Department of Management Studies, IIT Delhi

PROJECT REPORT

MSL 829

CURRENT AND EMERGING ISSUES

IN STRATEGIC MANAGEMENT

FINANCIAL AND PROFESSIONAL SERVICES

Group - 4

KARAN | SHARAN | SRIRAAM | VISHAL | AAKASH

Table of Contents

Introduction ......................................................................................................................... 3

Objectives ............................................................................................................................. 4

Reasons for RFI’s to form partnerships and Alliances ......................................................... 4

Constraints to Financial Services in Rural Areas ................................................................. 5

Framework for Understanding and Assessing Strategic Alliances ....................................... 6

Case Example ....................................................................................................................... 7

Innovations in Financial Services ....................................................................................... 14

Innovation Clusters ............................................................................................................ 18

Future Trends in Rural Retail Banking ............................................................................. 20

Trends and Innovations in Professional Services ............................................................... 20

Conclusion.......................................................................................................................... 21

References .......................................................................................................................... 22

Exhibits .............................................................................................................................. 24
Introduction
Strategic alliances and Joint ventures are considered as one of the important way for growth and
increase the market penetration in the financial services industries. The same can be observed with
a substantial increase in the number of transactions since 1990. Various well-known firms like
Citicorp, AIG (American International Group), Bank of America and Chase Manhattan have been
involved in joint ventures and strategic alliance activities 39, 55, 32, and 29 times, respectively,
since 1984. Considerable attention by different firms has recently led to consolidation of different
activities carried out in the financial services industries, life insurance, banking and the credit
unions. Even with such deep interest in consolidation of such activities, little research has been
done on how financial service firms use strategic alliances and joint ventures to get the hold of
assets, capture new markets, and expand in different geographies.

Even with more than thirty-five years for the investments and assistance programs, the access to
financial and professional services in the rural markets hasn’t expanded at a scale that was expected
in different regions. In the recent times, the government officials and the policymakers have shown
renewed interest in rural finance. Strategic alliances play a vital role in rural finance and the
duration of experiences of RFIs vary widely. The alliances for long duration enable have focus on
scaling up the operations whereas the alliances with shorter duration are for indicative trends. RFIs
can form strategic alliances and develop partnerships to overcome the barriers to scaling up access,
which is majorly done by introduction of new products and expansion in targeted market. Strategic
alliances and the strategic and developmental partnerships enable the RFIs to access new capital,
manage transactions, acquire skill set, bridge the technology used by banks and their infrastructure,
and also offer multiple products and services.
Thus, joint ventures and strategic alliances are such value generating ideas that they are helpful to
enter both new product and new geographies. Such cooperative strategies enable noncommercial
and commercial banks and insurance companies to enter such businesses that may be forbidden or
are difficult to operate through traditional acquisition means due to regulations and policies.
Objectives
This project work does the analysis and motive of rural finance institutions, known as RFIs in the
strategic alliances they form with other non-profit organizations and some commercial banks. This
sector also examines what are the constraints of financial services in rural India and other markets
and how they can be overcome through strategic alliances. The study carried out by us will tell the
types of RFIs that can be useful in helping formal sector to expand its reach in the rural markets,
the financial products for example international remittance and micro-insurance services, and the
aim of different models of strategic alliances. Also, we will be elaborating on 2-3 different case
examples and what are the areas of innovations where different Financial and Professional services
are focusing and what are the key points which have been noticed studying last few years
innovations.

Reasons for RFI’s to form partnerships and Alliances

This section deals with identifying and analyzing the objective behind the relationship of RFIs
with partners. Formation of strategic alliances is a new thing in rural finance with a wide range of
perspective. Alliances can be of longer duration as well as of shorter duration depending upon the
need and scope.

Business alliances are formed keeping following objectives in mind:

1.) To prevail resource limitation
2.) Control Transactions costs
3.) Acquire new skills, knowledge and infrastructure.
4.) Increase customer loyalty
5.) Increase their market share and competitive advantage.

