Paytm has got customers by way of cashbacks
“Paytm has got customers by way of cashbacks, not by rendering services. A bank has a brand, credibility and owns a customer whereas a payments company only rides on the groundwork done by the bank.”
- Aditya Puri, a senior banker & former CEO of HDFC Bank.
This argument is valid, as it questions the viability of the startup business model. If you are bankrolled by a VC, you have enough runway to survive. But when the taps are shut, as we are witnessing now, the flaws are exposed. And what better place than the public markets aka ‘the wisdom of the crowd”.
What makes a business model work?
It is a difficult question, as there are too many variables at play. We are surrounded by good and bad business models. A great business model is obvious, at least in the hindsight. And, the same is true for a bad business model too.
Business model feasibility & viability rule supreme, no matter who you are. If Amazon, Google or any upstart decides to start a bank, they will not be able to demonstrate the same agility as they will be governed by a very tight regulatory framework.
We need to understand that the supposed rigidity that the banks demonstrate is not necessarily a reflection of their strategy, but more of a function of the constraints in the form of regulations.
What are your thoughts? Join the discussion here.
(Sajid is a Strategy Consultant and founder at Le Monturé Strategy, who works at the intersection of human behaviour, business design and innovation strategy. He blogs at sknotes and tweets @sajidkhetani)
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