Digital financial services market to be $70 bn by 2020: McKinsey
Mumbai: Digital financial services opportunity in the country will grow eight times to up to USD 70 billion by 2020 as the usage of the Internet goes up, says a McKinsey report.
The present market size of the domestic digital services is USD 8 billion and this will grow to USD 60-70 billion by 2020, says the McKinsey & Company report.
Attributing the possibility of a steep rise in revenue to the increasing online consumer base, McKinsey India senior partner Alok Kshirsagar says in a report that "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."
The growth will be possible, "thanks to a rapidly evolving pool of Internet savvy users and easy online access via mobile phones and tablets," he said.
Most of the projected opportunity will come from changes in customer behaviour, wherein a person gets influenced by research on the web and buys a product offline, it said.
The "fully digital" pie, wherein a customer searches, researches and purchases online, will account only for USD 6-10 billion of the overall revenue pool by the end of the decade, it says.
The current Internet user base is 122 million, of which 27 million are "digital high value" consumers accounting for nearly a third of the overall household saving pool of all online users, it says, adding the two numbers are expected to jump to 350 million and 70 million, respectively, by the end of the decade.
The McKinsey study further said the revenue growth in the digital space is likely to grow at up to 30 percent annually during the remaining part of the decade, which is twice that of the overall revenue pool.
The study added that while demand is increasing, domestic financial institutions are currently ill-equipped to serve online consumers and capture the emerging opportunity.