Giving time back to SMEs, to do what they love, and are supposed to do – Build their Business Tide – India Strategy Abhijit Mishra Table of Contents Contents Outlook: ................................................................................................................................ 3 About the Company: ............................................................................................................ 3 Business Fundamentals & Value Drivers: .......................................................................... 3 Indian Markets: Fintech, Payments and SME .................................................................... 4 Fintech and Payments Industry in India:.................................................................................... 4 Small and Medium Scale Enterprises (SMEs) in India:.............................................................. 4 Where Tide fits into the Picture: India Expansion ............................................................. 5 Analysis – Tide in India ....................................................................................................... 6 I. Porter’s 5 Forces: ................................................................................................................. 6 II. SWOT .................................................................................................................................... 6 Long Term Strategy ............................................................................................................. 7 India Strategy - TIDE Outlook: Tide has the potential to capture a significant market share in India's rapidly growing fintech sector, by leveraging its innovative digital banking services and strong customer support, to serve the unique financial needs of the country's SMEs About the Company: Tide, which is a UK-based fintech company that provides business banking services to small and medium-sized enterprises (SMEs). Tide was founded in 2015 and offers a range of services, including business accounts, payment and invoicing tools, expense management, and integration with accounting software. The company operates entirely online and through a mobile app, which allows users to manage their finances on the go. Tide has become one of the leading players in the UK's SME banking market, with over 500,000+ registered members. The company has also expanded its services to other countries, including Germany and India, as it seeks to become a global provider of SME financial services. Here we will discuss about their entry and expansion in the Indian Market. It launched in India in 2020. Business Fundamentals & Value Drivers: Business fundamentals for tide comprises of: - Target Market – primarily SMEs that have been underserved by traditional banks - Digital Platform – Digital platform for current account, expense cards and expense management and tracking through the app - Customer Experience – USP of tide is in the ease of opening the account. They have opened over 50% accounts in under 10 minutes - Partnerships – Partnerships with various organizations to expand its customer base to offer additional services like bounce back loans in UK, and Sarthika, for women entrepreneurs in India – launched along with WE Hub. Indian Markets: Fintech, Payments and SME Fintech and Payments Industry in India: India is one of the fastest-growing fintech markets in the world, with a rapidly expanding digital payments landscape. The Indian fintech industry is expected to grow at a CAGR of 22.7% from 2020 to 2025, reaching a market size of USD 137.5 billion by 2025 The digital payments landscape in India is dominated by government-backed initiatives such as UPI, which has been a game-changer for the Indian payments industry, with its user base growing exponentially (over 100X from 21 million in December 2017). Several private players like Paytm and PhonePe also offer a veriety of services from mobile wallets to online payments to merchant payments through QR Code. Fintech companies are also active in other areas such as insurance, lending, and wealth management. These companies leverage cutting edge technologies to provide innovative products and superior service to their customers. However, the Indian fintech industry also faces several challenges, including regulatory uncertainty, cybersecurity risks, and a lack of financial inclusion in certain segments of the population. Despite these challenges, the Indian fintech industry is expected to continue its rapid growth in the coming years, driven by factors such as: - rising smartphone penetration - increasing digital literacy - government support for digital payments - financial inclusion. Small and Medium Scale Enterprises (SMEs) in India: Currently there are 63 million SMEs in India, employing over 110 million people. It accounts for over 30% of India’s GDP. SMEs have several challenges in a country like India which confines to: - Financial Inclusion/Access - Lack of infrastructure - Lack of skilled labor - Low or delayed access to technology - No regulatory compliance This makes it difficult for them to grow and compete with large businesses. In recent years, digital adoption and government initiatives like the startup India program have helped SMEs to expand. Overall, SMEs play a critical role in India's economic development, and the growth and success of these businesses are essential for the overall growth of the Indian economy Where