Growth: The Most Powerful Motivator

Newsletter Issue 46
February 2017

Growth is one of the most powerful motivator that keeps us going, we as humans have a constant urge and desire to grow and get better; better than what we are and better than others. And it is this urge for constant growth that also gets reflected in all our activities including our businesses. Every business owner / operator runs the business with a single objective of ‘GROWTH’. Although the definition of growth is subjective to an individual; for some this could mean higher revenue, for some it is increased customer engagement and retention, while for others this relates to brand visibility and recognition. All in all, it translates to an increase that is usually measured by increase in profits that the business earns.

 

Growth of Finance Industry in India – From Scare to Share!

India’s growth story is a bit of a twist.

Economic liberalization during the early 90s culminated into a dramatic upsurge in trade and commerce in the couple of decades that followed. And yet, even as markets mushroomed and flourished, India remained oddly true to its status of a severely cash-intensive economy for quite a while. With increased awareness, user-friendly technology, and drives like digitization and demonetization; cash as the key driver of exchange is slowly taking a backseat. Businesses and individuals are gradually placing trust on the banking sector – one of the most prudent and well-regulated in the world, which even stood the test of 2008 global meltdown. Financial service providers are gaining foothold as innovation and inclusiveness kick in, while insurance industry has witnessed unprecedented growth in the recent years.

Banking Upon Bankers

“Bankers know that history is inflationary and that money is the last thing a wise man will hoard.” – Will Durant, American writer and philosopher

The Indian banking system has seen a great upsurge in the fiscal decade of 2006-2016, deposits in banks grew at a CAGR of 11.47%. As of financial year 2016, USD 1.46 trillion in deposits is available with banks. Increase in disposable incomes and ease and confidence in using banking services are some of the major factors in enabling consumer deposit growth. On the other hand, a sharp increase in consumerism and easy access to bank credit have boosted the growth in consumer credit. In Financial Year 2016, the total credit extended peaked at USD 1,016 billion.

Aside from the core activities, banks have diversified their activities and have ventured into consumer finance, wealth management, life and general insurance, investment banking, mutual funds, pension fund regulation and stock broking services. Integration of electronic and cellular technology with banking to ensure a seamless experience has been a spectacular phenomenon in the recent years. To encourage this further, the Reserve Bank of India (RBI) has released In the ‘Vision 2018’ document of RBI; promoting increased use of electronic payments, rise in the adoption of digital channels, and widening the customer base for mobile banking. On other technology fronts, several banks are exploring the option to launch contact-less credit and debit cards.

Leveraging NBFCs

“You can’t fund India’s growth with just bank financing” – Vikram Limaye, CEO Designate, NSE

The contribution of Non-Banking Financial Companies (NBFCs) to the economy has grown enormously from 8.4% in 2006 to more than 14% in 2015. As far as financial assets are concerned, NBFCs have booked an impressive (CAGR) of 19% over the last few years. From the looks of it, NBFCs are all set to reach an AUM of around 6.044 trillion INR by March, 2017. This also comes in the wake of revised regulations and prudential norms for NBFCs to bring them at par with banks over a period of time.

Insuring India

“As an athlete, I understood the value of my health insurance. I knew that in my profession, injuries were common and could happen at any time.” – Magic Johnson, retired professional basketball player

During the Financial Year 2015-16, the life insurance industry clocked a growth rate of 22.5 per cent over the previous year. The general insurance industry, on the other hand, booked a 12 per cent YOY growth in Gross Direct Premium underwritten in April, 2016. India’s life insurance sector is the largest globally, grossing about 360 million policies. Globally, India is also the fifteenth largest insurance market in terms of premium volume. Life insurance penetration in India is only 3.9% of GDP, which is more than doubled from 2000. A high-growth economy, increasing levels of income, and improving life expectancy are factors that favourably influence growth in the sector in the near future.

Market Participation – Stocks and Securities

“Never depend on single income. Make investment to create a second source.” – Warren Buffet

Increased participation in financial and capital markets through investments in stocks and securities have been enabled by myriad recent steps such as introduction of information technology systems in the National Stock Exchange (NSE) in order to serve various investors in different geographical locations, and removal of the forward trading mechanism. With share trading and other investment modes now available online, consumers are able to handle their money from the comfort of their homes.

Innovation and Startup Landscape

“When you innovate, you’ve got to be prepared for everyone telling you you’re nuts.” – Larry Ellisona, American businessman

India’s financial sector has been something of a late bloomer when it comes to Fintech and Financial Services. Take for example, the case of mobile wallet startups who ruled globally and yet struggled to find foothold in India initially. Of course, with the demonetization drive, there has been an opening-up of markets and improved acceptance.

Mobile Wallets – Indian mobile wallet market is projected to reach $4.4 billion in transactions by 2022. Enterprises like Paytm, FreeCharge, Oxigen and others in the industry have collectively grown about 20 times to reach Rs 206 billion in the Financial Year 2016.  

Innovative Financing – Innovative financing such as P2P lending, crowdfunding, interest free EMIs, etc. have also taken the urban markets by storm and are expected to extend its services in the days to come.

Concluding Note

The finance industry constitutes the backbone of an economy, securing its individuals, fuelling its enterprises and promoting foreign participation. It will be interesting to see how the growth phase pans out in the light of recent developments. Stay tuned to our newsletter as we come up with more stories like this!

References:

http://www.ibef.org/industry/banking-india.aspx

http://www.infotechlead.com/ecommerce/indian-bfsi-sector-likely-invest-technologies-47207

http://www.livemint.com/Industry/4T8eyEJW2VsBCcGPxw7TqI/RBI-report-says-NBFCs-improving-on-performance-metrics.html

https://www.pwc.in/assets/pdfs/publications/2016/non-banking-finance-companies-the-changing-landscape.pdf

http://economictimes.indiatimes.com/markets/expert-view/you-cant-fund-indias-growth-with-just-bank-financing-vikram-limaye/articleshow/57057677.cms

http://economictimes.indiatimes.com/markets/stocks/news/sensex-has-given-9x-returns-in-last-20-years-it-is-time-to-be-a-buyer-now/articleshow/49448753.cms

https://www.mobilepaymentstoday.com/news/report-india-mobile-wallet-market-on-the-rise/

http://tech.firstpost.com/news-analysis/mobile-wallet-market-in-india-expected-to-reach-rs-1512-billion-by-2022-354944.html

http://www.ibef.org/industry/financial-services-india.aspx

Premium Plans & Advisory Services

During the last 4 years of operations, we have insisted on providing a host of support and services to our clients and hence our pricing plans were designed accordingly. But the change in the needs of our clients has resulted in the changes in both.

  1. Platform services – Platform services allow the stakeholders to manage leads themselves. This service is suitable for clients with a smaller ticket size where they can access inquiries and interest received for their business listing. Pricing starts from as low as INR 2000 (plus taxes).
  2. Advisory services – Advisory services allows access to professional assistance to manage end to end business transaction related to sale of business or assets, raising funds for investment, to acquire or invest in a business opportunity. Our advisory team of qualified and experienced professionals have been working on selected transactions. Pricing starts from as low as INR 25000 plus success fees on deal closure.

Indiabizforsale & Its Growth Journey

During my 3 years of tenure with Indiabizforsale, the platform has grown from 600 to 6000+ listings and from a team of 5 to 10+ team members. The success rate on deal closures is increasing month on month, ensuring an exponential growth of the team and the company.

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