Consumer Finance in the Digital Age (print)

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Author: Sudhanshu Sekhar Pani

Edition: First Edition

ISBN: 9788198239532

Publication Date: Dec. 15, 2024

Frontmatter

CONSUMER FINANCE
IN THE DIGITAL AGE

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First Edition

CONSUMER FINANCE IN THE DIGITAL AGE

Theory, Behavior, and Product Design

Dr. Sudhanshu Sekhar Pani
Faculty of Finance
NMIMS University
Mumbai

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About the Author

Dr. Sudhanshu Sekhar Pani is a Faculty member in the Department of Finance at the School of Business Management, NMIMS University in Mumbai. With a rich background spanning academia and industry, he brings a multifaceted perspective to the field of consumer finance and financial markets.

Dr. Pani completed his PhD in Management Studies (Finance) from NMIMS University, where his dissertation explored market microstructure and information content in order-driven markets. He holds an MBA from the Indian Institute of Management, Indore, where he graduated first in his class, and a Bachelor of Engineering in Metallurgy and Materials Engineering from Utkal University.

His professional journey includes entrepreneurial ventures and significant roles in banking and wealth management, having worked with prestigious institutions like Standard Chartered Bank, ICICI Bank and HDFC Bank. He co-founded Finance Central, a boutique wealth management startup that was ahead of its time, demonstrating his innovative approach to financial services.

As a researcher, Dr. Pani has published extensively in reputed journals, with a research focus on market microstructure, consumer finance, real estate economics, and capital markets. His recent publications include studies on limit order markets, Buy Now, Pay Later trends, and house price dynamics in metropolitan India.

Currently, he is actively involved in academic leadership at NMIMS, serving as the Program Chairperson for MBA (Law) and contributing to multiple university committees. He is also a co-founder of Treta Fund and continues to bridge academic research with practical financial innovations.

Preface

Consumer Finance in the DigitalAge: Theory, Behaviour, and Product Design is a comprehensive textbook designed for students taking courses in consumer finance in a MBA-level program. The learner, whether focussed in finance, fintech or strategy is seeking to understand the rapidly transforming landscape of consumer financial products. Developed initially as the primary resource for the "Consumer Finance" elective course at the School of Business Management, NMIMS University (Mumbai), this book addresses a critical gap in academic literature by focusing on household finance. Household finance is a fundamental yet often overlooked dimension of finance in the B-school curriculum. Synthesizing years of industry experience with cutting-edge research, the book brings relevant theory, research and practice to the B-school pedagogy. It weaves together insights from diverse disciplines including behavioral economics, neuroscience, and social psychology to provide a nuanced understanding of consumer financial behavior. The book aims to append conventional marketing-driven product design approaches, by introducing innovative frameworks that prioritize human behavior, psychological mechanisms, and the broader socio-economic contexts that shape financial choices. It is prescriptive as the goal is to nudge product managers and firms to have a ’household first’ design strategy.

The book’s unique approach lies in its holistic examination of consumer finance. It takes the readers from numerical analysis of rational decision making to explore the intricate psychological and social influences that drive financial decision-making. All the while it seeks the implications for product design. Readers will find a rich exploration of theoretical models alongside practical case studies that bridge academic concepts with real-world applications. From intertemporal choice theories to the role of emotions in financial decisions, the book offers a multidimensional perspective that is both academically rigorous and practically relevant.

A distinctive feature of this text is its comprehensive coverage of emerging trends in consumer finance. It explores innovative domains such as fintech, embedded finance, digital collateral, and alternative credit scoring, reflecting the dynamic nature of financial technologies. The curated case studies—ranging from global pension systems, chit funds, embedded finance apps to peer-to-peer lending platforms—provide students and practitioners with insights into complex financial ecosystems.

While primarily targeted at MBA students, the book’s interdisciplinary approach makes it a valuable resource for industry practitioners, policymakers, and researchers interested in understanding the evolving landscape of consumer financial products. It challenges readers to think critically about product design, regulatory frameworks, and the broader implications of financial innovations. It challenges readers to design products from the perspective of the households. As digital technologies continue to reshape financial services, this book offers a timely and essential guide to understanding the intricate dynamics of consumer financial behavior in the 21st century.

Table of Contents

Part I: Introduction to Consumer Finance, Fintech, and Embedded Finance

1 Consumer Finance
2 Fintech and Embedded Finance: Why Every Company Wants a Piece of the Pie

Part II: Theoretical Models of Consumer Financial Behavior

3 Intertemporal Choice
4 Case: X-Finance
5 How Consumers Do Behave

Part III: Social and Psychological Influences on Consumer Finance

6 Social Learning & Consumer Finance
7 Role of Human Brain in Intertemporal Choice
8 Role of Emotions in Decision Making

Part IV: Product Design

9 Consumer Finance Product Analysis Framework
10 Product Design Case Problems
11 Case: A "Savings & Overdraft" Product
12 Consumer Finance Product Cases

Part V: Real World Product Cases

13 Case: Payvider Health Card
14 Case: Shriram Chits
15 NPS (National Pension System)
16 Retirement, NPS and Product Design
17 Comparative Analysis of Global Pension Systems
18 Buy Now, Pay Later
19 P2P Lending
20 Miscellaneous Applications
21 Expanded Credit through BNPL
22 A BNPL Model of Consumers & Firms
23 Can Consumer Needs be Tied Up Using Product Design?

Additional Chapters

24 Adverse Selection in Consumer Finance
25 Low Income Households
26 Social Networks in Consumer Finance
27 Financing Human Capital
28 Experience Effects in Consumer Finance
29 Digital Collateral in Consumer Finance
30 Intermediation in Consumer Finance
31 Security Design in Consumer Finance
32 Financial Literacy
33 Financial Literacy and Product Innovation
34 Regulatory Guidelines on Consumer Financial Product Design
35 Personal Bankruptcy and Consumer Finance Products
36 Case: The Mortgage Piggy Bank
37 Case: Financial Resilience using Credit and Savings
38 Case: Complaint Severity Using Textual Analysis
39 Research Insight: Alternate Credit Scoring using Grocery Data
40 Research Insight: Savings Nudges and the Dynamics of Borrowing Behavior
41 Case: Yu'ebao

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