2016 was a difficult year for the world in general. Brexit took the wind out of the sails of the global economy long before the unexpected success of Donald Trump in the US Presidential elections in November. Global firms, including leading Asian and Indian firms, that had been using London as the gateway to Europe were caught between a rock and a hard place. London is no longer as attractive a proposition as it was before Brexit, and there is no obvious choice when it comes to an alternative base in Europe, although there are several options that might be cheaper.
But as the recent haemorrhaging in the value of Indian technology majors in the stock market shows, the fear of a rise in protectionism might easily negate any advantage that might come from having a more business-friendly US President. The threat to the H1B visa regime alone could damage the outlook for 2017 for Indian IT firms. The financial industry would also suffer indirectly if there is a slowdown in the economic growth rate due to lower exports overall. There would be a fall in foreign institutional investment in the capital markets, as there was after the recent interest rate hike in the United States.
There are various tools at the disposal of financial services firms in India such as anti-money laundering platforms and market surveillance systems to control fraud and malpractice, areas that are a current regulatory concern. Similarly, new technology, such as blockchain, artificial intelligence and internet of things (IoT) offer new means of addressing the requirements of the Indian financial sector.
In our 2017 Indian Financial Industry Trends and Outlook report, we look at some of the key challenges ahead for India and some options for financial institutions and participants alike to ensure that 2017 turns out better than 2016.