The direction based on which an RFI form alliance can be:

1. Strategic
2. Development

The alliance is said to be strategic one when both the firm in the collaboration obtains financial
advantage. Both the firms are getting economic benefits.
The alliance can be development driven as well where there is unidirectional flow of development
from partner to RFI, where the advantages are not shared between the partners.

These factors usually scale up financial services to rural household and micro-businesses. Scaling
up can be done by improving the customer satisfaction, providing new and improved services,
attracting potential new customers.

Spectrum of Development Partnerships and Strategic Alliances

Constraints to Financial Services in Rural Areas

Rural financial markets face several constraints which impedes the way for financing the
agricultural activities. The growth of rural markets is hindered by a lack of financial institutions
and affordability of financial services available in the developing countries. The major constraints
to providing financial services in rural markets are -
 1. Capital resources for credit are limited and due to the availability of non-credit services
such as payments, money transfers, savings, check clearing, the rural finance providers are
unable to scale up in the rural markets.
2. Due to the constant problem with registry system for land assets, rural producers are not
able to provide acceptable collateral in the rural areas.
3. Rural clients are usually less lucrative for financial institutions because of the low level of
economic activity and high information collection and transaction costs due to population
density in rural areas.
4. Seasonality and variances in the agriculture and production activities results in lower
margins and increase in risk for financial operations.
5. Alliances between commercial financial institutions and community based rural finance
providers are not happening due to the weak and limited institutional capacity of rural
finance providers.
Exhibit 1 details the supply and demand side factors that challenge the growth of rural financial
services.

Framework for Understanding and Assessing Strategic Alliances

1. Strategic alliances between corporate businesses: There have been several research papers
and theories published underlying the importance of strategic alliance as a means of competitive
advantage and also, there have been several theories of firm behavior as driving forces underlying
the formation of a large and diverse range of collaborative agreements. Major categories of
strategic alliances which can be identified in corporates can be seen as per specific reasons and
motivations which are as follows:
 Resource dependence principle: This describes a phenomenon in which a company which
is deficient of one or more resource(s), forms strategic alliances with other firm(s) to
maintain or improve market position.
 Transaction cost economics: Due to various market uncertainties and risks, strategic
alliances are formed to prevent from such risks as well as minimize costs.
  Relationship marketing: Formation of good relationships with suppliers and customers by
industrial market firms in order to provide exceptional value to customers thereby
enhancing relations with their customers.
 Knowledge-building or competence-based theory: It concerns with transfer of tacit
knowledge through strategic alliances b/w firms that operate at different level of value
chain thereby redefining the structure of industry they operate in.

2. Strategic Alliances and Development Partnerships in Rural Finance: The aforementioned

principles of strategic alliance extends to rural finance as well and such alliances may have a
strategic or development orientation it can have a strategic orientation when the rural finance
institution obtains a certain advantage which is financial or economic in nature and the intangible
benefits exceeding the ones specifically mentioned in the partnership contract can be earned by
firms involved in alliance. Also, it can have a development orientation when the benefits are not
distributed among the participating firms/organizations but have a one-way flow from a
development partner to the rural financial institution.

Key players in financial sector in India

1.Commercial Banks: These include nationalized banks, public sector banks, private sector
banks, foreign banks and regional rural banks. Broadly, they are categorized into three major
categories viz.,
(a) Public sector banks – where majority stake in the bank is held by the government
of India also, the management is controlled by GoI;
(b) Private sector banks – where certain corporations or individuals are key controlling
stakeholders;
(c) Foreign banks – these are the type of banks which are not headquartered in India and
have foreign origin and are managed by their wholly owned subsidiaries in India.

Following are some major commercial banks operating in India:

