'I’d skip the bank': Aswath Damodaran drops a major clue on where the next boom is brewing

Valuation expert Aswath Damodaran believes India’s next big boom won’t come from tech or banks — but healthcare. In a recent podcast with ET BFSI, the NYU Stern professor outlined what sectors he’s betting on, what’s likely to explode in India, and why the future of banking as we know it could be in question.

“Healthcare to me is what I would watch,” Damodaran said, pointing to rising incomes and a growing middle class as the catalysts. “As countries prosper… one of the items that people spend more on is healthcare. You visit the doctor more, you have MRIs and X-rays — things you’d never do if you didn’t have the money.”

He sees India as poised for a massive healthcare transformation — but not by mimicking Western models. “A truly India-centric healthcare business is what’s needed,” he said. “Something built for the special challenges of giving healthcare to 1.3 billion people, across a country with very different needs.”

Damodaran believes this sector is still in its infancy. “It’s still feeling its way. A lot of it looks like what you see in the U.S. or Europe — branded hospitals and diagnostics — but there’s room for something uniquely Indian,” he said, hinting at a future “mega-cap” opportunity in the making.

On banking, Damodaran was less optimistic. While he acknowledges the need for banking services — a place to park money or borrow — he questions whether we still need banks to provide them. “That’s the bigger question the last 20 years have opened up,” he said.

He points to Latin America’s Mercado Libre as a case study — a company known for e-commerce, now offering banking, payments, and investment services on the same platform. “They offer debit cards, mutual funds — essentially replacing traditional banks,” he explained.

India’s UPI system, he noted, is another disruptor. “It’s an astonishing development. In the U.S., I still have to pay bank fees to move money. In India, UPI just does it. That’s a soft part of the banking business that’s under threat.”

Damodaran believes banks are surviving not through innovation, but protection. “For now, they’re protected by regulation. But if you removed that systemic safety net? I’d skip the bank.”

In a world where technology replicates bank functions more efficiently, Damodaran sees disruption as inevitable. “There are going to be cuts,” he warned. “The model won’t hold forever.”