an image file of the required specifications from a standard passport-size photograph uploaded by the user, and (b) a gate at the start of the digital journey to determine whether the given user is qualified for the digital process or needs to be diverted to the paper-based alternative.

If they truly get digital, Indian IT companies can increase their share of large digital transformation deals from their core markets in the West. On the other hand, if the industry continues to do pseudo-digital work, it will dig itself deeper in the hole that the media claims it has fallen into.

These are just a few imperatives that I could think of.

I’m sure there are many more areas in which Indian IT + ITES can play a vital role. Vivek Wadhwa, Distinguished Fellow and Professor at Carnegie Mellon University, offers a few pointers in his Times of India article entitled “Indian IT needs to reinvent itself for the age of automation and AI”:

  • Bring manufacturing back to USA by helping US firms design new factory floors and workflows and install robots
  • Management consulting for optimizing supply chains and inventory management
  • Manage manufacturing and construction operations remotely.

Services has a lot of headroom for growth, as highlighted recently by Mr. N Chandrasekharan, ex-CEO of India’s largest IT company Tata Consultancy Services and currently Chairman of TCS’ holding group Tata Sons. There’s no shortage of ways in which Indian IT companies can ward off the looming crisis. If it gets its act together – as it has done several times in the past – the Indian IT industry can scale newer heights.

Use And Misuse Of Personas In Marketing

Friday, July 21st, 2017

Buyer persona is the bedrock of targeted marketing. HubSpot provides a succinct definition of the term:

“A buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.”

A sample persona is shown below:

Persona-based marketing has become increasingly popular in recent times, both in B2C and B2B realms. Maybe it’s only me but I see a strong correlation between PBM and the rise of Facebook Ads, which is arguably the first platform to provide the ability to run ads at scale segmented by buyer attributes like demographics, behavior, and preferences. (In contrast, Linkedin Ads helps you target ads by title and Google Ads, by purchase intent.)

We develop personas for companies in IT, BFSI and other technology-intensive industries. After doing that, we create persona-specific messaging and content for our customers’ technology products and services. Campaigns based on personas help our customers’ offerings resonate better with their buyers’ goals and preferences, thus accelerating lead flow and improving lead-to-deal conversion rates.

Like all popular tactics, persona is susceptible to overuse. A few marketing professionals have already started panning personas e.g. Marketoonist, which lampooned personas in a recent article with the following cartoon:

The article went on to say:

“Marketers have more customer insights at their disposal than ever. Buyer Personas can be one useful tool to turn this customer data into a story. They can help capture an abstract target audience as a tangible character sketch. But buyer personas are only as useful as what they help you to do. Marketers can get carried away with the fiction. I’ve literally seen “watches Game of Thrones” in the personality sketches of buyer personas for enterprise software. These personality-driven personas may read well, but aren’t necessarily actionable.”

Reading the reference to Beatles in the cartoon, I was reminded of an ad released by one of my ex-employers years ago. The company had just become the distributor for Sun Microsystems in India. The launch ad proclaimed in bold letters, “Here comes the sun”. Even if you’re not a Bealesmaniac, you’d recognize the name of one of the band’s most popular songs in the copy.

Given this experience, I wouldn’t dismiss references to music bands in a buyer persona so easily. The key is to use them – as well as automobile brands or TV shows – in the right context.

This is where I think Marketoonist has gone wrong: Its cartoon depicts a classic case of misuse of persona.

I’m not alone. Like commenter ALLEN ROBERTS says:

“Like any complex tool, personas can be misunderstood, misused, and give crap results, but in the right hands, and right context, can be very useful.”

The misuse stems out of targeting the persona at Sales. While the output of personas can be shared with sales, personas themselves are meant strictly for Marketing.

