Financial Services

D2C Admin

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Financial services deal with the management of money, any company that is involved with any form of money management such as banks, credit card companies, credit unions, mutual funds, pension funds, co-operatives, insurance suppliers, consumer finance, brokerage & investment funds.

In India, there is a strong financial sector that is undergoing a rapid growth phase. In India, Secondly, the banking sector has allowed the entry of the payments bank method thereby adding on new entities operating in this market. Thirdly, the financial services sector is primarily the banking sector. This holds roughly around 64% of the total assets in the financial systems.

The government is working in order to liberalize, regulate and expand the industry. The government and the RBI are working towards providing easy access to financial services to all through small, micro and medium enterprises. These include credit guarantee fund schemes for MSMEs, setting up Micro units development and refinance agency (MUDRA), etc.

Market Size

The total assets under management of the mutual fund industry stood at Rs 23.16 trillion as of February 2019. Another crucial sector in the financial services industry is the insurance segment which has been growing at a rapid pace. The total premium of life insurance companies reached at Rs 159004 crores. The total amount of Initial Public Offering (IPOs) stood at Rs 1402 crores as of Feb 2019.

Types of Financial Services

Accounting– It is the process of measuring the financial parameters of a company. Thus, presenting those to the investors and other stakeholders.

Brokerage– A firm that deals with the buying and selling of stocks or any other financial securities is a brokerage.

Consumer Finance– loans and credit lines granted to consumers

Credit Cards

Foreign Exchange

Hedge funds– Private limited investment partnerships which help the investors to spread their risk through diverse investment opportunities.

Insurance

Investment Banking

Private Banking

Private Equity– It is a method by which an investor takes control over a portion of the company’s stock in order to maximize their returns.

Retail Banking

Venture Capital- It is the initial round of funding that is provided by an investor anticipating a booming business so as to get a share in the returns of the business.

Wealth Management – It helps to maximize the returns for the affluent by alerting them about any new investment opportunities etc.

Trends in the Industry

The emergence of Big Data and Analytics have taken the industry by storm

Startups in India– with the economy booming, more and more fin-tech startups are coming into the picture. As the government policies are also aiding them, this trend will continue.

Outsourcing– Most Finance companies in India have their headquarters in metro cities. Since the costs are very high, they generally outsource their KPO activities to tier 2 and tier 3 cities in order to curb their costs.

NPAs– they are a menace to companies and the rise of NPAs led to the creation of the responsible debt payment. Unlike earlier, companies no longer consider debt as a primary source of funds that they can further engage in siphoning of funds.

IFRS– They have started to make a significant impact on the financial accounting of Indian companies. Some companies have been brought under the ambit of compulsory adoption from April 2016.

Payment Banks- They are redefining traditional banks as it is much easier for them to reach out to the rural population. They ensure that even rural areas get the same facilities as provided by formal banking services. This will create further demand for financial services.

Road Ahead

India is currently one of the most vibrant economies, on the back of robust banking and insurance sector. With the government relaxing the norms of foreign investment many global players have announced their entry into the Indian markets. Moreover, in the current year, multiple joint ventures are taking place between global and Indian players.