By Milan Dolansky, Chief Digital Officer, Home Credit India
Digitization in India is no longer an existing luxury as a complementary feature to functions such as banking, shopping, travel and others. It has now spread to almost every area of life, transforming businesses and governments to become a new way of life. Whether paying a vegetable vendor through a United Payment Interface (UPI) or filing taxes online, New India is quickly adapting to a digital lifestyle. The country currently has over 45% of its population online. This is well reflected in the Reserve Bank of India’s Financial Inclusion Index scores of 53.9 for March 2021. This indicates that more than half of the country’s 1.3 billion people are online and easy to access, use online services and receive quality services. This large-scale digital integration has naturally put more emphasis on online business, highlighting the importance of digital literacy in the digital financial inclusion of New India.
Successive attempts by the government through programs like the Digital India program have enabled a large part of the population to acquire basic digital literacy skills. However, there is now a need to channel this acquired literacy in economic activities so that the entire population enters the framework of digital financial inclusion. This would allow them to be part of the larger digital economy. Imagine a second generation fabric trader in a metropolis selling his wares to consumers in different parts of the country. He is now able to securely receive digital payments and virtually display his goods with this working knowledge of the Internet. His company is now empowered to transcend borders. This is a feat that was only achieved by his generation through the application of his digital knowledge. The impact has been an expansion of its commercial reach and an increase in the number of orders. The use of its digital culture created a bridge for its inclusion in the new digital financial system. This degree of inclusion is now the need of the hour for all of India to advance its economy and way of life. It can cumulatively help them to use and operate with banks, NBFCs and other financial institutions digitally.
Young people attract the attention of FinTech companies in a context of rapid digitization
Currently, digital banking services have reached over 420 million people in India, making room for digital financial inclusion. This plays a big role in the evolution of socio-economic behavior towards digital finance. It enables the rural and semi-rural population of India to embrace the secure use of digital gateways. As a result of this inclusion, the value of the country’s digital payments is expected to more than double to $ 135.2 billion by 2023, according to an ASSOCHAM – PwC, 2019 study. While this growth has been commendable, it has yet to see large-scale percolation through class and economic barriers for people of all classes to use their digital literacy skills to use these digital finance features.
The technology acts as a chronicler of the digital inclusion revolution in India by providing easy-to-use mobile apps, multiple regional language modes, safe and secure speed and transactions for the masses. It helps digital financial inclusion across the country through the use of digital payment gateways such as RuPay, BHIM and other mobile payment solutions. A great example of how digital inclusion through digital literacy enriches the Indian economy across all classes is the adoption of digital payment by over 15 million pop and mom stores or kirana stores across the India.
India’s digital transformation has also rubbed off on the NBFC sector. The digital literacy skills of the population allow NBFCs to leverage process automation technology to improve customer connection. Next-gen NBFCs are leveraging partnership networks across the lead generation, customer onboarding, underwriting, credit / loan disbursement, and collection value chain more than ever. Lenders can now assess individual consumer information and create alternative credit scoring models using artificial intelligence (AI), machine learning (ML) and big data.
While India has covered the areas of digital literacy to a large extent, digital financial inclusion remains the need of the hour for the country. The cumulative participation of the whole country in digital finance will pave the way for economic growth alongside global numbers. As a young nation, digital financial inclusion is the key to ensuring the equal spread of the benefits of digitization. This is the most effective step towards inclusive development. Ultimately, financial inclusion will give you the freedom to dream and live on your own terms. It will boost the hopes of millions of Indians across the country.