Daily Financial News Analysis – 7th Mar’20

Table of Contents

Today’s bank

Tech-driven aggregation of businesses has already changed how we commute and order food.
Financial services are ripe for similar change.
BANKING SECTOR traditionally high entry barriers
India’s financial landscape needs to be viewed against the backdrop of 120 crore-plus bank accounts with validated linkage to Aadhaar and mobile numbers (JAM).
Integrated, these will form the digital pipeline for clean, better-informed and faster lending and other services, within an ecosystem of fintech, artificial intelligence (AI), machine learning and blockchains.
The trajectory of banking is clearly towards ‘palm banking’, or banking from home.
Branch visits have already diminished, and the time isn’t far when ATM visits, too, shall be anachronistic, with affordable, easy, 24×7 financial services delivered at a click, or at the doorstep, arriving.

There will be a wealth management solution customised for you.
Real-time combining of data and banking make all this possible.
Banking and delivery of services are coming to asset of fingertips near you, in the not-too-distant future.

Despite rising geopolitical tensions, slow growth forecasts and uncertainty remaining the norm in 2019, 51% of the Ultra-wealthy Indians experienced an increase in their fortune.
Knight Frank’s Wealth Report 2020: The number of Ultra high-net-worth individuals (UHNWIs) in India is estimated to grow by a whopping 73% in the next five years, almost doubling the count to 10,354 from 5,986 in 2019.
Ultra high-net-worth individuals are defined as having a net worth of at least US$30 million in investable assets net of liabilities.
Knight Frank expects Asia to be the world’s second largest wealth hub outperforming Europe, with a five-year growth forecast of 44% by 2024.
However, even after a steep rise, it will reach only half the size of North America’s UHNWI population, which is predicted to increase by 22% over the same period.

The services Purchasing Managers’ Index (PMI), which is an early gauge of activity levels in the sector, rose in February to its highest in more than seven years.
The jump reflects a surge in new orders and improved export demand.
Business confidence appears to have gone up in this sector.
India seems to have bucked a global recessionary trend.
Anxiety over Covid-19 has dampened business in various other countries.
Australia and Japan have registered marked slowdowns, and service markets elsewhere are unlikely to escape unscathed.
India’s services sectors look like a bright spot.
Caution is also warranted because PMI readings are based on a survey of businesses and their outlook for the future, and the optimism expressed by them is not always a reliable predictor of how things actually work out.

Though PMI trends have pointed to a recovery for some months, this has not translated into faster economic growth as recorded by official gross domestic product (GDP) statistics for the sector.
Admittedly, one cannot quite compare the two.
Also, the time gaps between orders placed and income generated usually varies from one market to another.
Nevertheless, the wide divergence in trends makes space for scepticism.
Uncertainty now looms large over the impact of the disease.
Travel and tourism are likely to be struck.
Among services, however, the most crucial is undoubtedly the financial sector.
Credit growth has been languishing under 10%, while it arguably needs to be far higher than that for India’s economy to expand the way it did in its boom years.
The country’s bad loan problem persists and bank balance sheets are yet to be cleared up, even as lenders have apparently turned risk-averse.
Services account for three-fifths of the country’s GDP and if they are to form a lever that could lift everyone’s economic prospects, we need a lending revival.
This may take longer if a large number of state- owned banks with varied software platforms are distracted by the internal nitty-gritties of merging