Case study: Expanding a canadian payments processor’s portfolio
Case study: Expanding a canadian payments processor’s portfolio
Service

Case study: Expanding a Canadian payments processor’s portfolio

A Canadian payments processor (CPP) needed to expand its services portfolio to generate $100-$250 million in annual incremental revenue by 2020.

Situation

Since being formed as a joint-venture between its owner banks, the CPP has become Canada’s largest outsourcer of check processing, statement processing and production, and cash management services. Historically, the client has focused on its core capabilities and services, making little ongoing investment to enhance existing capabilities and services or develop new capabilities and services.

The changing payments landscape in Canada, however, has created a paradigm shift whereby a traditional check processing outsourcer is no longer required. Moreover, CPP’s lack of ongoing investment in existing capabilities and services limited its ability to obtain new clients for existing services.

KPMG was asked to help CPP management define a strategic plan to achieve its incremental revenue goals to supplement declining revenue in existing service lines.

Approach

Collaborating closely with the CEO and senior management team, the KPMG team developed a phased approach to identify and analyze potential strategic growth opportunities and conduct execution planning for the opportunities the client and its board of directors chose to pursue. KPMG led the effort to:

  • Conduct interviews with stakeholders including (1) client executives, to identify current strategic initiatives, and (2) owner bank executives, to identify operational pain points the client could address
  • Document detailed operational and technology core competencies to identify strengths the client could leverage to provide additional services
  • Conduct a detailed market scan of peer outsourcer organizations to identify services not currently offered by the client that aligned with its core competencies and/or addressed operational pain points identified during interviews with owner bank executives
  • Develop a strategic growth assessment tool that addressed considerations in five primary categories: strategic, market, operating model, financial, and risk and compliance. This tool is being used to assess and rank each strategic growth opportunity across the same variables

Recommendations

Our analyses highlighted that CPP’s core competencies could be leveraged to expand its services portfolio in the financial services industry, to address owner bank operational pain points, as well as in the consumer retail, healthcare, and telecom industries.  Those insights underscored the case for the client and its board of directors to expand its services portfolio as a means to achieve its revenue goals for 2020.

Example: Service expansion into coupon processing

See chart

Example: Service expansion into document management

See chart

Results

KPMG is currently assisting the client with the project’s analysis phase and hopes to assist with the execution planning phase for selected opportunities, including the development of multi-generational plans, operating model considerations and implementation support.