Insight Report: Non-Bank Providers of Payments and Financial Services – Best practices and Case Studies

Non-bank payments and financial service (NBPFS) providers are facing difficulties in terms of expanding and defending their market shares, as a result of changes in regulatory dynamics, the economic environment and competitive landscapes. Companies are under pressure to deleverage and seek alternative sources of profit, as key economies remain weak and competition has increased. In this altered environment, a new operating model is needed, one that is rooted in attaining a primary relationship with the customer through the rebuilding of trust and the forging of active customer relationships.

A number of NBPFS providers, both established and new, are setting best-practice examples in capitalizing on technology and their relationships with customers to enhance business potential, despite several hurdles to growth. This report explores key best practices adopted by NBPFS providers to stay competitive in the dynamic world of financial services.

New technology is being adopted by NBPFS providers all over the world to renovate their operating structures. By implementing analytical tools in lending processes, and incorporating communications devices and modes such as mobile phones and mobile broadband into their operations, NBPFS providers are shifting the focus from bricks-and-mortar branches towards digital structures to increase consumer convenience and lower costs. Mobile payments are also increasingly being adopted by customers and companies alike. Additionally, these communication channels are being used for advertising and branding purposes; several NBPFS are now utilizing mobile and social media platforms as a key part of the branding process for products and services.

While regulation in the NBPFS sector has traditionally been relatively liberal, the scenario is expected to change, primarily due to weaknesses exposed in the current financial system during the slowdown, and due to the persistent effects of the negative global economic environment. Regulatory pressures, however, are not only due to the negative economic environment, are also driven by the need to control money-laundering and its use in illicit activity. However, the sector’s regulatory landscape is highly dependent on the region in which the company operates.


• This report provides insights into the key trends impacting the non-bank financial services sector, covering operational, technological and regulatory developments.

• Discusses key factors which drive the growth of NBPFS sectors.

• Discusses the issues and challenges faced by NBPFS providers such as rising regulatory pressure and changing competitive landscapes.

• Discusses best practices adopted by non-bank financial companies and payment service providers across different markets to target consumers.

•Discusses case studies to illustrate how the adoption of best practices enabled companies to strengthen their positions in the market.

Key Highlights

• NBPFS providers play a significant role in the economic landscape of a country, and act as a balance between banks and changing customer needs. NBPFS providers primarily find applications in rural financing; in SMEs in the manufacturing, transport and other sectors; in employment generation; and in financing the poor.

• The majority of NBPFS have been driven by a short-term sales approach. However, increasing competition in the sector is expected to force these companies to change their business models. The effect of this trend is already visible, with NBPFS providers also being driven towards a relationship-based targeting model that would enable providers to streamline products based on customers’ needs.

• Service providers are promoting new products and services by capitalizing on relationships with consumers, especially for large retailers and mobile network operators which have the advantage of ready target markets. Encouraging loyal customers to adopt new payment solutions is a rewarding strategy, due to its relatively low cost and high probability of adoption.

•Despite the continued adoption of new strategies to acquire customers in a relatively difficult business environment, classic business strategies such as product bundling, cross-selling and partnerships remain integrated parts for most organizations.

•While NBPFS providers are subject to rising regulatory requirements and increased competition, consumers are becoming increasingly value-driven. This has led to increased pressure on profitability, forcing NBPFS providers to reassess their costs and revenue propositions across different models.

Reasons to buy

• Gain insight into strategies adopted and actions taken by NBPFS providers in various parts of the world to expand their businesses.

• Analyze the challenges on the business operations of NBPFS providers due to rising competition, increasing compliance costs, investment in IT infrastructure and regulatory developments.

• Assess the impact of regulations on the global NBPFS sector and how NBPFS providers have been taking initiatives to deal with regulatory changes.

• Analyze the key global operational, technological and regulatory trends and developments in the NBPFS sector.

Companies mentioned






Bajaj Finance

Accion Texas

GE Capital





Bajaj Finserv

Table of Contents

1 Executive Summary

2 Global NBPFS Industry Dynamics

2.1 Industry Snapshot and Future Outlook

2.2 Industry Growth Drivers

3 Emerging Trends and Challenges

3.1 Key Trends

3.1.1 Shift towards consumer-centric business models

3.1.2 Increased focus on targeting SMEs

3.1.3 Marketing efforts shifting to mobile platforms

3.1.4 Increased utilization of technology to lower costs and improve efficiency

3.1.5 Rising regulatory pressure for NBPFS providers

3.2 Issues and Challenges

4 Best Practices and Case Examples

4.1 Best Practices

4.1.1 Use of cost-effective solutions to target emerging markets

4.1.2 Partnerships to enhance value proposition and target larger customer base

4.1.3 Offering products with improved security levels to gain consumer confidence

4.1.4 Capitalizing on existing customer relationships

4.1.5 Capitalizing on opportunities presented by technological changes

4.1.6 Revenue enhancement through product bundling and cross selling

4.1.7 Changing business model and services offered to target unique consumer segments

4.2 Case Examples

4.2.1 Octopus cards – expansion beyond transport in Hong Kong

4.2.2 Telefonica betting big on the power of Direct to Bill

4.2.3 Deepening of mobile payments in Kenya via M-Pesa

4.2.4 Aviva Life Insurance goes beyond insurance to target rural market in India

4.2.5 Zopa emerging as a challenge for traditional lenders in the UK

4.2.6 Amazon capitalizing on its relationship with sellers

4.2.7 Bajaj Finance improves CRM by reducing loan processing times

4.2.8 Accion Texas’ use of analytics to hone its micro-financing capability

4.2.9 GE Capital’s bundling strategy to offer superior value proposition to client

5 Appendix

5.1 Methodology

5.2 Contact GlobalData

5.3 About GlobalData

5.4 GlobalData’s Services

5.5 Disclaimer

List of Tables

Table 1: NBPFS Providers’ Industry Dynamics

Table 2: Global AML Compliance Spending (US$ Million), 2008–2017

List of Figures

Figure 1: Shift From Product- to Customer-Centric Pricing Approach

Figure 2: Evolution of Pricing Models

Figure 3: Number of Mobile Subscriptions (Million), 2009–2013

Figure 4: Mobile Broadband Subscriptions (Million), 2009–2013

Figure 5: Global AML Compliance Spending (US$ Million), 2008–2017

Figure 6: Safaricom’s M-Pesa Customers in Kenya (Million), FY2010–2013

Figure 7: Safaricom’s M-Pesa Revenue in Kenya (US$ Million), FY2010–2013


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