A TECHTONIC SHIFT

Gear up for mas­sive changes in the way you ac­cess fi­nan­cial ser­vices.

Business Today - - CONTENTS - By Anand Adhikari

Gear up for mas­sive changes in the way you ac­cess fi­nan­cial ser­vices.

The In­dian fi­nan­cial ser­vices in­dus­try is on the cusp of great change. The new buzz­words are soft­ware ro­bot­ics, ar­ti­fi­cial in­tel­li­gence, API bank­ing and dig­i­tal wal­lets. The tra­di­tional bank model is chang­ing with banks al­low­ing tech­nol­ogy part­ners and Fin­tech play­ers to plug into their core sys­tems to of­fer seam­less ser­vice. The next set of in­no­va­tions is set to come from new dif­fer­en­ti­ated banks -Pay­ments Banks and Small Fi­nance Banks. There is also a new breed of NBFC play­ers — dig­i­tal wal­let com­pa­nies, on­line SME loan play­ers and peer-to-peer lenders. Th­ese have all the po­ten­tial to change the face of re­tail bank­ing, which so far has been dom­i­nated by banks. To­day, NBFCs such as Ba­jaj Fi­nance and Cap­i­tal First have cor­nered a big mar­ket share of the con­sumer durables fi­nanc­ing mar­ket. Banks are grad­u­ally mak­ing their en­try with sub­sidiaries but NBFCs have the first-mover ad­van­tage with dealer tie-ups and dig­i­tal one-click buy­ing. Con­sumer durables fi­nanc­ing will slowly move to semi-ur­ban and ru­ral ar­eas where there is a huge as­pi­ra­tional pop­u­la­tion. There are also ex­pec­ta­tions of pub­lic sec­tor banks get­ting their act to­gether by way of con­sol­i­da­tion. If han­dled prop­erly with re­forms, they would also en­er­gise the mar­ket in a big way.

As things set­tle in the next three-five years, the face of the fi­nan­cial ser­vices in­dus­try will be vastly dif­fer­ent from what it is to­day. The NBFC sec­tor would grow big while life and gen­eral in­sur­ance play­ers would have achieved scale. The mu­tual fund in­dus­try, wit­ness­ing huge in­flows through sys­tem­atic in­vest­ment plans, is al­ready a force to reckon with in In­dia's cap­i­tal mar­kets. They are be­com­ing a source of cap­i­tal for top com­pa­nies.

In our fi­nan­cial ser­vices pack­age over the next few pages, we bring you what is in store for the in­dus­try as well as con­sumers of fi­nan­cial ser­vices.

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