Will the Digital Neo Banking Platforms Succeed in India ?

We credit the Telecom reforms to Mr. Sam Pitroda erstwhile adviser to the Prime Minister of India Shri Rajiv Gandhi. During the UPA 1.0 headed by Dr Manmohan Singh, the Economist PM invited Infosys Co-founder Mr. Nandan Nilekani to Lead and Architect the Unique Identity Project – Aadhar. On the basis of UIDAI, Indian Financial ecosystem has witnessed massive disruptive transformations. The first wave of disruption in financial services was led by digital payment startups, followed by digital lending, wealth management, and Insurance technology startups. As we enter the second wave of disruption in FinTech 2.0, it is led by Neobanks ( Digital Only, over-the-top banks without actual RBI Banking License leveraging on the license of a Traditional Bank) that aim to redefine customer-centric consumer and (more…)

Should you own the Life Insurance Business ?

Protection is the most profitable part of business. Life insurers will benefit from monetisation of opportunity in life-protection with rising awareness in post Covid, favourable demographics and reasonable costs. Penetration of protection is low at 10% of addressable population with scope for market to double in five years (+23% CAGR over three years).

Insurance stocks have fared well in the current environment due to their relative defensive nature as compared to banks/NBFCs. Recent growth trends are encouraging, significantly better than initial expectations. However, ability of insurance companies to deliver yoy stable/increase in VNB (Value of New Business) remains a crucial monitorable. Traction in protection business will provide tailwinds to all players. While capital market inflows / ULIPs will likely remain weak, ability of insurance companies to underwrite/scale up traditional business assumes importance. Better product-mix (higher protection & non-par savings share) should (more…)