Thus this makes us keen to know the business model of Bajaj Finance and know its flourishing business model.
In this blog, we have discussed the business model of Bajaj Finance in detail which includes its revenue model, customer segmentation, and service segmentation.
Before getting into the roots of its business model let us know about Bajaj Finance as a company.
About Bajaj Finance
Bajaj Finserv Limited is based in Pune, India. the organization has 294 purchaser branches and 497 provincial areas with over 33,000+ dissemination focus. The organization detailed a pre-charge benefit of Rs.626 crores and a post-charge benefit of Rs.408 crores at a ROA of 0.8% and ROE of 5.1%.
Bajaj Finance Ltd, an auxiliary of Bajaj Finserv Ltd, is a supplier of non-banking monetary administrations with store tolerating exercises. Its arrangement of contributions includes advances, speculations, protection, and cards.
Loaning arrangements incorporate credits for individual use, home, gold, advance against offers, property, and fixed stores; rent lease limiting; advance for experts; and vehicle advances. Speculation administrations incorporate common assets and fixed stores. The protection portfolio comprises inclusion forever, wellbeing, and non-life.
The organization additionally offers credit and EMI cards, and e-wallets. It takes into account individual and business customers through an organization of branch workplaces, online gateways, and venture counsels across India.
Let us now start with the business model of Bajaj Finance.
Business Model of Bajaj Finance
The business model is used to determine a company’s plan for generating revenue. It determines the products or services the business plans to sell, its identified target market, and any anticipated expenses.
Let’s take a look at all the elements of the Business model of Bajaj Finance step by step.
1. The retail segment of Bajaj Finance
In 2007-08 there were financial crises and all banks were suffering mostly in the retail segment where people couldn’t return the amount back. So later on all the banks didn’t participate in the retail segment.
But during this time bajaj finance thought of investing in the retail segment because at that time there weren’t any competitors in that section of the market. Due to this, they earned a large amount of profit.
Let us now see its revenue model.
2. Revenue Model of Bajaj Finance
They earn from different fees like EMI card fee which comes to approximately 10% of its revenue. They also apply their charges on delayed loans, processing fees, penalties, etc. through which they earn.
They also earn from the following methods:
- 0% EMI – They tied up with manufacturers and retailers and started charging them for their services in which they would give the people 0% interest loans which would help the retailers and manufacturers to sell their products faster.
- Small medium-sized enterprises loans – They provide them with secured loans and unsecured loans where they provide loans secured loans by keeping some collateral and unsecured loans are given without any collateral.
- Rural loans – These are the loans provided to the rural people and they have also started FD’s for farmers.
- Commercial loans – They are big-sized loans that deal with different companies in the market but here they charge less amount of interest than other categories. But even with less amount of interest the amount earned from the large sum is a profitable amount for them.
Let us now see the customer segmentation of Bajaj finance.
3. Customer segmentation of Bajaj Finance
Most of their loans are taken by their existing customers. This is because when they come in contact with any of their customers they make a relationship with them by being in touch with them by sending emails and offers.
This helps them to keep their customers coming back or the customers tell about bajaj finance by word of mouth.
4. Product and service segmentation of Bajaj Finance
Bajaj Finance provides its customers with different services like consumer finance, SME finance, commercial lending, lending.
Let us now see the digital marketing methods used by Bajaj finance.
5. Digital marketing methods used by Bajaj Finance
They have optimized their SEO in such a way that if a customer searches for anything related to Bajaj finance then their company website is on the top. Which makes the customer come back on the same page.
On the analysis of the business model of bajaj finance, we have known that it has categorized its business model as to the market. Thus this created a large advantage for them now and in the future. They have made some successful decisions like entering the retail segment during 2007-08 and capturing most of the market. They have different revenue streams like small medium-sized enterprises loans, rural loans, commercial loans, and charges for their services. They also provide their customer with different products and services like consumer finance, SME finance, commercial lending, lending. Bajaj finance has also been using digital marketing like optimizing its SEO and showing its website on all its customer’s related searches.
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