The digital bug has caught on with Indians like a Tsunami! Every other day, internet is grabbing headlines with some unbelievable news - we have mobile phones getting out of stock online in less than 3 minutes; 100 million dollars of online sales clocked in a single day and venture capitalists and PE players making significant investments in online businesses.
So, is this a passing fad or for real? Consider this - India has a reported internet population of 243 million as on June 2014 and is adding 5 million users to internet every month primarily driven by low cost of smart phones and improving connectivity to internet. India has favorable demographics with 422 million young digitally savvy consumers in the age bracket of 15 to 35 years which will adopt to digital offerings easily and seamlessly. Even the propensity to transact is very high amongst this audience as compared to any other country during the similar stage of internet evolution. In fact, 75% of internet population in India is under the age of 35 years and is driving factor for growth in internet population which will soon become the 2nd largest internet population globally after China.
The above data clearly indicates that digital is a mega trend in making and will fundamentally solve many consumer problems by re-shaping the business & in some cases, even industries. However, it is extremely surprising that the same consumer who is comfortable buying the latest gadget online shies away when it comes to financial transactions online; especially managing finances and investments.
In a survey done by Master card in Asia, India ranked 15th out of 16 countries on financial literacy. A recent survey shows that we are not ready to take care of our personal finance needs - be it emergency fund planning or retirement corpus creation. In fact many among us, some even in the 30s and 40s, have not even thought of retirement planning yet!
The human mindset is a complex one. On one hand, we buy the latest mobile phones on impulse online and on the other hand, we postpone important decisions like investing for retirement etc. till such a point that it becomes a crisis. In fact as a buying behavior, people do elaborate research online, take on social media for views and follow review/rating from aggregators for buying any product online. However, when it comes to managing finances - we go the old school way for advice from friends, family, relatives and in some cases even neighbors. The survey revealed that most Indians do a sub-optimal job of managing money due to lack of complete view of scattered finances and complexity associated with some of the wealth creating products like equities & mutual funds. Thus, the average Indian has an extremely skewed profile of finances which puts him at high risk with respect to various personal finance situations. Most of the household savings lie in physical assets like gold & real estate whereas bank deposits are favorite when it comes to financial assets. Thus, Indians are woefully under-prepared to face personal finance situations and in some cases face extreme risk.
The big question which comes up before us is that the same confident Indian who is comfortable doing one click e-commerce transactions online, goes offline for managing finances and investments. An interesting revelation during my meeting a young IT professional - ''My bank allows me to set-up FDs at a click so don't see any reason for me to go through pains of investing in MFs by doing KYC once again and going through pains of selection, paperwork and account opening to invest.''
Can managing finances online be a possible solution? We think yes, it can and the reasons are given below:
1. Discovering, selecting, transacting and tracking online is remarkably simple, easy and fast.
2. There are online platforms that have made investing paperless i.e. no filling up of forms, no standing in queues etc.
3. You are always on the top of your finances by getting real-time updates online and in some cases even on mobile.
But old habits die hard! We still take our time and a good majority of us continue to refrain from making the most of the online platforms for managing finances. Why? Simply, because managing finances is like going for a daily morning walk - we all know and agree that it is good but have enough reasons to avoid it. Another good example is buying mobile phones online; there are multiple models, multiple sizes, versions etc. with minor changes like processing speed, operating system, screen size etc. We always manage to research online and buy the best mobile phone to suit our needs. But, when it comes to selecting from over 6,000 MFs online, we leave the decision to an expert, which eventually never happens.So, the million dollar question before us is can our digital savvy behavior help us in becoming financially savvy as well? The answer is a resounding yes. There are plenty of online platforms which give us good content to create awareness, help us discover the correct solution through tools, make us select correct products through algorithms, get us to transact in convenient and easy manner and finally enable us to track the finances through regular updates, alerts, reports etc.It is time that we get serious about managing our finances by using convenient online platforms and ensure to take control of our finances.It's never too late for a digitally savvy person to turn financially savvy and make the most of the online platforms available out there!
(Contributed by Rahul Parikh, Head of Aditya Birla Money MyUniverse)
