The path to greater financial inclusion

Nearly 40 per cent of the country’s population has embraced digital payments and we account for the highest volume of real-time payment transactions at 48 billion (2021). Thankfully, fintech has played a massive role in bringing about a revolution in financial inclusion.

Today, India is home to 1.14 billion mobile users, of whom at least 840 million have smartphones (2021). This growing base has encouraged digital payments through tech-driven platforms for mobile banking, mobile wallets, USSD-based payments, and UPI-based payments for feature phone users. Besides mobile-based payments, credit cards, debit cards and IMPS offer seamless options to customers.

Traditional financial services were struggling, but thanks to the collaborative approach with fintech, the world has seen the growth of several unicorns. Currently, there are about 350 fintech unicorns in the world, of which 17 belong to India. By 2026, the global market for digital lending platforms is likely to touch $20 billion. Besides, the advent of robo-advisors owing to artificial intelligence innovation has led to the growth of online trading and investment — so much so that the global online trading platform market is expected to touch $12.16 billion in 2028.

Lending institutions in India registered more than 40 billion digital transactions in FY21, minting over a quadrillion rupees. With its revolutionary financial inclusion initiative, Pradhan Mantri Jan Dhan Yojana, India has successfully reached nearly 460 million beneficiaries so far. The Digital India Programme is another initiative to make the country a digitally empowered and cashless economy. Besides, India’s rural broadband connectivity project, Bharat Net, aims to connect hundreds of thousands of gram panchayats and villages with affordable yet high-speed internet.

Data for 2021 suggest that at least 76 per cent of the global population holds a bank account. However, it is only 71 per cent in developing nations. More than half of the unbanked population lives in seven developing nations, according to the World Bank. For sustainable growth, the world needs to manage wealth and investments. Services such as small-value retail credit, basic health insurance, and life or accident insurance are not boosted enough to aid financial inclusion.

In India, the concept of financial inclusion was introduced in 2005 by the Reserve Bank of India (RBI). The RBI has been instrumental in providing secure, dependable, accessible, economical, and efficient payment systems. It also plans to roll out its digital currency backed by blockchain technology. The Central Bank Digital Currency will bring the unbanked to the financial system and streamline the execution of monetary and fiscal policies. The RBI is hopeful that the UPI will register a growth of around 50 per cent and an increase of at least three times in the number of digital payment transactions by 2025.

The RBI introduced the Payments Vision 2025 with the core theme being e-payments for everyone, everywhere, every time. Designed with a vision of providing every user with safe, secure, fast, convenient, accessible, and affordable e-payment options, the document is a progressive move towards making India a global powerhouse of payments.

Now the world needs to identify ways to replicate India’s success story to drive growth. What is lacking across the world is low-cost distribution and access to these products. To achieve equitability, we need the right set of products that are suitable, accessible, and affordable for the global population.

The pace of change that a new technology or platform delivers makes the whole model feasible for the world’s 8 billion people. To continue this growth, there is a need to provide the right push not just at a local but a global level. We need to give the same experience to everyone, especially the new generation, irrespective of demography. Half of the 8 billion can be served if India’s model is debated and replicated across the globe.

The writer is Advisory Board Member, Global Fintech Fest 2022; and Chairman, Fintech Convergence Council