Now, let’s see what can happen if the persona described in the aforementioned cartoon is consumed by Marketing – i.e used in the right way. Based on this persona, Marketing can shape the content, messaging and medium of the software in the following ways (if not many more):

  1. Pepper the marketing collateral of the product with Acura-related terminology. From personal experience of marketing ERPs, an enterprise application offers tremendous scope for flaunting a wide range of terms. Slipping in an Acura-related term or two in the product and / or marketing collateral is a piece of cake!
  2. Seek product placement and / or advertising in Game of Thrones
  3. Lace the ad copy and demo videos with Beatles lyrics and background music respectively.

Needless to say, a campaign based on such persona-shaped elements will have a higher success rate than a “spray-and-pray” campaign, as my ex-employer’s Sun launch ad did.

Beatles was popular at the time. The reference to the band’s popular song “Here comes the sun” in the copy of the ad for Sun servers elicited an immediate connect with the thousands of Beatles fans in the target audience. The ad elicited a chuckle or two from the early adopters of the product and triggered a strong brand recall for the distributor amongst prospective buyers of RISC-based servers for years to come. (If you knew that the product manager of the company’s Sun division went by the initials of SUN, you might even spot another pun in the copy!).

Ergo, in the right hands, personas – including the one described in the cartoon – can be very valuable.

That said, everything is not hunky-dory in the world of personas. In a follow-on post, I’ll describe three ways in which personas are misused nowadays. Stay tuned.

How To Fight Card Payment Surcharge And Take #CashlessIndia To Next Level

Friday, July 14th, 2017

I recently read the following tweet:

I replied back pointing out that:

He replied back with the following tweet:

@logic was implying that merchants will definitely pass on the MDR cost to consumers.

Even if that’s true, he was confusing MDR for Surcharge. While both amount to a charge on card payments, they’re not the same. By definition, MDR is borne by a Merchant whereas Surcharge is slapped on a Cardholder. There are many other differences between them. Before I list them and explain why they matter to a common man, here’s a graphical depiction of how a card payment works.

The key entities in the so-called “card payment value chain” that processes a card payment are as follows:

  1. Cardholder: The consumer that uses a credit or debit card to buy something e.g. John Doe, Jane Doe
  2. Merchant: The business that sells that “something” to the Consumer and receives payment via payment card e.g. ASDA, Big Bazaar
  3. Issuer: The bank that issues the card used by the Consumer e.g. Barclays, State Bank of India
  4. Acquirer: The bank that issues a Merchant Account and POS (or POS alternatives like Bharat QR) to the Merchant, both of which are required for the Merchant to accept card payments e.g. Citi, HDFC Bank
  5. Card Network: The company that owns the infrastructure – aka “rails” – for processing card payments e.g. Visa, MasterCard.

The card payment value chain is also called a “4-corner marketplace”. Created over 50 years ago, it’s subject to the so-called “network effect”, which explains its popularity and longevity. The Merchant incurs a cost for using this infrastructure to accept card payments. This cost is called MDR or Merchant Discount Rate.

With the basics of card payment out out of the way, let me come back to the key differences between MDR and Surcharge. They’re as follows:

  1. MDR is the fee incurred by the Merchant for accepting card payments. Any charge levied by the Merchant on a consumer paying by card (over and above the price of the product or service purchased by the Cardholder) is called Surcharge. As we’ll see shortly, Surcharge need not equal MDR (and often does not)
  2. Set by the Card Network, the schedule of MDRs forms a part of the Merchant Account signed between the Merchant and the Acquirer. As a consequence, MDR is pre-defined, strictly regulated and ranges from 0.5-3% depending upon the product purchased and the type of card used for payment. (For the sake of convenience, I’ll assume a uniform MDR rate of 2% during the rest of this post.) On the other hand, Surcharge is totally arbitrary – it’s whatever the Merchant says it is. I’ve come across Surcharges ranging from 2 to 10%. In other words, Merchants slap Surcharge – masked as ‘Convenience Charges’ – that’s as high as 5X of the MDR cost they incur
  3. MDR is deductive. That is, if the sale value at the till is £100, the acquirer retains £2 and passes on £98 to the Merchant. On the other hand, Surcharge is additive. That is, against the purchase value of £100, the consumer incurs a cost of £102 at checkout (or even higher, if the Merchant passes on costs in excess of MDR to the Cardholder).
  4. Being deductive, MDR attracts no taxes. Whereas, being additive, Surcharge attracts taxes. So, the total debit the Cardholder sees on their statement is even higher than £102
  5. In return for MDR, a Merchant gets many freebies from the Acquirer e.g. fire insurance for store. Cardholder gets nothing for shelling out Surcharge.

