2

Online credit comparison portal wants to grow its business (market sizing + strategic case)

Dear preplounge-community,

I have quite an open case that I got asked in an interview with which I heavily struggled. I was wondering how you would approach the case?

The case goes as follows:
You are working for a leading online credit intermediary, i.e. the company has an online platform (comparison portal) on which private consumers are offered loans from banks. There are 2 main competitors who also offer loans on an online platform and which have a similar portfolio of banks. The CEO asks you the following questions:

  1. Market sizing
    1. What is the monthly additional credit volume a bank can attain when our client includes it on its platform?
  2. Strategic
    1. Which banks should the client include in its portfolio from the point of view of competition?
    2. Why do these banks offer a real value-add to the end-consumers?
    3. Which banks should be added to the portfolio that are not yet part of any other comparison portal?

I would really appreciate your views on this one – sure let me know if you have just a view on one of those questions :)

Thanks a lot in advance!

Best,
Andreas

Dear preplounge-community,

I have quite an open case that I got asked in an interview with which I heavily struggled. I was wondering how you would approach the case?

The case goes as follows:
You are working for a leading online credit intermediary, i.e. the company has an online platform (comparison portal) on which private consumers are offered loans from banks. There are 2 main competitors who also offer loans on an online platform and which have a similar portfolio of banks. The CEO asks you the following questions:

  1. Market sizing
    1. What is the monthly additional credit volume a bank can attain when our client includes it on its platform?
  2. Strategic
    1. Which banks should the client include in its portfolio from the point of view of competition?
    2. Why do these banks offer a real value-add to the end-consumers?
    3. Which banks should be added to the portfolio that are not yet part of any other comparison portal?

I would really appreciate your views on this one – sure let me know if you have just a view on one of those questions :)

Thanks a lot in advance!

Best,
Andreas

(edited)

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer

Hi Samuel,

Thanks for sharing your example, it is quite an interesting case. I will try to answer the questions, please suggest improvements and we can have a dialogue about it.

1. Market sizing

population of country (assuming client operates in only 1 country) * % of people in age group to apply for loans (here we can segment and say based on type of loan - education, home loan, personal loan, etc) * % of people likely to check online (use assumption of internet savvy population) * likelihood of selecting your bank (based on competitve assessment of diff banks by loan type) * probability of your bank financing loans (based on rejection rate by loan type) * size of loan per customer/avg no. of years per loan/12.

2.i Which banks to include:

select the banks based on 4 key parameters:

- customer preferences (must have banks in your comparison list)

- financial stable (known banks which have good track record and low rejection rate)

- offer diversified loan terms based on customer wallet

- benefit to you (the client) - % comission per loan, no. of views, no. of sales leads, perception management for banks to entice new customers, marketing gimmick which helps them sell products through online channel --> what is the benefit client brings to the bank and what is bank ready to pay/support in return. this will depend on client's bargaining power vs banks

2.ii. simplified comparison, objective perspective highlighting pros and cons, market analysis before making a decision and educating customers on do-it-yourself calculations

2.iii. select banks which are not part of competitor having following :

- local/regional banks with avergae or good loan terms

- banks entering new markets or having growth focus, but have risk limits with tolerance levels

- other companies which could think of expanding into loan market (e.g. Paypal, Visa) through their online channel

Apologies for the long answer :) Let me know what you think.

Hi Samuel,

Thanks for sharing your example, it is quite an interesting case. I will try to answer the questions, please suggest improvements and we can have a dialogue about it.

1. Market sizing

population of country (assuming client operates in only 1 country) * % of people in age group to apply for loans (here we can segment and say based on type of loan - education, home loan, personal loan, etc) * % of people likely to check online (use assumption of internet savvy population) * likelihood of selecting your bank (based on competitve assessment of diff banks by loan type) * probability of your bank financing loans (based on rejection rate by loan type) * size of loan per customer/avg no. of years per loan/12.

2.i Which banks to include:

select the banks based on 4 key parameters:

- customer preferences (must have banks in your comparison list)

- financial stable (known banks which have good track record and low rejection rate)

- offer diversified loan terms based on customer wallet

- benefit to you (the client) - % comission per loan, no. of views, no. of sales leads, perception management for banks to entice new customers, marketing gimmick which helps them sell products through online channel --> what is the benefit client brings to the bank and what is bank ready to pay/support in return. this will depend on client's bargaining power vs banks

2.ii. simplified comparison, objective perspective highlighting pros and cons, market analysis before making a decision and educating customers on do-it-yourself calculations

2.iii. select banks which are not part of competitor having following :

- local/regional banks with avergae or good loan terms

- banks entering new markets or having growth focus, but have risk limits with tolerance levels

- other companies which could think of expanding into loan market (e.g. Paypal, Visa) through their online channel

Apologies for the long answer :) Let me know what you think.

