IGI Logo

Exactly a year before, we wrote ‘Andra tutto bene’ (everything is going to be alright!) in which we analysed the likely changes to customer behavior, business model etc. We revisit the thoughts, we looked beyond the noise, and present potential changes in operating environment and likely beneficiaries – Va tutto bene (everything’s fine!). A root-cause-analysis of every trend indicates that it is a consumer / customer behaviour change.

“Andra tutto bene #14 & #15” is here – link 1 and link 2. Top long-term trends in the financial sector are: 1) digitisation has been fasttracked and is enabling business transformation in the form of next-level personalisation and customer journey mapping, efficiency to value creation, collaborative digital ecosystem in niche segments, partnering with fintechs and shift towards data aggregation; 2) expansionary counter-cyclical fiscal policy with focus on reviving growth suggests India Inc. is on cusp of releveraging (post deleveraging phase) and we are at an inflection point of credit growth; 3) preference is skewed towards secured and better rated business segments, and judiciously and prudently leveraged unsecured products; 4) entire cost structure is being reimagined and a few overheads would be shaved off permanently (e.g. real estate requirement) as online processing reduces cost of customer acquisition / service, etc. and 5) consolidation in the space (strong becomes or will become stronger, and weaker players getting further marginalised.

Beneficiaries: HDFC Bank, Kotak Mahindra Bank, Axis Bank, SBI, Federal Bank

Potentially negatively impacted segments: PSU banks

See our previous reports in the series – Consumer, Agriculture, Pharma, Real Estate, Telecom, Power, Dairy, Capital Goods, Cement

Medium-to-long-term trends anticipated post Covid:

Indian financial system responded to the crisis with a new rhythm redefining, refocusing and reorienting its approach and thinking. Evolution and transformation of the sector has gathered pace. Many players have undertaken distinct and differentiated initiatives to remain in action, be ahead of the curve, and make their businesses bigger, leaner and better.

* Digitisation: Fast-tracked and enabling business transformation. Financiers are utilising the pandemic period to fast-track the digitisation drive and undergo business transformation at every stage of customer lifecycle by reimagining businesses, processes, functions and customer proposition. In our view, they have realised that core principles need to be centred around being fully customer-centric, ensuring 360° omni-channel engagement with clients, provide intelligent data-driven orchestration, and adopt open platform architecture.

* Leaders are shifting from a product-centric to platform-centric approach and taking personalisation to the next level by offering highly-tailored services. Global study shows that retail banks that digitise their customer journey see a 520% boost in revenues, 15-35% cost reduction, and 10-15% rise in customer satisfaction.

* The strategy now is directed towards value creation through automation, AI, analytics, APIs, etc. Players are establishing platforms and marketplaces to offer comprehensive solutions.

* Banks are intending to create a collaborative ecosystem of stakeholders partnering with incumbents to leverage each other’s strengths and create a better long-term sustainable marketplace. In this emerging ecosystem, their role will shift considerably towards that of data aggregator or smart orchestrator.

To Read Complete Report & Disclaimer Click Here

For More ICICI Securities Disclaimer https://www.icicisecurities.com/AboutUs.aspx?About=7

Above views are of the author and not of the website kindly read disclaimer