India’s personal financial wealth is projected to grow to $5 trillion by 2022, making it the world’s 11th wealthiest nation ahead of Switzerland, Hong Kong, the Netherlands and Taiwan, according to a report by Boston Consulting Group (BCG).
The report says that India’s personal financial wealth, currently at around $3 trillion, has grown at 12% CAGR since 2012 and is expected to grow at 13% CAGR from 2018 to 2022. This makes India the only nation apart from China to have a double digit CAGR for personal wealth. The report adds that India is set to constitute the second largest pool of wealth from emerging markets in the coming years, second only to China.
BCG’s report too points out how the number of people with high personal wealth in India is growing rapidly. According to the report, India has 320,000 people in the affluent category—those with wealth up to $ 1 million; 87,000 people in the high net worth individuals (HNWI) category—those with wealth between $1 million and $20 million; and 4,000 in the ultra high net worth individuals (UHNWI) category—those with wealth above $20 million.
Although BCG have not released figures for these categories in the previous years, Ashish Garg, partner and director at BCG, India, said the UHNWI category saw the fastest rate of growth. The report also pointed out that 67% of India’s personal financial wealth is accessible to wealth managers as investable wealth as of 2017. This figure is projected to grow to 70% by 2022. Anna Zakrzewski, partner and director, BCG Zurich, said that the investable wealth in India makes it an attractive market for banks to swoop in and offer wealth management and investment advisory services, especially to their HNI clients.
However, both Garg and Zakrzewski said that Indian banks are not doing enough to tap this space. “Most of the products that banks offer in this space end up looking similar. There is a need to diversify and offer more customised products to clients,” Garg said, adding that there is enough scope in this space for both banks and non-bank players to thrive.
Zakrzewski stressed on the need to harness the power of digital for capitalising on the wealth management space. “If you compare with other markets, Indian banks have millions of customers. We’re talking big numbers; which means the wealth of data they have is huge—patterns, behaviours, investments, life cycles… Honestly, banks maybe use just 25-30% of this information,” she said, adding that if banks can find a way to leverage this data, they will emerge as winners on the revenue, market share and client satisfaction fronts.