Page 33 - Banking Finance March 2025

ARTICLE

goal-based investing has become a norm among during market downturns, leading to premature
young investors. withdrawals.
Misinformation and Over-Reliance on Social
d) Tax Benefits and SIP Culture Media: While financial education is increasing, the
With the rise of Systematic Investment Plans (SIPs), spread of misleading investment tips can negatively
investing in mutual funds has become more impact decision-making.
disciplined. Millennials appreciate the affordability
Short-Term Mindset: Some investors expect quick
and flexibility that SIPs offer, enabling them to start
returns, overlooking the long-term benefits of
with small amounts while benefiting from rupee cost compounding.
averaging. Additionally, tax-saving mutual funds
(ELSS) provide lucrative deductions under Section 5. The Future of Mutual Funds Among
80C, making them an attractive option. Millennials
As financial literacy continues to rise and fintech
3. Popular Mutual Fund Categories Among innovations make investing more seamless, mutual fund
Millennials adoption among millennials is expected to grow further.
1. Equity Mutual Funds – High risk, high reward Regulatory initiatives by SEBI and AMFI to promote
funds attracting aggressive investors seeking long- transparency and investor protection will also play a
crucial role in sustaining this trend. Encouraging financial
term wealth creation.
discipline, promoting goal-based investing, and ensuring
2. Index Funds and ETFs – Preferred by passive proper risk assessment will be essential in shaping the
investors looking for low-cost diversification. investment behavior of millennials.

3. Hybrid Funds – A balanced option offering stability
with equity and debt exposure. Conclusion
Millennials are reshaping India’s investment landscape with
4. Debt Funds – Chosen by risk-averse investors for
a preference for mutual funds, leveraging technology and
stable returns and liquidity.
financial knowledge to achieve their financial aspirations.
While challenges exist, disciplined investing and increased
4. Challenges Millennials Face in Mutual Fund awareness can help millennials build a robust financial

Investing future. As this generation continues to embrace mutual
Despite the growing trend, millennials encounter funds, India’s mutual fund industry is poised for
certain challenges in their investment journey: unprecedented growth in the years to come.
Market Volatility: Many first-time investors panic - Banking Finance Research Team

The Rise of Digital-Only Banks in India

The Indian banking sector is witnessing a paradigm shift with the emergence of digital-only banks, also known as
neo-banks. These institutions operate entirely online without physical branches, offering seamless, tech-driven fi-
nancial services. The rise of fintech innovation and increasing smartphone penetration have fueled this trend, pro-
viding customers with enhanced user experiences, minimal fees, and 24/7 accessibility.
Key players such as Jupiter, Fi Money, and Niyo have gained traction, offering tailored banking solutions, AI-driven
financial management, and instant lending. The Reserve Bank of India (RBI) is closely monitoring the regulatory
landscape to ensure consumer protection while fostering innovation. As more customers, especially millennials,
embrace digital banking, neo-banks are expected to revolutionize India’s banking sector by making financial services
more inclusive and accessible. However, challenges such as cybersecurity risks and regulatory compliance remain
crucial aspects for sustainable growth. With continuous technological advancements and strategic collaborations
with traditional banks, digital-only banks are set to redefine the future of banking in India.

30 | 2025 | MARCH | BANKING FINANCE