Consumer behavior has been changing in India, over the last few years as a result of the rising income and exposure to new ideas and technologies. However, there has been a sea change in this behavior post the COVID-19 pandemic.
Due to the pandemic led restrictions, an increasing number of people adopted the digital way to avail services. From online shopping, to ordering groceries online, using digital payments etc. changed the way companies ideated, developed their products, functioned, reached out to consumers, and provided their services.
With almost 54 percent of smart phone penetration in India and availability of low-cost internet, people in the smallest of cities have access internet and digital platforms. The move towards digital in the smaller states and cities also witnessed a huge boost during the pandemic.
People increased their acceptance towards digital payments/ wallets, digital insurance, e-commerce in the last one and half years; the consumption of platforms like YouTube, over-the-top digital services, online classes also increased. The usage of these digital platforms has now settled at elevated levels which indicate that this consumer behavior shift is not a temporary one but is there to stay forever.
Like every other segment, the personal finance segment too got impacted from the consumer digital shift. Personal finance companies have been joining the digital bandwagon to reach out to consumers and cater to their finance needs and services. Be it the mutual fund companies, stock market brokers, real estate industry, insurance industry, every category accelerated the digital route to cater to the changing consumer demands and needs.
Digital has also been instrumental in building awareness towards multiple financial services. This has been especially true for the smaller towns and cities, where people have shown interest towards investments (especially after COVID), and digital helped them build awareness about different financials tools and investment options.
Mutual fund companies encouraged consumers to execute self-serviced online transactions; stock brokerage firms offered online services with zero brokerage, government encouraged buying of digital gold (through sovereign gold bonds), financial apps were developed to increased financial literacy amongst consumers.
The Insurance sector witnessed a transformation in the way insurance products were bought, sold and serviced. Insurance companies, distributors, web aggregators increasingly used digital model and app-based platforms to reach out to consumers across the country. Digital has proven to be immensely helpful providing insurance in the smallest towns and cities, and catered to the sudden growing demand in the life and health insurance category.
Talking about the insurance segment, Insurtech/ digital insurance companies also helped in building awareness towards insurance and availing right insurance products. Insurance is one sector in India which always had a huge latent need but there was lack of awareness and accessibility. There are around 700 million consumers who always needed insurance but there was lack for accessibility.
Digital helped in making insurance reach out to those 700 million people, majorly residing in the Tier 2, 3 cities and beyond. The endeavor towards consumer outreach, using digital is still ongoing in the insurance segment.
If companies in the personal finance segment want to increase their consumer base; they need to keep working on their channel strategies and constantly scale up their technology. Companies not only need to build up on their digital offerings, but also need to orient their brick-and-mortar workforce for servicing a more digital oriented consumer segment.
In the health and well being segment, insurance companies need to accelerate digital adoption to reach out to more consumers, as there is still a huge demand supply gap when it comes to the insurance category. It is high time that the entire insurance industry comes together and works towards building a fully digital based insurance infrastructure. This will not only help consumers, but also the huge insurance advisor force, which is equally struggling to increase their insurance sales and consumer base.
It is important for personal finance companies to understand how consumers are conceptualizing complex financial products today and accordingly shape up their digital approach. Along with strengthening the digital arm, companies should increasingly look at personalizing their products which will help in building long-term and credible association with their targeted consumers.
The author, Balachander Sekhar, is CEO and Co-Founder at RenewBuy Insurance. The views expressed are personal
First Published: IST