a. State Bank of India (SBI) and other associate banks:
This bank is a public-sector bank with GoI having majority stake of more than sixty percent. It has
more than seventeen thousand branches and more than two hundred foreign location offices under
its operations, making it the largest company in terms of assets which are valued at more than USD
420 billion. Also, it has 5 associates namely - State Bank of Hyderabad, State Bank of Bikaner &
Jaipur, State Bank of Patiala, State Bank of Mysore & State Bank of Travancore.
b. ICICI bank:
This bank is the largest bank in the private sector in terms of consolidated assets which are worth
more than USD 103 billion. It has approximately 5000 branches and more than 14,000 ATMs
across India. Also, it has presence in nineteen countries in total.
c. HDFC bank:
This bank is the second largest private sector bank in terms of assets which are more than 97 billion
US dollars. It has more than 4700 branches and more than 12000 ATMs across 2,666 cities and
has presence in Bahrain, Hong Kong and Dubai.
d. Axis bank
It is the 3rd largest private sector bank with total assets exceeding 74 billion US dollars and it
manages approx. 3,300 branches and approx. 14,000 ATMs nationwide.
e. Kotak Mahindra Bank
It is rather growing and upcoming bank with more than 1,300 branches and more than 2,100 ATMs
it is the 4th largest private sector bank with total assets worth 15.8 billion US dollars. Also, it
merged in year 2015 with ING Vyasa bank.
f. Indusind bank
This bank’s total assets are worth 15.7 billion US dollars and was founded by Hinduja group in
year 1994. It has network of more than a thousand branches and approx. two thousand ATMs.
g. Bank of Baroda
This bank is a state-owned bank headquartered in Vadodara, Gujarat and has more than hundred
branches spread across 24 countries in total and has retail banking as core business offered with
help from its subsidiaries in African continent. It is one of the largest banks in India and has a
global presence. The bank has total assets which are worth more than 117 billion US dollars
making it the second largest bank overall.
h. Punjab National Bank (PNB)
Punjab National Bank is a 4th largest bank overall in terms of total assets which more than 101
billion US dollars, a public-sector bank which is headquartered in New Delhi and operates network
of more than 6,900 branches and is owned by GoI.
i. YES Bank
It is a private sector bank established in year 2004 with lowest non-performing assets ratio in the
sector and has total assets around 14 billion US dollars as of end of first quarter, 2017 and has
network of more than a thousand branches.
j. IDBI Bank (Industrial Development Bank of India)
It is headquartered in Mumbai & was established in 1964 by an act of Parliament and is owned by
GoI and is currently the 10th largest development bank in the world with network of approx. two
thousand branches. The bank has total assets exceeding 57 billion US dollars.

2. Insurance companies: The insurance business of India consists of fifty-seven insurance

corporations of that twenty-four are in life assurance business and thirty-three are non-life insurers.
In the life insurers category, Life Insurance Corporation is the one which is a sole company owned
by GoI. Rest of the companies that fall under the non-life insurers category there are six public
sector insurers and additionally to this category there's one sole national re-insurer owned by GoI
which is General Insurance Corporation of India. Other stakeholders are various third-party agents
and facilitators. Holistically, the insurance sector as a percent of GDP has been approx. 4%
penetration in India market.

In FY03, private sector insurance had only 2% share overall in the life insurance market in India
whereas in FY18 it rose to approx. 30% of the pie. With approx. 70% market share LIC is still the
leader.

SBI life Insurance Company

It is a Joint venture between State of Bank, largest state-owned bank which offers banking and
financial services and BNP Paribas Cardif, which is a French multinational bank. The former owns
74% of the total capital and 26% is held by the latter. It is the first private insurance company here
in India and it basically provides platform for cross selling insurance services along with banking
services to bank customers which is known as bancassurance.
It acts like a new distribution channel which have widened the reach and helped in reducing the
operational cost. With the presence of SBI banks to the remotest places in India it can reach many
customers and satisfying their needs. It is deeply established and providing employment services
to a large population. The mission of the company is simply providing life insurance and pension
products at competitive prices to a large base of population.

It is offering a variety of products:

1. Term Plan (Shield Plan, Swadhan plan)
2. Endowment Plan (Money back plan)
3. Children Plan (Higher Education plan)
4. Pension plan (Retirement plan)
Though it enjoys strong multi-channel distribution, innovative new products, it is eyeing the future
now through digital network. The innovative services provided are:
1. Connect Life
It is a tab-based app which is paperless sales system that provides online payment for the insurance
and need based analysis to the consumers.
2. Mobcast
Mobile based employee engagement group.
3. Missed Call for fund access
Where customers can give missed call to predefined mobile number to receive the fund value on
their mobile through internet.