In case all this sounds a bit technical, that’s because it is. However, there’s a reason why it matters to an average John / Jane Doe consumer and impacts the adoption of card payments.

I’ve made no secret of my distaste for Surcharge. The way I see it, MDR is the Merchant’s cost of doing business – if they don’t accept card payments, they can lose business. Like rent, electricity, employee and other costs, Merchants have to recover their card processing fees from their sales and can’t pass it on to me explicitly. If a Merchant still insists on a Surcharge, I can walk out and buy the same thing somewhere else without paying Surcharge.

Armed with this knowledge, I flatly refuse to pay Surcharge for paying with my credit card.

When Merchants try to justify their demand for Surcharge on the grounds that they pay this fee to banks, I turn the last point mentioned above to my advantage and fire back: “You get fire insurance for your store by paying MDR. Will you give me fire insurance for my home if I pay you Surcharge?” When they hear this, many Merchants quietly accept my credit card without any Surcharge.

Of course, my tactic only works when there’s a human being on the other side whom I can challenge with this logic.

Whenever a website demands a Surcharge, I abandon my shopping cart and rant to the company via Twitter.

Somtimes it works!

I know you “can’t win ’em all” but that’s no reason why you shouldn’t try!

I know many people who use cash because they don’t want to pay extra charges for using their cards. This is a serious stumbling block in front of greater spread of digital payments. I hope this post gives such consumers enough ammunition to fight Merchants’ demand for Surcharge so that they pay by card without incurring any extra charges and, in the process, take the adoption of #CashlessIndia to the next level.

Indian IT: Turning Crisis Into Opportunity

Friday, July 7th, 2017

At the end of my blog post entitled Indian IT – Crisis Or No Crisis?, I reflected on the zeitgeist about the looming crisis faced by the Indian IT industry due to growing automation, digital challenges, H1B restrictions and Trumpism-driven Middle America outsourcing.

Even if these challenges are real, there’s no need to panic. The industry has been through several crises in its 30 year history and emerged from each of them stronger than before. I predict that the same will happen even this time.

But not if it continues to bury its head in the sand. The Indian IT industry can escape the dark clouds on the horizon only by taking a few concrete measures on a war footing. I suggest the following imperatives for the industry in which I’ve spent over 20 years of my professional life:

  1. Go up the services value chain
  2. Target the CMO organization
  3. Set up component factories
  4. Rethink fixed price deals
  5. Redefine digital transformation


No, I don’t mean develop products. For reasons highlighted in my blog post entitled “Going Up The Value Chain” Is Wrong Path For Indian IT Services Industry, the industry’s DNA is in services. And services has a lot of headroom for growth, as highlighted recently by Mr. N Chandrasekharan, ex-CEO of India’s largest IT company Tata Consultancy Services and currently Chairman of TCS’ holding group Tata Sons. So there’s no need to jump off the services bandwagon.

What I mean is move up from project management to program management level within a services engagement.

For the uninitiated, a program is an aggregation of individual projects around business analysis, architecture, design, development, testing, infrastructure, deployment and communications. In addition, a program also manages relationships with other internal and external stakeholders such as business, legal, compliance, regulators, industry associations, and so on.

Historically, bulk of Indian IT companies’ revenues have come from development projects involving requirement gathering, design, coding and unit testing. Program management activities are left to the customer. Quite often, the customer outsources these activities to other IT services companies.