Thanks a lot! That is an interesting view and great help! Here my thoughts:

  1. Market sizing
    1. What is the monthly additional credit volume a bank can attain when our client includes it on its platform? --> totally agree
  2. Strategic
    1. Which banks should the client include in its portfolio? --> I agree with the dimensions you want to look at. However, maybe this question should/could be answered (more easily) using a profitability framework in a more straightforward way? At the end of the day we want to make money. So maybe we could look at it from a quantitative perspective (%commission, rejection rate, etc.) and from a qualitative perspective (customer preferences, financial stability etc.) Question to you: You list rejection rate under “financial stability” though I would put it in “benefit to you (the client”). Agree? What do you mean with “perception management”. How would you define “good track record”?
    2. Why do these banks offer a real value-add to the end-consumers? --> Here, I don’t completely agree with the answer/maybe we understand it differently. Maybe, the answer is more along if 2i holds (specifically, low rejection rate, diversified loan terms) then this is helpful to the end consumer because the likelihood of getting a loan is higher? What do you think? Maybe there is a more structured approach to this?
    3. Which banks should be added to the portfolio that are not yet part of any other comparison portal? --> Agree. I would put this in addition to 2i meaning that 2i must hold plus the additional criteria you mentioned here. Question: Is there maybe an opportunity to make this more MECE?

By all means, thanks a lot already! …and maybe you have some additional thoughts? :)

Best,
Andreas

Thanks a lot! That is an interesting view and great help! Here my thoughts:

  1. Market sizing
    1. What is the monthly additional credit volume a bank can attain when our client includes it on its platform? --> totally agree
  2. Strategic
    1. Which banks should the client include in its portfolio? --> I agree with the dimensions you want to look at. However, maybe this question should/could be answered (more easily) using a profitability framework in a more straightforward way? At the end of the day we want to make money. So maybe we could look at it from a quantitative perspective (%commission, rejection rate, etc.) and from a qualitative perspective (customer preferences, financial stability etc.) Question to you: You list rejection rate under “financial stability” though I would put it in “benefit to you (the client”). Agree? What do you mean with “perception management”. How would you define “good track record”?
    2. Why do these banks offer a real value-add to the end-consumers? --> Here, I don’t completely agree with the answer/maybe we understand it differently. Maybe, the answer is more along if 2i holds (specifically, low rejection rate, diversified loan terms) then this is helpful to the end consumer because the likelihood of getting a loan is higher? What do you think? Maybe there is a more structured approach to this?
    3. Which banks should be added to the portfolio that are not yet part of any other comparison portal? --> Agree. I would put this in addition to 2i meaning that 2i must hold plus the additional criteria you mentioned here. Question: Is there maybe an opportunity to make this more MECE?

By all means, thanks a lot already! …and maybe you have some additional thoughts? :)

Best,
Andreas

(edited)

Related BootCamp article(s)

Growth Strategy

Growth questions are among the most common questions in consulting case interviews: gather the necessary Information about volume and price to find the best growth lever

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

1 Q&A

CAGR - Compound Annual Growth Rate

Learn everything you need to know about CAGR (Compound Annual Growth Rate) for your case interview ✔ Definition ✔ Formula ✔ Examples ✔ Applications

Related case(s)

Bain case: Asian lubricants producer

Solved 128.4k times
Bain case: Asian lubricants producer LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils). According to preliminary examinations, further growth potentials in the Asian core market are rather limited. Thus LubricantsCo would like to investigate options to internationalize in the passenger car business – also outside the premium segment which is given priority. Therefore your consulting firm was instructed to elaborate a market entry strategy for the European market.  
4.6 5 28333
| Rating: (4.6 / 5.0)

LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils). ... Open whole case

Oliver Wyman case: Full Electrons Ahead

Solved 80.9k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 5689
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

Deloitte Consulting case: Footloose

Solved 63.9k times
Deloitte Consulting case: Footloose Duraflex is a German footwear company with annual men’s footwear sales of approximately €1 b. They have always relied on the boot market for the majority of their volume. In this market they compete with three other major competitors. In the fall of 2019, Badger – one of Duraflex’s competitiors – launched a new line of aggressively priced work boots. The strong success of this line has caused Duraflex’s management to re-evaluate their position in work boots. With limited additional resources, the management must now decide if they should focus their efforts on competing with Badger in the work boot sector, or allocate their resources on further strengthening their position with casual boots. The management team approached you and asked for your advice. In order to advise them on their future work boot strategy please prepare first some insights regarding market size and competitive landscape.
4.5 5 12914
| Rating: (4.5 / 5.0)

Duraflex is a German footwear company with annual men’s footwear sales of approximately €1 b. They have always relied on the boot market for the majority of their volume. In this market they compete with three other major competitors. In the fall of 2019, Badger – one of Duraflex’s competitiors – ... Open whole case

Bain Case: Old Winery

Solved 54.1k times
Bain Case: Old Winery You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
4.4 5 1419
| Rating: (4.4 / 5.0)

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case

Roland Berger Case: Onlinestar

Solved 36.3k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
4.3 5 762
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case