Following is brief of on other key insurance companies operating in India:

a. Apollo Munich Health Insurance
It’s a joint venture of Apollo hospitals group and Munich health and a private sector health
insurance provider which was established in year 2007 and it has record of settling 95% of the
claims within 30 days. It has employee strength of more than two thousand.
b. Liberty Videocon General Insurance
It’s a JV amongst the Videocon Industries and Liberty Citystate holdings PTE and was founded in
year 2013 and is headquartered at Mumbai. It offers non-life insurance products viz. motor, health,
travel, property, commercial & industrial insurance. Recently Videocon sold off its majority shares
and the company was rebranded as – Liberty general insurance.
c. Kotak Life Insurance
It’s parent company is kotak Mahindra bank and was founded in 2001, headquartered at Mumbai.
It has assets worth 17,000 crore INR under management as of 2016.
d. Bharti AXA Life
It is a major life insurance Service provider established in year 2006 and it’s a JV of AXA Group
and Bharti Enterprises. It’s innovative offering is that it ensures that the settlement of the insured
cover within 2 days the claim is made.
e. Bajaj Allianz General Insurance Company
It’s a JV of Bajaj Finserv Ltd and Allianz SE which has achieved PBT of more than INR100 Cr in
last two years.
f. LIC
It is non-private sector company and has the majority market share in total and has more than two
thousand branches with total assets exceeding 380 billion US dollars.

3. NBFC:
Non-Banking Financial Companies (NBFC) is an institution for providing financial services and
banking related facilities likes loans, stock, securities etc. without meeting the legal definition of
a Bank. They fall under the banking regulations laid down by Reserve Bank of India and as per
regulation they don’t take any direct deposits from public. They are an important part of the
economic growth of the country, which has offering in both the markets i.e. Rural as well as urban,
mostly famous for providing loans to new startups.

Power Finance Corporation Ltd

It is power sector public financial institution which is serving the country since 1986, it is the main
support of Indian Power Sector which provides fund based and non-fund-based services to
different power projects in the country. It is also listed in NSE and BSE.
It provides a range of services and products in the below mentioned areas:
a) Financial and fund-based services;
b) Institutional Development services; and
c) Others include fee-based consultancy services.
Recently it started to provide services to the projects which have backward linkages to the power
sector like oil and gas pipelines. Various customer has been served by this company which are
state power utilities, central power utilities, private power sector utilities. These clients are
involved in generation, transmission and distribution in the power sector in India.
It serves as a financial institution to finance, facilitate and promote power sector development in
India. One of the main problems which rural and several urban sectors is facing is continuous and
uninterrupted power supply in which PFCL is helping other power projects.

Ujjivan Financial Service Private Ltd

It is a micro finance institution which started its functioning in 2005 for providing financial
services to the economically active poor who are not served by financial institution. It is the largest
spread MFI which operates in 24 states from 64 branches with over 6500 employees. The company
offers individual loans to micro and small enterprises (MSE’s). It also provides joint lending group
lending way for providing collateral fee, small ticket size loans to economically active women.
Based on the requirement of customer it offers a wide range of loan products.
In addition to the loan services it also offers non-credit products comprising life insurance products
in partnership with HDFC standard life insurance company and Bajaj Allianze life insurance
company.
In Oct ,2015 it has received RBI nod to open a small finance bank which later registered as Ujjivan
Small Finance Bank Limited.

To provide better services to the people and to improve its efficiency in providing loans, the
company has launched handheld devices to its employees to provide quick services to its
customers, for reducing the turnaround time, improving efficiency in the working.
Under this approach the field staff is provided with internet enabled handheld devices to provide
the services. With this Ujjivan has taken individual lending operation to online.
With the introduction of these hand-held devices the individuals don’t have to stand in queues
neither they must travel to central office for applying loan which saved a lot of time for them. Two
units were created with the introduction of this i.e. front end and back end. Where front end unit
deals with the customers for doing field work which includes customer enrollment, underwriting
and monitoring and back end employees used to act upon the filed data on real time basis.
Apart from loan processing, these hand-held devices are used to training purposes or as a means
for sending urgent information to field employees.