If Indian IT companies can start playing a larger role in the end-to-end program, they can stand to achieve a manifold increase in revenues.

Let me explain how by using the following case study.

A Top 5 UK bank was mandated to introduce a new payment system (“FastPay”) by the regulator. The bank’s Board directed its C-Suite to launch FastPay by a certain deadline. Within the C-Suite, the initiative was owned by the MD of Global Payments (“Executive Sponsor”), who had to fulfill it by collaborating with IT, IT, Operations, Product, Marketing, Legal and the Scheme Operator. Busy with the BAU pressures of running a multibillion dollar business, the MD needed someone to handle the day-to-day minutiae of FastPay’s introduction. This “someone” was the “Program Manager”, who was a partner at a Big 5 consulting firm.

The overall program structure is shown below.

The project level comprises individual projects around business analysis, licensing of new product, implementation of new product, modifications to existing systems, testing, and systems integration.

All these individual projects fold under the Program Manager. In addition, the Program Manager also leads the Steering Committee and the War Room. Chaired by the Executive Sponsor (MD of Global Payments in this case), the Steering Committee comprises of all key stakeholders and convenes on a weekly basis to review the progress of the program and make midcourse corrections as required; the War Room also comprises of all key stakeholders but convenes during go-live and at other critical program milestones.

Most Indian IT services companies – including my employer at the time – typically function in the capacity of (a) implementation partner and (b) systems integrator. For the sake of clarity, an implementation partner makes a new product work at a given company by providing consulting, training, customization, extension and other services; and a systems integrator “lands” the new product into the given company’s systems landscape by developing interfaces between the new product and the company’s existing systems. As you can see, both roles are largely technical. Typically, these vendors are not part of the Steering Committee or War Room and don’t have the ears of the program stakeholders or much say in the overall direction of the program.

In the specific instance, vendors of individual projects made revenues in the $5-8M range, which totaled up to around $40M at the program level. In addition, the program manager and the infra project manager spec’ced a plethora of environments such as development, system integration testing, user acceptance testing, sandbox, staging and production that contributed incremental revenues in the high single-digit millions for the infra workstream. All told, the program management vendor billed nearly $50M, which is 6-10X of the billing of any individual project vendor.

This is how moving up the value chain from project management to program management can result in manifold increase in revenues for an IT services company.


While new tech initiatives can happen anywhere in an enterprise, most companies are looking at customer experience and revenue growth as the low hanging fruits to gain rapid ROI for their tech investments. As a result, technology projects are increasingly driven by the CMO organization nowadays. According to Forrester, “CMOs are the most likely C-level executives to have taken full control of their tech spending.”

The Indian IT industry has developed a keen sense of efficiency, having traditionally sold technology to the CIO organization, which is a cost-center in most companies. Besides, dealing with the CIO organization has shielded the industry from end-users of technology, whether it’s consumers or “business”. As a result, the industry has managed to get away by paying lip service to UX and by treating performance and other non-functional aspects of their software as an afterthought. These characteristics won’t help while targeting the CMO organization because CMOs are more interested in the effectiveness of technology and are driven by customer experience. Therefore, to open opportunities in the CMO organization, Indian IT needs to

  • shed its traditional cost-centric mentality and develop a revenue-oriented mindset, and
  • come out of its technical shell and gain an appreciation of how people use technology to run a business instead of using technology for its own sake.

Neither is an easy change to make but Indian IT can jumpstart the transition by keeping in mind the following realities of CMO organizations:

  • Online ads and social networks play a vital role in today’s marketing world
  • UI goes beyond color and fonts and encompasses psychological drivers like shortage, sense of urgency, and so on
  • UI, UX and CX are super important for any customer-facing software
  • What looks like a cosmetic defect to a programmer (or even project manager) could actually be a CX breakdown that could cause revenue and reputation loss, both of which are critical issues for a CMO needing immediate redressal
  • Learn to make conversation beyond technology. CMO orgs are fairly garrulous (present company included!)

