Digital adoption for financial services higher than other categories: Report
The report also points out that India is set to leapfrog many advanced economies in digital adoption and is rapidly transitioning from a data poor to a data rich nation
The Boston Consulting Group (BCG), together with Facebook, has released a report that focuses on the rising influence of digital and the transformation required to make the most of this revolution.
According to the report brought out in June, along with the new Indian consumer, the digital ecosystem of India has also evolved rapidly over the last few years. The report also points out that India is set to leapfrog many advanced economies in this space and is rapidly transitioning from a data poor to a data rich nation, with immensely useful data being created across businesses and consumers alike. From creating ‘Digital India’, to setting up open architecture layers such as Aadhar, India Stack, Bharat Bill Payment System and GST, the Indian government is actively developing the entire digital ecosystem.
Increase in adoption of digital channels post demonetization
As per the report, post demonetization, the use of cash channels has gone down by over 10 percentage points – i.e. from 89% pre demonetization to 78% post demonetization. Mobile wallets have seen over 10 times increase in usage and use of online or mobile banking has gone up by 40%. This shift is more prominent for monthly and annual payments, where use of cash channels has gone down by over 16 percentage points.
The report also looks at digital adoption trends across categories. According to the report, in terms of Digital adoption, financial services is already much larger than other categories like consumer electronics, travel and home appliances. Interestingly, digital influence is high across all financial products – from basic products such as savings account to more mature products such as mutual fund and credit card.
There are 38 million active urban online banking users currently. This number is expected to touch 150 million by 2020.
FinTechs ad spend on digital touches 35-40%
The rising importance of digital for an average urban consumer has not been fully recognized by the financial services industry. Urban internet users spend almost 43% of their media time on digital, and 70% of urban category buyers with internet access use at least one digital channel during the purchase of a financial product. In comparison, financial services industry spends only 20-22% of media spend on digital. This is a significant increase from 5% in 2012, however there is scope for further increase. On the other hand, FinTechs have been quick to adapt, with almost 35-40% ad spend on digital.
Leveraging the new set of technology paradigms, FinTechs are uniquely poised to disrupt traditional financial services in a meaningful way. Since 2010, over 1,000 FinTechs have been founded and have raised more than $ 2.5 Bn across the spectrum – from payments to lending to investments.
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Speaking about the findings of this report, Umang Bedi, Managing Director, Facebook India & South Asia said, “As more and more Indians access the internet on their mobile phones, there is a big opportunity for financial companies to create a powerful digital experience that is intuitive and secure for their customers. The report confirms that consumers are leaning in towards digital adoption of financial services faster than previous estimates, and the time is now for the financial services industry to invest so we can help more people contribute to a digital future.” Since 2010, over 1,000 FinTechs have been founded and have raised more than $ 2.5 Bn across the spectrum – from payments to lending to investments.
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