Current Trends in the Industry

With the emergence of new technologies and upgradation of sector, these new technological
changes are having an upper hand.
In today’s modernized era, the organization need to upgrade themselves to compete in the market.
Customer needs and expectation are changing in this technological world so these financial
services should be ready for this.
In every field use of IT sector technology are raising day by day.
1. Computerization
For providing quick service and greater efficiency.
2. Internet
It has completely changed the way a service is delivered. It is one of the widely used distribution
network for selling insurance policies. It is also used as a medium for sending reminders to clients
regarding payment and any other policy updates through emails. Websites of insurance companies
provides premium calculator which helps consumers to find a suitable policy for themselves.
3. Bank ATM’s
Many insurance companies have tied up with banks for providing better services to customers by
enabling them to pay their premium through ATM.

Key players in professional services sector in India:

Companies operating in this sector broadly provide various services such as consulting,
accounting, legal, advertising, marketing, scientific research, architectural, engineering and IT
services and there are several significant groups operating within one or more domains mentioned
above to provide one hub for all client requirements.
Ernest & Young: It is having head office in London and is a significant accounting firm and has
presence in India as well through their offices situated in New Delhi, Ahmedabad, Kolkata,
Bangalore and Chennai. It offers host of services including but not limited to Tax, Regulation,
Accounting, etc.
DDB Mudra: It is one of the best advertising agencies and is a significant player in India market.
The company also founded MICA institute to impart advertising and marketing education in
Ahmedabad. Also, DDB Mudra has basket of key clients including Volkswagen group, Pepsi,
Castrol, Colgate, Future Group, Henkel, Reebok, Puma etc.
Hafeez Contractor: He is one of the best-known architects in India and his company is recognized
globally, the company which started in 1983 has been credited for designing prominent buildings
in India including Hyatt Regency, Infosys, BITS Pilani among others at several locations.
Bain Consulting India Private Limited: Established in year 2006 it has given consultancy services
to various clients in India for various topics such as strategy, organization, operations, M&A, etc
across all industries and is a significant player.
BHEL: It is India’s largest engineering and manufacturing company which was founded in year
1964 and is well engaged in designing, fabricating, manufacturing, testing and servicing for
industries, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and
defence which are catered to through their sixteen delivery hubs, fifteen regional offices and
around 150 site offices across various locations in India as well as foreign countries and also
exports its products to more than seventy countries globally.
Khaitan & Co: It is one of the best-known law firms in India offering a host of services in legal
domain including but not limited to Corporate, BFS, M&As, Dispute settlement, IP rights, Energy,
Labor & Employment laws, etc. It was founded in 1911 and has offices in major metro cities in
India and have more than 65 partners in its firm.

Case Example
Sonata Financial Services and Oxigen - Micro ATMs
Sonata Financial Private Limited began its operations in 2006. The main aim of Sonata Financial
is to provide customers with insurance and saving products, income-generating loans, emergency
loans and other financial services to help low-income Indian women. Sonata serves thousands of
people across villages in India and their mission is to provide a range of financial services to the
poor section of the society and eradicate the poverty.
Oxigen Services India Pvt Ltd is one of India’s largest payment solutions provider. Its business
involves utilizing mobile, PoS and web for online payment processing and money transfer services.
Oxigen has a retail footprint of 1,00,000 outlets and has processed over 2 billion transactions and
has a large customer base of over 150 million.
Grameen Foundation India, in partnership with Sonata and payment solutions provider Oxigen
Services, has provided digital financial solutions to rural people. GFI worked with Sonata to
identify human as well as technology constraints they faced in serving their clients, and then
worked with payment partner Oxigen, to identify solutions for these issues, such as Micro ATM,
an innovative technology that was simple and easy to replicate across Sonata branches.
In the first phase, 150 Oxigen Micro ATMs were set up in rural UP and around 2 lakh women
clients were benefited from it. New Oxigen Micro ATM allows the customer of Sonata Finance in
the rural areas to make payment without going to their bank through this system. The project is
designed to let Sonata reduce the cash management burden and focus on its core strength as a
trusted intermediary to develop the financial capability of the clients and on delivering financial
services to the poor, while Oxigen will focus on providing a digital transaction channel to the poor.

