Difference between revisions of "Innovative personal finance products"
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* Airlines, railways and others are now selling tickets online and it is cheaper than buying through an agent or from the airline. You need a credit card to buy these online. | * Airlines, railways and others are now selling tickets online and it is cheaper than buying through an agent or from the airline. You need a credit card to buy these online. | ||
* Pension funds are still big in India. Not clear if India will go the US route of defined contribution plan (as opposed to defined benefit plan) | * Pension funds are still big in India. Not clear if India will go the US route of defined contribution plan (as opposed to defined benefit plan) | ||
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+ | === GDP growth === | ||
+ | * GDP growth is projected at 6% and higher for the coming decades, making India the fastest-growing large economy in the world | ||
+ | [[Image:PersFin GDP Growth.jpg|thumb|center|400px|GDP growth in India]] | ||
=== Credit === | === Credit === |
Revision as of 19:46, 2 January 2007
Contents
Brief
- Identify innovative personal finance products in various countries
- Personal finance products such as loans, credit cards etc. customized and productized in ways to appeal to local markets
Approach
- Trend analysis
- Demographic trends
- Market trends
- Technology trends
- Regional trends
- Sociocultural trends
- Internet and communication trends
- Market analysis
- Quantifying above trends
- Estimating size of markets
- Identify needs based on trends
- Survey of existing products
- Analyze strengths, weaknesses of existing products
- Identify new products
- New product ideas
- Invent new products based on trends
- Qualify new product ideas
- Quantify market size for new ideas
- Identify implementation strategies for new ideas
India: Demographic trends
- Asia is exploding with money
- China, India etc. have a voracious appetite for credit
- People there are very worried about weddings, especially daughters' weddings can be extremely expensive
300 million strong middle class
- The Indian middle class is 300 million people with a purchasing power of US families with $15,000-$35,000 in annual income
- Huge appetite for two-wheelers, telephones and cars
Education
- 50% of India's population is below the age of 25 and 2/3rd of the population is below the age of 35
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Employment
India: Financial trends
- Fraud is a major problem, e.g. loans on homes are based on higher valuations by the appraiser
- There is no credit rating system and the judicial system does not allow companies to easily recover their money from the borrowers
- A high amount of undisclosed income
- Hawala
- Cash-on-delivery (COD)
- Airlines, railways and others are now selling tickets online and it is cheaper than buying through an agent or from the airline. You need a credit card to buy these online.
- Pension funds are still big in India. Not clear if India will go the US route of defined contribution plan (as opposed to defined benefit plan)
GDP growth
- GDP growth is projected at 6% and higher for the coming decades, making India the fastest-growing large economy in the world
Credit
- Booming economy with a growing middle class
- Access to credit is relatively new
Reimbursements
Foreign Direct Investments
- Foreign Direct Investment inflows are rapidly growing in India and have reportedly reached an all-time high of $7 billion last year, doubling from just 6 years ago
Microfinance
- 1.4 million microfinance groups in India
- Over 20 million members for microfinance groups
- According to one estimate, 30 million non-agricultural enterprises and 50 million landless households in India collectively need approximately $30 billion credit annually
- Microfinance is growing in South India, which contrasts with the stagnation in Eastern, Central and North Eastern India
- Downside: Microfinance involves very high transaction costs given the small amounts of money involved for each loan, which necessitates high transaction costs
India: Customer service
- If you want to open an account of if you want a loan, someone comes to your house from the bank to get the papers to you
- If you want to exchange currency, someone comes to your house for that too
India: Sociocultural trends
- Movies get financing from the underworld and other unsavory sources
Anecdotes
- There was this article about citibank or someone hiring goons to get an executive woman to pay her credit card bill. She defaulted because she was travelling. She created a big stinker.
- A grocery store in India figured out that its cost of capital was much higher than what their customers were earning in a savings account. They came up with a scheme whereby consumers could give them a deposit and they would give them coupons to shop in their store. The effective interest rate that the consumer was getting was higher than what a bank offered them, however the interest rate was however lower than the cost of capital for the grocery store and they got loyal customers.
Needs
- Non-traditional ways of evaluating credit worthiness
- How to give credit to developing markets using different approaches than developed markets
- Short-term loans
- High transaction fees but low interest
- Non-revolving credit card
- Need money to buy groceries this week, pay back next week or end of month (Payday loan?)
- Programs to help fund big events such as daughter's weddings
- Financial advisory services to high net worth individuals
- Financing for movies
- Simplified COD
- Escrow services
- Loans for individuals with lower credit scores (people who don't appear very credit worthy on paper)
- A clearing house that could collect cash from people's houses or stores for airline/railways transactions - that would be convenient for people without credit cards