Undoubtedly, India’s economic reforms have changed the way we work, live, consume and invest. And in sync with this, aspirations and expectations have also changed dramatically for many of us. With changing aspirations and greater choice in employment, consumption, and investment options we have become a far more mature economy. No doubt large gaps remain, the large numbers of the unbanked, the lack of adequate micro-finance options for the poor and the underprivileged, the inability of many to enter into the organized sector and stable employment are all unfulfilled gaps. But unlike in the past, today both private and public sector initiatives are being taken to find the right mix of technology, access, and costs, that can fulfill the demands of the masses. What was available in only Mumbai and Delhi a few years back is today commonplace in small towns and villages in India. ATMs are one example. Credit card is another. Already mobile payment options have been introduced and are further being experimented with. Cash cards are also expanding rapidly. Good quality internet access has already spread beyond the major metros and with the introduction of broadband will be available in every nook and corner of the country. Admittedly, such advances in financial technologies have tended to benefit the better-off more than those at the bottom of the pyramid. The key problem is that most financial technologies in use today were developed in the West (and consequently are costly) and have been introduced into India almost as-is. It is difficult to profitably service the masses with those. But trials of new innovations are under-way. A team at IIT Chennai has developed a very low cost ATM that public sector banks are currently experimenting with. Many financial institutions are trying out different ways of running low cost micro-finance options. IT companies are trying out various low cost electronic payment alternatives not to mention computing options. Undoubtedly, many of these experiments will fail. But a few will succeed. And it is those innovations that will change the lives of the masses, just as their predecessors have changed ours.

1. Continuing Potential of The Financial Sector in India Indicus Analytics

2. Financial Services are terribly under penetrated services in India Therein lies the opportunity for high growth

4. Rapidly Changing Landscape Financial organizations have only been able to penetrate larger cities and metros with a range of financial services. The better educated are much more likely to try new instruments when offered Rising educational attainment and incomes of the masses greater surpluses to invest greater willingness to try out New services greater private sector activity Technology innovation Mainstays: savings bank deposits post office savings life insurance informal instruments Under penetrated: Mutual funds equity shares gold The promise of growth

5. Informal instruments lead by a long way. Gold in direct form (not the most efficient way) is second The ratios change significantly with educational levels Informal Instruments dominate

6. Urban Middle Class is the main investing class Life Insurance is the Only product with deep penetration

7. Assets Under Management While the growth is impressive, it still works out to just Rs 3,200 per capita pa

8. Credit Card Penetration The base is firmly with Large cities. However, the growth has already shifted to smaller cities

10. Mostly under penetrated Very small pockets of high penetration Bank Credit Indian Financial Scape 2008-09

11. But the big growth % are from the Under penetrated pockets Bank Credit Indian Financial Scape 2008-09

12. Financial Services are terribly under penetrated services in India Therein lies the opportunity for high growth

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