HUL and ACCESS Microfinance Alliance (AMA)

In 2008, Hindustan Unilever (HUL) partnered with a group of MFIs known as the ACCESS
Microfinance Alliance(AMA), to sell its PURE-It water filters on credit to villagers in Andhra
Pradesh. Hindustan Unilever (HUL) is India’s largest manufacturer of fast-moving consumer
goods, but even its massive distribution network has not yet reached in the deep rural areas of
India. The filters, which cost approximately Rs.1800 are purchased in bulk by AMA branches and
sold to rural households by AMA loan officers, who in turn receive a commission per unit sold.
Customers purchase the filters on credit and repay the loan in monthly instalments of Rs. 100.
ACCESS facilitates the loans for rural women to be able to afford these water purifiers through its
partner microfinance institutions (MFIs). Based on a public-private partnership model, this alliance
is financially sustainable and benefits all players in the chain, which allows it to scale up rapidly.
HUL and ACCESS expanded the initiative countrywide through the ACCESS Microfinance
Alliance, which has a 110 partner MFIs across India.
The model met with initial success. The village centre meetings were a good venue for loan officers
to demonstrate the use of the product, make sales, and collect payments. Within six months of
operation, the program had sold 1,500 water filters through 11 separate MFIs. By forming an
alliance with distributor like HUL, MFI had many benefits. The customer relationship with MFI
was strengthened and it allowed low-income consumers to finance their purchase of products.
Though there were challenges like working capital inventory costs, limited logistics infrastructure
and NBFCs prohibited from trading, the MFIs learned from the problems and developed a better
mechanism to cater to the needs and problems in the future.

Innovations in Financial Services

Innovations in the rural financial sector and most importantly under RFI’s (Rural Financial
Institutions) have been happening at various levels as under:
i. Policy level
ii. Design & process level
iii. Implementation level
iv. Monitoring level
v. Delivery and Infrastructure level

i. Policy Level - Government and Central Bank

a. Multiagency approach
The GoI has taken many important initiatives in rural financial sector. It setup Regional Rural
Banks in 1975 and NABARD in 1982. And the recent innovation in this area has been setting up
of specialized banks i.e. Small Finance Banks and Payment Banks. These smaller and specialized
banks have specific objective of reaching out to people like farmers & farm labourers who need a
lot of money on short notices and lesser collateral for fulfilling their financial needs. Also, these
banks have the expertise in knowing the local populations and thus have been succeeding so far.
The best example for this case has been AU Bank of Rajasthan

b. Interest subvention and incentives offered

To make the financial credit affordable to rural people, GoI supports banks with 2% interest
subvention. Also, to inculcate prompt and timely repayment of loans and financial discipline
among farmers another 3% interest relief is given as an incentive to them
ii. Design and Process
Banks and RFIs are providing the borrowers with digitally enabled RuPay cards so
that people get better ways in use of credit. Also, Kisan Credit Card is offered to farmers to help
them with their financial needs

iii. Implementation
Subsidy-linked credit schemes
Various schemes have also been introduced like for cold storages, rural godowns, market yards
etc. The subsidy associated with these programmes acts as an incentive for the farmers to take up
these activities and enable them to borrow from formal banks and banking channels.

iv. Monitoring
Credit Planning
RFIs and peoples' representatives meet at regular intervals to monitor progress of various schemes
offered by the GoI and achievement of rural credit targets. The committees also undertake mid-
term course correction initiatives if something isn’t going as per the plan. This is also known as
the business facilitator and the business correspondent models (Exhibit 2)

v. Delivery Infrastructure
a. Producers organizations
Various cooperatives and Producer Organizations are being formed and preferred by RFIs as it
decreases the risk of losses and the needs of collateral.

b. Technological Infrastructure
Use of Biometrics has enabled lesser usage of paper in financial services in rural areas and
speeding up of approval requests and in turn providing the credits and financial services back to
people in rural areas