Like I’d warned in Indian IT – Crisis Or No Crisis?, relying solely on coding, testing and other technical skills will no longer suffice. To successfully execute on the above imperatives and capture the revenue opportunities offered by them, the Indian IT industry will need to develop new non-technical skillsets in its delivery organization around stakeholder management, commercial acumen and marketing.

In a follow up post, I’ll describe the next three imperatives. Stay tuned.

Uber Masters Abandoner Remarketing

Friday, June 23rd, 2017

Uber didn’t invent targeted offers but the world’s largest taxi company sets itself apart from other brands by the innovative ways with which it uses the fledgling marketing tactic to deepen customer engagement, as I’d highlighted in Mastering Targeted Offers – The Uber Way.

I recently saw Uber’s mastery of another “next gen” marketing tactic, namely, abandoner remarketing.

For the uninitiated, abandoners are those who visit a website (or fire up a mobile app), click around but leave without making a purchase; and the act of following up with them and persuading them to convert (i.e. make a purchase) is called abandoner remarketing.

I abandoned all my bookings during a week in the recent past when I suspected surge pricing. I say “suspected” because, as I highlighted in Uber Creates Loyalty To The Deal But Not For The Brand, the fare estimate displayed by the Uber app no longer mentions whether it’s subject to surge pricing or not.

At least 50% of the B2C – and 90% of B2B brands – I come across regularly don’t provide any evidence of even tracking conversions, let alone employ remarketing techniques to win back their abandoners. Most of the others that do take abandonments seriously use Retargeted Ads to remarket to people who fail to convert. But not Uber.

The world’s largest taxi company uses a combination of cross-sells and special deals – herewith termed “targeted offers” for the sake of convenience – to remarket to its abandoners.

During the week week following my spate of abandonments, I got the following Targeted Offers from Uber:

  1. Whenever I fired up Uber, the app placed the highlight on the uberPOOL icon. For the uninitiated, this is the ride share (“car pool”) product recently introduced by Uber. An uberPOOL ride typically costs 40-60% of uberGO, which is Uber India’s entry level private cab product. Sensing that I’d abandoned surge rides the previous weeks, Uber perhaps thought that I was price sensitive and tried to propose a cheaper offering
  2. I got an email from Uber summarizing the number of uberGO rides I’d taken the previous month along with the fare I’d paid. The email also simulated my savings had I chosen uberPOOL instead of uberGO. This was obviously yet another attempt to draw my attention to a lower-priced alternative
  3. For the first time ever, I started seeing cabs with wait times exceeding three minutes. On one occasion, Uber showed me two options with varying wait times and fares: 3 minutes @ INR 75 and 12 minutes @ INR 60. In this, I see an attempt by Uber to make my preferred product cheaper if I was willing to live with a slight delay in getting picked up
  4. My wife got a targeted offer of 50% off “to make up for the cancellations you experienced in the last 2 weeks”
  5. My daughter also got the same offer
  6. I got 50% off but for a different reason: “to make up for the long wait times you experienced in the last 2 weeks”.

Uber’s targeted offers were personalized and based entirely on my actions of the previous week. Contrary to what some people may think, I didn’t find them creepy at all. In fact, I thought Uber’s responses were very smart and reflected a strong intent on the part of the company to deepen its engagement with me.

Now let’s examine the relevance / accuracy of these targeted offers.

To me, a taxi is a private mode of transport. When I think of Uber – or its chief rival Ola for that matter – I’m not thinking of sharing a ride with a stranger. Therefore, I won’t order an uberPOOL (or Ola Share) at any price – even if keep ditching uberGO only because of surge price. So, Uber wasted its first two targeted offers on me. But I don’t fault the company for making them: It’s only by proposing and testing my response to its cross-sell offers that Uber can learn my preferences and make better offers going forward; besides, the offer for uberPOOL may have worked on many others who don’t mind a compromise on privacy in return for a lower price.

