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 Indias 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.