Tide fits into the Picture: India Expansion India can be a profitable market for Tide if the company is able to successfully tap into the SME segment and effectively compete with other players in the market. India has a large number of SMEs that could benefit from Tide's digital banking services, and the government has also launched initiatives to promote digital payments and financial inclusion, which could create a favorable environment for Tide's operations Tide can help SMEs in several ways: - Digital banking: Tide offers a full suite of digital banking services, including business accounts, payment services, and expense management tools. This can help SMEs streamline their financial operations, reduce paperwork, and save time. - Access to credit: Tide offers business loans and lines of credit to SMEs, which can help them to meet their working capital needs, invest in growth opportunities, and manage their cash flow. - Expense management: Tide's expense management tools can help SMEs to track their expenses, categorize their spending, and generate reports for accounting and tax purposes. This can help SMEs to manage their finances more efficiently and avoid costly errors. Tide can also impact women entrepreneurs in India by resources and financial tools they need to start and grow their business: - Financial Inclusion - Financial and Digital Literacy - Networking Opportunities - Advisory Analysis – Tide in India We will analyze tide in India basis multiple frameworks: - Porters 5 forces - SWOT - Value Chain - Business framework – Customer, Company, Product, Competitor I. Porter’s 5 Forces: a. Threat of New Entrants: The Indian banking sector is highly regulated and requires significant capital investment, making it difficult for new entrants to compete. However, the rise of digital banking has lowered the barriers to entry, increasing the threat of new entrants. b. Bargaining Power of Buyers: Indian SMEs have limited bargaining power due to the fragmented nature of the market and their reliance on banks for financing and other services. c. Bargaining Power of Suppliers: Tide's suppliers would include technology providers, payment processors, and other service providers. These suppliers have moderate bargaining power due to the competitive nature of the industry. d. Threat of Substitutes: There are several alternatives to traditional banking services in India, including payment wallets, online lending platforms, and other digital banking solutions. This increases the threat of substitutes. e. Competitive Rivalry: The Indian banking sector is highly competitive, with several established players vying for market share. Tide would face stiff competition from both traditional and digital II. SWOT a. Strengths: Tide's key strengths in India would include its focus on SMEs, its innovative digital platform, and its experience in the UK market. b. Weaknesses: Tide's lack of experience in the Indian market, its limited product offerings, and its reliance on technology could be potential weaknesses. c. Opportunities: The growing SME market in India, the rise of digital banking, and the favorable regulatory environment provide significant growth opportunities for Tide. d. Threats: The highly competitive banking sector, the threat of new entrants, and the potential for regulatory changes pose significant threats to Tide's success in India Long Term Strategy A potential long-term strategy for Tide could include the following elements: Product Diversification: Tide could expand its product offerings beyond basic banking services to include loans, credit cards, insurance, and other financial products tailored to the specific needs of Indian SMEs. This would require significant investment in product development and partnerships with local financial institutions. Geographic Expansion: Once Tide has established a strong foothold in the Indian market, it could consider expanding its operations to other emerging markets in Asia, Africa, and Latin America. This would require significant investment in market research, partnerships, and digital infrastructure. Strategic Partnerships: Tide could develop strategic partnerships with local banks, payment processors, and other financial institutions to expand its reach and offer a wider range of services to customers. This would require a deep understanding of the local financial ecosystem and the ability to build strong relationships with local partners. Innovation and Technology: Tide's success in the long term would depend on its ability to continue innovating and leveraging technology to deliver a superior banking experience to SMEs. This would require ongoing investment in digital infrastructure, data analytics, and cybersecurity. Brand Building: Tide could focus on building a strong brand in the Indian market through targeted marketing and sales efforts, partnerships with local businesses, and community outreach programs. This would help to differentiate Tide from its competitors and build a loyal customer base. Customer Retention: Tide could focus on building long-term relationships with its customers by providing high-quality customer service, personalized financial advice, and loyalty programs. This would help to reduce churn and increase customer lifetime value. Overall, Tide's long-term strategy in India would need to be based on a deep understanding of the local market, a focus on customer needs and preferences, and a commitment to innovation and technology.