From the way the app kept switching between the two fare-wait time options every few seconds in TO #3 above, I felt that Uber was running an A/B test on me. But two can play the A/B testing game. I never intended to take a cab for that journey and fired up the app only to test Uber’s response to my previous week’s abandonments.

My wife did experience one cancellation during the previous week. So TO # 4 was totally relevant.

My daughter had booked an Uber the previous week. While the cab came in two minutes, the app displayed a wait time of 154 minutes. So TO # 5 was well-grounded in data (though not in reality!)

I abandoned my bookings because I suspected surge pricing or was A/B testing Uber. So the trigger for the last targeted offer – long wait times – was wrong.

But I’m not complaining. 50% off is 50% off – I’ll take it regardless of its rationale. When I convert on it, I’m guessing Uber’s algorithm will tag me as a big sucker for its targeted offers and keep making more of them going forward. Mission accomplished!

Oh wait, just as I was about to publish this post, I got an offer from Uber for 50% off on my next 10 rides. This is the mother of all targeted offers I’ve got from Uber so far.

Looks like Uber’s algorithm has fulfilled my wish!

How Relevant Is “Crossing The Chasm” After 25 Years?

Friday, June 16th, 2017

As the title of our website’s WHAT WE DO page proclaims, GTM360 helps growth-stage companies in technology-intensive industries to “cross the chasm” and break into the mainstream market.

In a recent MEDIUM article titled 25 Years Later, ‘Crossing the Chasm’ Has Withstood the Test of Time, author Tiffani Bova has a fireside chat with Geoffrey Moore, the author of “Crossing the Chasm”, the classic published nearly 25 years ago.

When asked how relevant the principles of chasm marketing are in today’s world, Moore quipped:

“With over a million books sold, and it being in its third edition, (I have) only made small updates to the book (including new company examples). However, the frameworks have remained consistent and continue to be completely applicable to today’s B2B businesses.”

I pondered about the “completely” part of Moore’s reply and left a detailed comment below the article. A lightly-edited version of my comment is given below.


I’ve been in the B2B technology space for three decades and read “Crossing the Chasm” a decade ago. During this period, I’ve come across two major categories of enterprise software:

(A) New versions of good old transaction processing-cum-analytics software viz. ERP, CRM, CBS e.g. SAP, Salesforce and FLEXCUBE respectively

(B) Altogether new genres of software viz. Enterprise Chat, Social Media Management e.g. Slack and HootSuite respectively.


Purchase of Category A software continues to be quite centralized and the TALC persona of the buyer company asserts itself at some stage of the process. Therefore, I’ve no hesitation in agreeing that the key takeaways of chasm marketing continue to be relevant for this category.

For the uninitiated, TALC refers to “Technology Adoption Lifecycle”. TALC spans five segments of the market with varying sizes, namely, Innovators (5%), Early Adopters (10%), Early Majority (40%), Late Majority (40%) and Laggards (5%). A given buyer company belongs to one of these segments and exhibits the traits of the correponding TALC persona.


When it comes to Category B software, purchase decisions are quite decentralized. Slack’s founder once said that his company initially targeted end users directly, created excitement, got individuals in sales, marketing, and other functions to sign up for the platform using their personal or corporate credit cards, and used the critical mass of business users as a fait accompli to get the enterprise to purchase and roll out the platform across the whole company. As you can see, the buyer company’s TALC persona hardly comes to the fore in the buying process.

Even if we stretch the notion of TALC to individual buyers, the same messaging resonated with all of them without any ostensible attempt to segment them into Innovator / Early Adopter or Early Majority cohorts. This vitiates the basic principle of chasm marketing, which is, “what works in Innovators and Early Adopters segments does not work in the mainstream market comprising Early Majority, Late Majority and Laggards”.