The framework which we have discussed above has been structured against 6 core functions of
financial services and 11 areas of innovation.
Functions of Financial Services
Even in an era of rapid change of ecosystem of Financial Services in terms of the design, delivery
and providers, the core needs which these services fulfill remain the same. Following are the 6
core functions which comprise financial services:
1. Payments
2. Market Provisioning
3. Investment Management
4. Insurance
5. Deposits & Lending
6. Capital Raising

Innovation Clusters
We have noticed following 11 clusters of innovation which have been instrumental in putting
pressure on old business models
Following have been the key research findings and insights gathered from those areas
1. Financial Services Innovation is deliberate and predictable. Current players have the
most probability to be attacked where the customer friction will meet their profit pools
2. Innovations in financial services sector have been able to create an impact where they have
employed the business models which are data intensive, and less capital intensive
3. The immediate effects of innovations happening in Financial Services sector are being felt
in the banking sector; however, the greatest disruption is likely to be felt in the insurance
sector
4. Old and Current institutions have been making the best use of parallel strategies; where
they are competing with new market players while also leveraging their legacy assets to
 provide help and access to the new entrants with their infrastructure and access to
services
5. Collaboration between regulators, old and new market players will be needed to alter the
risk profile of the financial service sector both positively and negatively
6. Disruption isn’t a one-time happening, rather a continuous and everlasting pressure to
innovate that will redefine customer expectations, their behaviours, business models of the
firms, and the structure of the financial services sector

Future Trends in Rural Retail Banking

Few of the projections have been formulated along with the possible scenario in the industry for
the year 2020. These projections can largely be categorized into – outcome and enabler. Exhibit
3 lists out the 20 projections.

Trends and Innovations in Professional Services

According to a recently published report Professional Services Market Global Report 2017 by The
Business Research Company, the professional services market is forecasted to register a 6%
growth rate from 2018 to 2020, crossing almost $5 trillion.
The challenges faced by Innovation in professional services sector are quite different from the
challenges of a product-based firms, as the output and the value offering of the latter is a physical
product. Also, such offerings have built-in structures for innovation. Professional services sector
is more of a people-based business with no necessity for structures or codification. Everyone can
provide a service based on their own expertise.
People employed in professional service industries are often highly paid, as the industry’s product
offered (service) is knowledge and expertise. To stay competitive and up to date, one from this
industry is expected to be aware of several key market trends, which are as follows:

Adoption of Social Media

Web content, searches on different websites, and social media market has grown at 23% in the
last 2 years, and it is forecast to grow at 25.8% growth rate from 2017 to 2020. An increased
presence over social media platforms, helps professional services firms to increase brand
awareness, their client base, client satisfaction, and relationships with their clients. This helps
firms achieve their overall goals and vision.

Value-Oriented Revenue Model

Earlier, the professional services firms used to charge their customers on an hourly basis. But
these days, due to intense competition and pressure to decrease costs, many professional firms
are adopting value-oriented billing. Value-oriented billing is easy to apply as the value (such as
tax savings, awards, damages, the size of an acquisition or merger) is more explicit.

Modularization of Services

Earlier the services were bundled together and offered in the form of a full-fledged package, but
these days services are now being split into several individual components and sold separately.
Many clients prefer to choose service that can be executed in house and opt for the rest from

Conclusion
Through this study we have brought in the different examples of successful strategic alliances
across the world and India, share their experiences and encourage experimentations. Strategic
alliances and partnerships is a recent approach to rural finance sector and other services, many
companies aren’t aware of the advantages, and the risks that exist in strategic alliances with
experienced institutions. Urban financial services institutions and providers, credit card service
providers, insurance companies, health service providers, money transfer service providers can
think of forming strategic alliances in rural markets. We also discussed the innovations which are
happening in the financial and professional services sector which have the potential to redefine the
industry.

References
1. Valenzuela, Liza. 2002. “Getting the Recipe Right: The Experience and Challenges of
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2. Dalia Marciukaityte, Kenneth Roskelley, Hua Wang, Strategic alliances by financial
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Exhibits

Exhibit-1

Exhibit-2
Exhibit-3
Exhibit-4

Exhibit-5
Exhibit-6

Exhibit-7
Exhibit-8