Introduction

Financial services are the

economic services provided
by the finance industry

Finance services facilitate

the flow of money
 Components of Financial
System

INSTITUTIONS MARKETS INSTRUMENTS SERVICES

Non-Banking Money Market Term Based Fund Based

Banking Capital Market Type Based Fee Based

 Financial Services
Car Purchase??

Leasing

Fund Based Hire Purchase

Factoring
 Financial Services
Mergers and
Acquisitions

Fee Based Credit Rating

Merchant Banking
 Highlights of Indian Financial
Services industry
• As of March 2017, India’s Gross National Savings(GNS), as a percentage of GDP, stood at 30 per cent.

• The number of Ultra High Net Worth Individual (UHNWI) increased to 2,697 in 2018 and the population of
UHNWIs grew by 118 per cent from 2013 to 2018.
• India’s UHNWIs individuals is likely to expand 37 per cent by next five years

• As of February 2019, the Assets Under Management (AUM) of the mutual fund industry stood at Rs 23.80
trillion(US$ 340.48 billion).
• Mutual fund industry AUM recorded a CAGR (in Rs) of 15.51 per cent over FY07–18. India is considered one of
the preferred investment destinations globally.

• The total amount of Initial Public Offerings increased to Rs 84,357 crore (US$ 13,089 million) by the end of FY18.
• In FY19 (up to Jan 2019), Rs 14,032 crore (US$ 1.94 billion) has been raised from Initial Public Offerings (IPOs).
 Highlights of Indian Financial
Services industry
Growing Demand Innovation
• India benefits from a large cross-utilisation of channels to
• Rising incomes are driving the demand for financial services
expand reach of financial services.
across income brackets
• As of October 2018, the Financial Inclusion Lab has selected 11
• Financial inclusion drive from RBI has expanded the target
fintech innovators with an investment of US$ 9.5 million
market to semi-urban and rural areas.
promoted by the IIM-Ahmedabad's Bharat Inclusion Initiative
• Investment corpus in Indian insurance sector can rise to US$ 1
(BII) along with JP Morgan, Michael and Susan Dell Foundation,
trillion by 2025.
and the Bill and Melinda Gates Foundation.

Growth Policy Support

• Credit, insurance and investment penetration is rising in rural
areas.
• HNWI participation is growing in the wealth management • Government has approved new banking licenses and
segment. Lower mutual fund penetration of 5–6% reflects increased the FDI limit in the insurance sector.
latent growth opportunities. • Gold Monetization Scheme, 2015, Atal Pension Scheme,
• The Government of India launched India Post Payments Bank Pradhan Mantri Suraksha BimaYojana, Pradhan Mantri Jeevan
(IPPB), to provide every district with one branch which will Jyoti BimaYojana.
help increase rural penetration. It opened a total of 1,896,410
accounts till December 24, 2018.
 Financial Services Trends

GOVERNMENTS &
DIGITAL STRATEGY
MARKETS

Digital Cost Containment Cybersecurity

Transformation
Data & Analytics Deals Regulatory Easing

New age tech People RegTech

Tax Planning

Sources: “Top financial services issues of 2018” – PwC Financial Services

 Digital: Digital Transformation
Current Scenario
Trust in machines:
• Behavioral shift toward digital channels
• 46% of customers rely entirely on handheld
devices and other online applications – PwC
2017 Digital Banking survey
• Asset managers moved aggressively down
market with automated advice once offered
only to affluent clients
Sources: “Top financial services issues of 2018” – PwC Financial Services
FinTech and InsurTech moves towards
partnerships:
• Incumbent firms feared that new entrants
would disrupt their business
• Fintech and Insurtech entrants finding it hard to
scale in a highly regulated sphere
• Both have come to see the advantages of
working together
 Digital: Digital Transformation
Road Ahead

Opening up of business models

By opening platforms to third parties through APIs,
firms can unlock value from data, create synergies
with partners, and develop new cloud-based
services more quickly.
Firms are now thinking more about how they
develop, manage, and secure APIs.

Voice as a channel
There is trend towards virtual assistants for
financial services which goes far beyond
technology.
Firms are making branding choices with enhanced
customer experience as a goal.

Digital Help
Firms are expected to pay more attention to
how humans and digital labor can work
alongside each other more effectively.

Sources: “Top financial services issues of 2018” – PwC Financial Services

 Digital: Data and Analytics

Current Scenario Road Ahead

Uses of data
• Asset managers use big data to analyze
non-financial factors when evaluating financial
instruments
• Banks use heuristics to analyze marketing campaign
results, improving the return on these investments.
• Insurers are taking the lead in data analytics by
incorporating multiple data sources, tools and
models into their risk analysis modules giving them
the confidence to make sophisticated decisions
Trading and
Tax Reform
Investment
Risk Analysis Automation
Information Overload
• Firms will prepare data for machine learning
—creating “synthetic data” mimicking real client
profiles to help train systems
• LEAN DATA - Defining specific goals for the data
(creating value) with a focus on efficiency and
speed (minimizing waste)
Data collaboration
• Financial institutions to combine business domain,
analytics, and artificial intelligence (AI) experts who
understand algorithms and new techniques, as well
as data engineers/scientists who can work with
cloud technology and machine learning systems.

Fraud Detection and

Investigation

Sources: “Top financial services issues of 2018” – PwC Financial Services

 Digital: New Age tech

AI in credit underwriting AI in fraud detection

Blockchain Applications beyond cryptocurrency

Sources: “Top financial services issues of 2018” – PwC Financial Services, “Artificial Intelligence in Finance” – Sigmoidal.io
 Strategy: Cost Containment
Cost containment is a major pain point for the financial services Major causes of cost increase
industry
Regulator’s response
to global financial
crisis

Rising significant
investment in IT

Cost of litigation
(non-compliance)

How can banks defy these cost and revenue trends to restore healthy profit margins and ROEs? 

Simplify products, services and Pursue low-cost organic

Increasing revenue underlying processes growth
Cost Containment is the
will be difficult, answer
Use M&A and partnerships to
especially in mature Digitize Operations
build scale
markets.

Sources: “Top financial services issues of 2018” – PwC Financial Services, “Four Ways Banks Can Radically Reduce Costs” - BCG
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