A friend of mine was asked this in his final round in Mckinsey:
Estimate the market size of the banking sector in country X.
The bank only serves individuals - no corporates.
(structure only, no numbers required)
A friend of mine was asked this in his final round in Mckinsey:
Estimate the market size of the banking sector in country X.
The bank only serves individuals - no corporates.
(structure only, no numbers required)
Underneath is my approach. I am open for feedback.
Clarifying question:
What is meant by ‘market size’? Is it (a) the total money in the banking system relevant to individual banking OR (b) total revenue in the banking system because of individual banking solutions.
Presuming the answer is (b), I would use a top-down approach structured underneath:
There are five major services in individual banking market:
1. Savings and Checking Accounts : Total Revenue = Avg. Revenue per $1000 in the account x Avg. Account size (in $Ks) X number of accounts
Number of Accounts could be estimated by segmenting the number of households in the country to:
0 Account: 10% HHs (Extremely Low/No Income)
2 Accounts: 40% HHs (Lower Income)
4 Accounts: 40% HHs (Middle Income)
6 Accounts: 10% HHs (High Income)
2. Debit and Credit Cards Total Revenue = [Avg. fees from account holders + Avg. Transaction fee from Merchants x Avg. Annual Transaction/card] x Number of cards
Number of cards can be estimated with HH market sizing approach laid out above.
3. Loans Can be estimated with similar approach
4. Investment and Wealth Management Can be estimated with similar approach
5. Insurance Can be estimated with similar approach
After laying out the structure, I would offer to move forward with Savings and Checking Accounts if okay with the interviewer.
Hi there,
Sorry, do you have a question?
Did you want us to provide a structure/answer?
If you can provide what you think a good approach is, we can critique it - truly the best way to learn!
Hi!
Interesting case.
Why don't you propose a structure that we can review? I believe it's best to learn.
Best,
Anto
Just to second what Ian said, do more than just ask someone else to solve it, it is a lot better to get feedback on an approach vs posting a question.
Udayan
Best is to try it out yourself and provide us a solution that we can give feedback on.
Ideally I would consider the following elements:
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