Consumer behavior in India, has changed over the past few years as a result of rising incomes and exposure to new ideas and technologies. However, there has been a drastic change in this behavior after the COVID-19 pandemic.
Because of the pandemic-led restrictions, more and more people are adopting the digital way to take advantage of services. From online shopping to online grocery ordering, the use of digital payments etc. has changed the way businesses think, develop their products, operate, reach consumers, and deliver their services.
With nearly 54 per cent of smartphone penetration in India and low-cost internet availability, people in the smallest cities can access the internet and digital platforms. The move towards digital in smaller countries and cities has also seen a boost during the pandemic.
People have increased their acceptance of digital payments/wallets, digital insurance, and e-commerce in the last year and a half; The consumption of platforms such as YouTube, digital super services, and online classes has also increased. The use of these digital platforms has now stabilized at high levels indicating that this shift in consumer behavior is not temporary but is here to stay forever.
Like any other sector, the personal finance sector has also been affected by the digital transformation of the consumer. Personal finance companies have joined the digital realm to reach consumers, meet their financial needs and services. Be it mutual fund companies, stockbrokers, the real estate industry, and the insurance industry, each category has accelerated the digital path to meet the changing demands and needs of consumers.
Digitization has also played an effective role in building awareness towards multiple financial services. This was especially true for smaller towns and cities, where people showed an interest in investments (especially after COVID), and digital helped them build awareness about different financial instruments and investment options.
Mutual fund companies encouraged consumers to carry out self-service transactions over the Internet; Brokerage firms offered online services without brokerage, encouraged the government to buy digital gold (through sovereign gold bonds), and financial apps were developed to increase financial literacy among consumers.
The insurance sector has witnessed a shift in the way insurance products are bought, sold and serviced. Increasingly, insurers, distributors, and web aggregators have used digital forms and application-based platforms to reach consumers across the country. Digital technology has proven to be very useful in providing insurance in the smallest towns and cities, and it is also catering to the sudden growing demand in the life and health insurance category.
Speaking of the insurance sector, Insurtech / digital insurance companies have also helped build awareness towards insurance and avail suitable insurance products. Insurance is one sector in India that has always had a huge underlying need but there has been a lack of awareness and access. There are about 700 million consumers who always need insurance but there has been a lack of access.
Digital technology has helped bring insurance to 700 million people, mainly residing in Tier 2 and 3 cities and beyond. The quest to educate consumers, using digital, is still ongoing in the insurance sector.
If companies in the personal finance sector want to increase their customer base; They need to keep working on their channel strategies and constantly upgrade their technology. Companies not only need to build on their digital offering, but also need to direct their actual workforce to serve the more digitally oriented consumer segment.
In the health and wellness sector, insurance companies need to accelerate digital adoption to reach more consumers, as there is still a huge supply-to-demand gap when it comes to the insurance category. It is time for the entire insurance industry to come together and work towards building a fully digital insurance infrastructure. Not only will this help consumers, but the insurance advisor’s massive powerhouse, which is also struggling to increase insurance sales and consumer base.
It is important for personal finance companies to understand how consumers perceive today’s complex financial products and thus shape their digital approach. Besides strengthening the digital arm, companies should increasingly look to customize their products which will help build a long-term and credible relationship with their target consumers.
The author, Balachander Sekhar, is CEO and Co-Founder of RenewBuy Insurance. The opinions expressed are personal
First posted: IST