Chasm marketing proponents could counter this by positing that all Slack buying companies were themselves Innovators / Early Adopters, that’s why the same messaging worked with all of them. While this is consistent with the “what works here does not work there” mantra of chasm marketing, it would amount to an admission that Slack? hasn’t yet entered the mainstream market. If Slack  – and, by extension, all Category B software? – are still on the left side of the chasm, how can we assert that chasm marketing principles are relevant / valid as they try to go over the right side of the chasm? Or that they even face a chasm?


In short, chasm marketing is certainly relevant for Category A software but I’m somewhat undecided about its applicability for Category B software.

As of now, bulk of the software industry’s revenues comes from Category A software (Source: McKinsey).

Ergo, “Crossing the Chasm” is still very much valid for the B2B technology market taken as a whole and will continue to be relevant for the forseeable future.

As if to prove this point, there’s no shortage of companies I come across virtually everyday that are facing the chasm and need a drastic change in their approach to cross over to the mainstream market.

Not just companies – even entire technologies.

In closing, let me post Geoffrey Moore’s response below:

GTM360 – Response from Geoffrey Moore

Crossing the chasm is at its core a B2B model focused on high-risk purchasing decisions that get reviewed by multiple constituencies within the enterprise before they are confirmed. For the bulk of the 20th century this was IT. In this century, consumer IT developed a very different path to market based on low-risk adoption decisions going viral – a very different model. We talk a bit about it in the appendix to the third edition of Crossing the Chasm. Nowadays we can see some blending of the two. In the freemium model, for example, you start with the consumer path but at some point look to close a B2C deal. In the SaaS model you often “land” with a given early adopting unit but seek to “expand” by crossing the chasm to pragmatic later adopters. In data-driven business models you would like to get the signal-collecting edge devices deployed for free (or as close to it as you can get) and then monetize the analytical and predictive value of the data streams via B2B contracts with interested parties. In each case, when you get to the big contract signed by the enterprise executive, you should see “chasm dynamics” prevail.



Why Branch And Digital Channels Will Coexist Forever

Friday, June 9th, 2017

I noticed a huge crowd during a recent visit to my bank branch.

I happened to spot the bank’s Head of Relationship Banking – let me call her Sonia – in the branch.

I asked her how come their branch was so full when finsurgents have been predicting the death of branches for so long.

Sonia told me that, let alone die, their branches are growing. Despite the fact that branches are expensive – think mounting real estate costs – her bank is opening new branches and expanding many of its existing branches. As a matter of fact, there was a vacant space right below where we were standing and the bank was negotiating a deal with the landlord to rent it for expanding the branch in which we were having this conversation.

I then quoted her bank’s nearest competitor’s claim that 60% of its transactions were happening digitally and ribbed her by asking if her bank wasn’t so successful with its digital banking initiatives. She shot back saying 90% of their transactions were happening on digital channels. While she didn’t mention it, I know for a fact that the help desk at the entrance of the branch pushes many customers out of the branch, telling them to use ATM, Internet / Mobile Banking for carrying out balance inquiry, statement printing and other routine transactions.

Despite all that, this bank is growing its branch network.

What gives?

According to Sonia, the key reasons for her bank to expand its branch network were as follows:

  • Many branches were seeing rising footfall of customers who walk in to open new accounts, apply for a credit card and inquire about car / home / business loans
  • New account holders prefer to learn their banking ropes in a branch before moving to digital channels
  • Heavy use of cash and cheques in business banking, both of which involve branch visits. In fact, I’d visited the branch that day to withdraw petty cash from my company’s bank account. (For the uninitiated, unlike a personal savings account, it’s quite painful to get a debit / ATM card for a company’s current account, so I’ve not bothered to get one).

Now, before some financial zealot predicts the imminent death of this bank for its continuing use of branches, let me assure you that this bank is the most valuable bank in India and is also the #1 brand across all industries in India.

