NEW DELHI: Financial services brands in India could benefit from enhancing their focus on digital media, a channel set to deliver at least $60bn in revenue by the end of the decade, McKinsey has argued.
The consultancy suggested this medium generates around $8bn for the financial sector at present, a total due to reach between $60bn and $70bn by 2020, equating to annual growth of 20% to 30%.
Such figures compare with an anticipated lift of 14% per year for the industry as a whole, which should thus expand in value from $130bn to between $400bn and $440bn in 2020.
"The opportunity in digital financial services is here and now, because online consumer behaviour is changing faster than financial institutions are responding," Alok Kshirsagar, a senior partner at McKinsey, told the Business Standard.
"Consumers are using technology to rapidly change the way they access financial services, and financial institutions will have to respond even faster in order to support and accelerate the behaviour that is already changing."
More specifically, McKinsey estimated that India currently has 122m internet users, together accounting for between 35% and 45% of the country's overall household savings.
Within this, some 27m individuals were reported to represent "digital high-value" consumers, who are the most engaged with the web and also contribute a third of the online audience's net worth.
Looking ahead, it was predicted that the internet population would increase in size to 350m people, partly thanks to the roll out of cheaper connected devices like mobile phones and tablets.
Fully 70m "high-value" shoppers, generally in the 20–45 year old age range and boasting an annual household income of more than $11k, will also be using the internet by this date.
At present, however, less than 0.5% of the Indian web users who search for information about financial services go on to exclusively research, select, purchase and activate products via this route.
Kshirsagar said: "Even the best performing institutions today are not doing enough to satisfy the rising expectations of digital customers. Winners will develop more compelling and easy to use online and mobile applications, adjust their sales and service practices and incentives, and drive digital as a core priority, rather than just a marketing exercise."
Going forward, the primary opportunity will remain in transactions "influenced by digital", or researched on the web but bought offline. As such, "fully digital" purchases will be worth $6bn to $10bn by 2020.
Data sourced from Business Standard/DNA India; additional content by Warc staff