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India offers huge potential for digital banks: Report

IBEF:  June 10, 2021

On Wednesday, BCG, a consultancy stated in a report that India provides a huge growth potential for Digital Challenger Banks (DCBs).

The report said, India which has a population of 130 crore people presents 10x revenue opportunity as compared to rest of South East Asia.

The report said, "Indian regulators put substantial stress on financial inclusion and priority sectors, which could be a challenge for foreign firms. However, not all licenses hold the regulatory restriction and operating as a Non-Bank Finance Company (NBFC) provides one a major flexibility.”

The report added that once a NBFC obtains establishment, collaborating with a conventional bank is the key to success.

The report said an investor must consider at Indian demographics and high growth potential.

The report also indicated that some firms consider India as a "diverse and geographically dispersed market" and which might be perceived as a challenge to raise the required funds. However, the report stated this as pre-perceived notion. In reality, the report added, there are niches in the market that offer a business to build at scale within them. It added, there are micro, small and medium enterprises' business, which are focused in 30 clusters in India and they are estimated to have a credit outstanding of US$ 300 billion.

The report said, addressing various challenges is possible by establishing the majority of the technology stack domestically while leveraging global capabilities for the design models, customer experience, and security.

The Indian DCB landscape includes Niyo offering customer experience solutions financial services products and Paytm, an existing digital ecosystem companies with a huge customer base.

The report picked out Paytm as the profitable performer in India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.