From what this banker said, it follows that people prefer a branch when

  1. They’re totally new to banking
  2. They’re new to a certain financial product (even if they’re familiar with the basics of banking).

i.e. when they’re considering “new banking products”.

Going by the following reports, the above inference seems to be universally true:

  1. According to an SMF study, over 60% of people would go into a branch when making a big decision.
  2. As Jeffry Pilcher, CEO/President & Publisher of The Financial Brand, points out in Branches Refuse to Die, “While the majority of consumers prefer online or mobile banking, … a surprisingly high number of consumers still visit the branch. It might be tempting to dismiss the findings and assume these branch visits were triggered by consumers who were frustrated that they weren’t able to accomplish some financial task in digital channels. But that would be a mistake.”
  3. According to McKinsey, while customers want digital, it’s not to the “exclusion of other channels, which remain critically important.”

For reasons highlighted in my blog post Secret Of Survival Of Bank Branches, banks also prefer a branch for selling new banking products.

So, branch is the mutually-preferred go-to channel in the “new banking products” scenario.

In every part of the world, there will always be

  • People who will enter the banking system to open new bank accounts
  • People with bank accounts today who will want a credit card tomorrow, a mortgage five years from now, and a retirement product ten years from now.

The number of people in each of these two categories will depend upon the demographics of a country – or even the specific geographic region of large countries with heteregeneous demographics like USA, China, and India. However, there will always be a market for new banking products.

In short, customers and banks both prefer a branch for “new banking products” scenario and the market for “new banking products” is inexhaustible.

Ergo, branches will never die in the forseeable future.

This long-held belief of mine was reinforced recently when I read that payment banks were opening branches. This new category of banks in India are licensed to operate solely on mobile phones. But they’re still setting up branches. One of them is PayTM, which has a valuation of $9 billion. The near-decacorn is a pure-play fintech without any bank DNA, so it hasn’t suffered from legacy thinking when it decided to open branches.

That said, branch networks won’t be immune to growth of digital channels. But the churn in branch count driven by digital channels will be specific to individual banks rather than being a secular issue that sweeps the entire banking industry. In other words, some banks will open new branches whereas others will close existing branches.

Let me elaborate this by using a metric called “Ideal Branch Count” or IBCO, which is the number of branches required to service the market for new banking products. I’m using the term “service” a little broadly – it includes the execution capacity required to fulfill demand and the marketing efforts required to generate the demand in the first place.

If a bank has fewer branches than IBCO, it might open new branches. If a bank has more branches than IBCO, it might shut down some branches.

IBCO depends upon the individual bank. Other things remaining the same, a bank with higher productivity will have a lower IBCO than another with lower productivity.

IBCO is also impacted by the country – or even specific geographic region of large countries with heteregeneous demographics – because of the link between demographics and size of market for new banking products market.

I doubt if IBCO is affected too much by the size of the Millennial population in a given demographic. While people of this generation like to do many things on mobile phones, buying new banking products is not one of them. I anticipated this in my blog post titled Will Millennials Bankrupt Neobanks? published two years ago. I’m convinced about this from recent personal experience and research findings e.g:

  1. The Millennials I saw in the branch were glued to their smartphones but they’d still come to a branch.
  2. The aforementioned SMF study reports that “72% of those under 30 would go into a branch when making a big decision, versus just 61% of those over 50.”

There could be other factors that shape OBCO.

But whatever be the factors, IBCO will not be zero for any bank.

If I were to take a wild guess, IBCO will be around 60% of current branch count for overbranched banks and 150% of current branch count for underbranched banks. In other words, overbranched banks may slash their branch network by 40% whereas underbranched banks may grow their branch network by 50%.

Even if all banks in the world turn out to be overbranched – which is impossible IMO – there’ll be enough branches left for a long time.

Digital channels aren’t going away, either.

Therefore, branch and digital channels will coexist with each other forever.

Optimizing the channel mix is an area of opportunity for fintechs to partner with banks. More on that in another blog post.