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Financial Education In India: The Opportunities & Challenges

Savvy new investors, armed with knowledge and street smarts, will shake up the game.

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In the past, financial education was restricted to the financial shelf in bookstores. Practical knowledge about investing was not discussed even in colleges that taught economic and financial courses. Today this has changed.

The game has changed due to the internet. Today, knowledge is available at the tap of a finger. This creates both a great opportunity and a great challenge.

Let's start with the challenge.

The challenge is information overload and data paralysis. With so much raw content floating around on everyone’s screen, it gets hard if not impossible to pick the signal from the noise. Should one believe the expert on Twitter, or the expert on LinkedIn? Should one believe the Wikipedia page, or the Investopedia page? 

To break down the problem even further, people seeking information are faced with 3 problems: lack of structure, lack of credibility, and lack of direction. 

Information presented online is often presented in a fragmented manner. To retain info, the human brain needs to be fed in a highly systematic way. Unstructured facts are not remembered for long because there is no narrative structuring them into a memorable whole. 

Lack of credibility is also a big problem. People want to learn from experts who have experience and training on the subject they want to know more about. On the internet, though, anyone can opine on any topic, and it’s hard to verify whether the credentials one is displaying are authentic. 

Lack of direction is a problem that can be understood when you think about how people traditionally learned things: through a textbook. Textbooks can be cumbersome and heavy to carry, but here’s a unique advantage they offer: directional learning. The table of contents lays out the scope of your lessons and shows you how you’ll go from beginner to intermediate, or intermediate to advanced, on a given topic. This is something that internet learning sorely lacks. 

While these are big challenges, we also have a great opportunity in front of us.

The opportunity is this: if these challenges can be overcome, then we will truly democratize financial education in India. 

Why is democratizing financial education important? Investing and financial knowledge helps people accumulate wealth, and great wealth leads to healthier lives. Wealth is also tied up with positive educational outcomes for children. By making financial education universally accessible, we are giving people an important tool they can use to improve their station in life. 

The internet provides a unique chance to do just that. Every passing day in India, here are three numbers that only go up:

  1. Number of smartphone holders in the country
  2. Number of hours spent online every day
  3. The average speed of an average internet connection

Almost 70 crore Indians have a smartphone, and this number will inch up to 100 crores in the next 5 years.

On average, Indians spend 3.5 hours on their smartphones every day, and this number keeps going up. 

The average Indian’s internet connectivity speed is also increasing, and speed-wise our country today is in the global top 40. Our rankings are rapidly going up. 

The opportunity for financial education is precisely this: technological advances can be used to provide accessible and valuable content to millions of newly connected people. 

This development also flattens the playing field. In the past, people in metros had access to brokers, sub-brokerage offices, and other facilities needed to invest. Those living in smaller towns and villages were distant from both the knowledge and the practice of investment. Today, this is no longer the case.

Today, someone living in a tier 3 city can learn about the stock market just as quickly, and place orders just as fast, as someone living in a tier 1 city. This is a tectonic shift.

Angel Broking is consolidating this shift with its educational product, Smart Money. Unlike most financial information on the internet, the information on Smart Money is structured, coming from a trustworthy brokerage house with a long history, and arranged hierarchically. We have separate modules for beginners and experienced learners, as well as investors and traders. (In stock market parlance, people who maintain positions for long are called investors, and those who clear all their positions at the end of the day are called traders.)

Smart Money utilizes different formats to provide a variegated learning experience. For example, the Smart Money workshops unleash the power of interactive and cohort-based learning. Attendees listen to an expert on a specific subject and get their doubts clarified in real time - all while never leaving their room. 

The future of investing in India is very exciting for 3 reasons. The first reason is that investing in India is still very unpenetrated. Only 2% of the country has ever bought a single stock. As tools to invest become faster, and investing education becomes more accessible, this is bound to change. India is a mobile and aspirational land. As our country’s disposable income rises, a large chunk of it is sure to make its way into the equity markets.

Second, leapfrogging technology. The finance sector is often the first one to adopt new technology and use it to serve its customers. As different advances are made across artificial intelligence, machine learning, and data analysis, the finance sector absorbs these new capabilities and produces ever more convenient solutions for its clients.

Third, internet penetration followed by “knowledge penetration.” We discussed internet penetration earlier in the article - smartphone users, internet speed, and hours spent online increase day by day. This will lead to knowledge penetration. People will be able to learn about investing in whatever form they prefer: video, podcasts, articles, curated modules, or live workshops. Everyone’s learning style is different, and the beauty of the internet is that it respects this crucial fact. As financial literacy spreads, we will see a renaissance in the Indian equity markets. 

Savvy new investors, armed with knowledge and street smarts, will shake up the game.

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