India high on foreign financial services companies' radar

Foreign financial services companies have set their sights on the Indian market. Rising disposable income and an array of financial products available for sale, have thrown up opportunities for marketing financial services.

E-Trade has increased its stake in IL&FS Investsmart, and also appointed its nominee to head the company. India Infoline and Indiabulls also have attracted foreign investors in recent times.

While Indian entities started off primarily as equity brokers, they have morphed into financial services houses, offering largely fee-based services, while some have fund-based activities too.

Their offerings range from broking (equities and commodities), selling MFs, insurance broking, wealth management and even margin financing. Some have even forayed into consumer finance.

Distribution is a prized asset, a nationwide network - either owned or franchisee driven - is essential. What also helps is that existing companies are making money.

Even as new investors enter the fold, technology helps the players scale up without incurring additional costs. The range of products on offer provides a cushion, makes them less dependent on say, a volatile business like equity broking.

Traditional institutional brokers have already expanded into retail segment and more are waiting in the wings. By acquiring a player like Investsmart, E-Trade reduces its risk and gestation period to become a significant player.

In turn, its global experience in this sphere can help it add more products to Investsmart’s existing portfolio so that both benefit.