Digital Financial Inclusion in India

Written by Ramesh Kumar Nanjundaiya

Digital Financial Inclusion (DFI) for business development, an important transformational change happening in India today:

A new business opportunity is getting developed for entrepreneurs from California and the US to tap the growing market in India in Fintech, content provision, interactive commerce,  technology tools for incorporating business via the social media, promotion of evolved technology platforms for payments and commerce. 

Any discussion in the current day India be it with academicians, policymakers, local government, the banking sector, business and corporate sector, the technology ecosystem, retail commercial sector, etc, etc, a very common discussion agenda is directly or indirectly on the digital India initiative, economy, and its ramifications and benefits.

With the current pace of rapid ongoing technology intervention in the financial sector via electronic banking activity and communication across India including rural and remote areas of the country, one witnesses a very huge increase in the use of financial services via technology as well as an uptake in the e-commerce sector.

Due only to the availability of this cost-effective “financial technology”, one does not fail to notice the fact that the standard of living across India is improving at a fast pace. This has been an eye-opener to all the commercial banking activity in the country to tap the huge potential of the unbanked market area that is available across India as well as the e-commerce space.

As an example, today in India, it is conservatively estimated that about 60% of the Indian population have a mobile phone which they actively use for instant communication. Suppose financial tools are provided in the mobiles, then a handheld bank will be available with every India. Thanks to technology and digitization, welcome to Mobile banking in today’s rising marketplace and an adaptation to mobile financial services.  This had led to a new digital economy comprising of a “hybrid marketing & communication” tool as finance and business are going hand in hand. What is needed is content.

Let’s briefly recall various initiatives in India post-2014; Jan Dhan Yojana, Direct benefit transfers, RuPay card, account dormancy, Aadhar card, Unified payment interface, Demonetization, GST, New regulatory framework, New NPA assessment in commercial banks, payment banks, fintech, small finance banks, etc.  All these in a nutshell mean, we are witnessing an ongoing “digital financial inclusion” (DFI) phenomena in the country currently.

DFI  can be broadly defined as digital access to and use of financial services by all sections of the country’s population including remote and rural India. It is the availability of digital financial services across the nook and corner of India. So what is needed for this and how does this happen cost-effectively. We can identify 3 main components of this service. The players are a technology platform, retail agents or technology finance communicators, and a device that is the ubiquitous mobile phone which will enable all transactions via a platform. This platform enables a customer to use a device to make or receive payments and transfers and to store value electronically with a bank or nonbank permitted to store electronic value. A common example is a  POS machine in a merchant outlet where payments are effected via a debit/credit card. The players here are the retail agents armed with a digital device connected to communications infrastructure to transmit and receive transaction details enable customers to convert cash into electronically stored value and to transform stored value back into cash.

With the ease of internet and data pack availability, the customer devices include a laptop, mobile phone, payment card, all used as a means of transmitting data and information or an instrument that connects to a digital point of sale POS terminal, all encrypted of course. Going forward and with awareness and trust, the whole of India can become financially wired.

Thanks to the digital initiative, today in India the Financial inclusion concept has become very important and has touched all aspects of society. It is a user-friendly technology method of offering banking and financial services to individuals. The market in India is growing by leaps and bounds with a good percentage of the young generations.  The work for financial institutions, the regulatory organization that has adapted technology well, the sky is the limit for business development via the digital economy. It aims to include everybody in society by giving them basic financial services regardless of their income or savings. DFI focuses on providing financial solutions to all levels of society including the economically underprivileged both within the urban as well as rural areas of the country.

The term DFI is broadly used to describe the provision of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure that the poor make the best use of their money and attain financial education. With advances in financial technology and digital transactions, more and more start-ups are now making financial inclusion simpler to achieve.

Given the above development, currently, a “transformation” is being felt in the country where business, commerce, and digital content are working hand in hand. What does this entail?  The whole concept and mindset of shopping have changed. Today mobile shopping is picking up at tremendous speed across the country and without any influence via advertisement. Today what is fuelling technology and communication is the digital content for the smartphone users. Per available statistics, this has seen a huge uptake in the last year due to covid 19 pandemic and work from home arrangement. This is going to be the new India’s growing digital economy which extensively uses such designations as FaceBook, YouTube and Instagram for content consumption. It is now the right time particularly for branding companies, in the highly competitive and growing market to use their best and sustaining interactive commerce marketing and influencing strategies for higher engagement with the growing digital customers. Today the tech-savvy customers are increasingly using social media platforms for their shopping. So what is needed for organizations to get a  slice of this market is to combine e-commerce with digital payment platforms, with new content and communication, video shopping and content creators, an all-in-one package. What started as the Digital Financial Inclusion initiative has now given new inroads to a new market find both for business explorations and for commercial banks to seek new customers. This, in turn, leads to a new development,  of customers  now a days , undertaking their purchases via social media. Thus, this will give a new breed of marketers, advertisers, content writers, technology platform providers a new outlook to promote their respective products and services.

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