Karan Ahluwalia is a specialist knowledge banker with longstanding experience in the Indian industry. He is currently Group Executive Vice President and Country Head – Media and Entertainment, Fine Arts, Luxury and Sports Banking Group at YES BANK.
As part of the start-up team at YES BANK, he has been instrumental in setting up, developing and managing the portfolio of this highly focused banking group. At YES BANK, Karan has worked on customizing comprehensive financial and banking solutions comprising strategic advisory, fund raising, direct and structured financing to meet the specific requirements of players in the Media and Entertainment, Sports and Luxury sectors.
In a career spanning close to fifteen years, Karan has developed strong professional relationships with major industry players in the M&E, Sports and Luxury space. He brings with him over 10 years of banking experience as well as firsthand experience in startups within the media industry. Prior to YES BANK, Karan was part of ANZ Investment Bank and Rabo India (Rabobank’s Indian subsidiary) where he worked across the Corporate Finance, Investment Banking, Marketing and Strategic Initiatives functions.
How would you define luxury in the BFSI and why has luxury become important in this segment?
The Indian Luxury Market – which comprises the broad verticals of services, products and assets was estimated at $8.21 billion in 2012. Globally, emerging markets such as China, Russia and India are expected to represent 80 percent of the growth in luxury businesses by 2015. Asian economies have emerged, not just as a market for luxury products, but also as a source of capital. Recent times have seen international luxury brands choosing to list themselves on Asian Stock Exchanges rather than traditional bastions such as Milan and London. This interesting development is a clear reflection of the prevalent trend.
These are interesting times for the Indian Luxury Market, which by various estimates is expected to grow at a compounded growth rate of over 20 percent for the next few years. Although in its nascence, the Indian luxury consumer is evolving rapidly along a path that is inherently different from those in other developing economies. The Luxury Market in India – once considered the vanguard of royalty and business families; now includes young Indian professionals and businesspersons who represent the face of new luxury. This burgeoning segment has high levels of disposable income, is not averse to spending and as a result of being well traveled is also fashion-conscious.
India and China have shown their resilience to the global turmoil by exhibiting sustained growth and thus laying a solid foundation for future global economic recovery. As elite members of the BRIC club which currently accounts for 11 percent of the total world luxury sales (representing a combined retail value of over US $33 Bn in 2011-12), India and China are poised to undertake dominant positions in the global Luxury Market.
What are few of the offerings that you provide for clients who fall in this category?
As a Bank for Future Businesses of India, YES Bank has institutionalized a specialized Luxury Banking Group focusing on luxury products, retail infrastructure and allied areas. In line with our philosophy of promoting luxury retail and allied businesses in India, we have built significant expertise in this sector through our knowledge driven approach, which has allowed us to offer bespoke financial solutions for this nascent sector.
Our deep rooted knowledge focus has also seen YES Bank release the India Luxury Top Management Survey 2012. This first of its kind luxury study by YES Bank in association with ASSOCHAM was conducted with the support of our partner country Italy, Italian Luxury Council La Fondazione Altagamma – Milan and the European Cultural and Creative Industries Alliance, Brussels. The released report captures the strategic insights of over 300 business leaders from India, UK, Italy and France on how luxury businesses are capitalizing on existing opportunities in India.
Upgrading the current customer is a way of bringing them in the fold of luxury, what have been few learnings of YES BANK on the same?
The behavioral change from price consciousness to quality consciousness is observed very strongly as family income/ wealth levels go up. This change towards branded luxury products is consistent for growing customer base with high salaries and professionals. In many cases upgrading a customer has worked as a tipping point towards change of life style.
Luxury, Sports and Entertainment is an integral part of YES BANK offering meant for discerning individuals who are at the stage of upgrading their lifestyle. In this specific direction, YES BANK has formed alliances with expert organizations in respective areas in order to bring holistic luxury and lifestyle experiences for customers. This has also helped the bank to deepen its relationships with clients.
Can you share insights from your luxury survey?
The survey findings suggests that the best returns would come from investing in luxury assets for the long term and luxury products in the short term. This statistics has been supported by findings in the AT Kearney report where trends indicate the following:
– Cars have shown the highest growth rate in luxury assets i.e. 40 percent per annum from 2006 driven by a wider choice of brands, availability of cars in the small and mid segment as well as rapid increase in millionaires in Tier I and II cities. It is estimated that luxury assets are going to grow to US $7.9 billion in 2015 versus US $4.31 billion currently
-Luxury products are projected to grow to US $5.38 billion in 2015 versus a current US $2.85 billion. Jewelry is believed to be the largest contributor (31 percent) for this sub-sector given the investment mentality of Indians in jewelry, which leads to low consumer price elasticity
-Recent trends indicate a shift in the perception of luxury as an overall experience versus a mere material possession. This is evident from data on the Indian luxury services market that has shown resilience in the face of a global slowdown. The sector is expected to grow to US $ 1.45 billion in 2015 from US $ 1.05 billion currently. Hotels are the largest growth contributor to this sector followed by travel, tourism and bespoke concierge services
Recently, YES BANK associated with IPL; can you share some insight on the association?
IPL is the foremost event property in India, which through its vibrant and innovative platform brings together the entire country, irrespective of regional or demographic diversity. We are confident that YES BANK’s association with IPL for five years will facilitate our brand recognition, and further propel our pan India Retail Banking franchise. We look forward to deepen our relationship with our stakeholders through various exciting and creative initiatives around the IPL in our Retail branch serving areas across India.
This interview first appeared in the April issue of Marketing Booster magazine