Boston Consulting Group (BCG) has predicted that the mortgage market in the country would benefit from the demographic dividend and is expected to surpass $900 billion by 2020.
In its report, road to excellence: perspective on Indian retail banks, released on Tuesday, the international consulting house has observed that rapid concentration of income in the top 5% of households would drive the wealth management market to ten times its current size.
At the same time, millions of households will rise out of poverty to form the largest customer segment for banks.
In order to serve this segment profitably, financial institutions will need to adopt low-cost business models and pursue rapid expansion using smaller cost effective branches as well as innovative technology.
Moreover, there is threat of a margin squeeze stemming from the deregulation of savings bank rates. Many bank are exploring initiatives to enhance productivity and improve branch throughout.
?Looking ahead, the dependency ratio in india will continually decline over the next two decades and savings rate is expected to rise,” said the report.
Internet banking, which has otherwise not seen much adoption, will experience a revolution as mobile phones become the primary channel of internet access for the majority of Indian households.
Today, most banks and non banks have recalibrated their unsecured-lending strategies. Overall, the prospects for sustained high economic growth in India look bright and retail banking is poised for its second round of spectacular growth, said the report.