Study of new wave of financial supermarket

Abstract

It would not be long where onions and tomatoes are sold along with Mutual funds, Insurance and Customer loans. Consumers would have the power of buying anydurable. Travel plan etc. with instant finance scheme. Home loans, Car Loans could be bought off the grocery stores. This is the new wave of financial supermarket, whereby the boundary between banking and other services of insurance, trading is blurring. There would be unique marketing strategy touching every aspects of consumerism. In the banking sector there is a need for the banks to diversify to need economies of scale, ward off competition from corporate and overcome the shrinking Net Interest Margin. In the banking sector ICICI and SBI is the biggest player in diversified services. However they are constrained by the cap of 20% investment in subsidiaries. RBI has put up a consultation paper to alleviate the growth constraint. Retail Financial Market is seeing lot of players entering into the fray Future Capital led by Kishore Biyani being the pioneer of this concept is planning to enter every aspect of customer life from Honeymoon funding to Purchase of House. It has already gone through a big successful IPO listing. Reliance Capital is one of the most sophisticated players in this area tying up with various players in the market to increase the footfall for its financial services ventured. It has tied up with McDonald, STC, Various banks, and Mobile platform to carry its business model to the grassroots level. Bharti is going the JV. It has tied up with AXA, Rothschild, Wal-Mart to enter various segment of Retail and Financial services, depending on its own mobile platform to carry the distribution angle to the last mile. As with any business ventures there are huge risks that come along with it. Indians having lot of Power Distance Inequality with a Masculine dominated society with Long Term objective and a tendency of Uncertainty avoidance, financial products with its transactional nature and short term fulfill ness may not appeal to all the section of society Further there are other business imperatives of high credit risks and focus away from the Core Business Imperatives US had the earliest introduction of Financial Supermarkets way back in 1990s.Business there are moving out of the concept now with the primary reason being business focus dilution. India is one of the late entrants to the concept. With a growing GDP of 8-9% with consumerism in the rise, there are exciting times ahead for the business.