The Next Billion Consumers: A Road Map for Expanding Financial Inclusion in India

This report argues that creative business models can transform the vast segment of under-served consumers into an attractive opportunity for growth, boosting inclusion. The report is based on a study that identified how existing business models affect the cost of serving low-income individuals in India, and how regulations constrain the banks ability to reach them. The report also derives lessons from players in other emerging markets. It makes the following statements:

• The financially excluded are a distinct and huge group of consumers, who have the potential to become viable banking customers;
• Successive Indian governments have required the formal sector to provide services to low-income households;
• A comprehensive solution can only come from viewing ‘the next billion consumers through a prism of opportunity rather than obligation;
• Financial institutions must understand:
  • The segments financial needs and aspirations;
  • The barriers that give rise to exclusion;
  • The impact of Indias rural-urban divide.

The report concludes that:

• Financial institutions need to develop more cost-effective business models geared towards serving the next billion;
• The mobile handset could become the sole banking channel for many consumers in India;
• Government efforts to boost inclusion would be more effective if they focused on enabling banks to serve the next billion consumers profitably.