Who are the biggest beneficiaries of India's digitisation drive in Covid?

When Prime Minister Narendra Modi announced the JAM trinity in 2014, the idea was to integrate mobile phones with Aadhaar and bank accounts. The introduction of UPI and wallets furthered the government's cause of digital penetration. Since then, the government has launched BharatQR and e-Rupee. While a lot of Indians are yet to adopt digital banking, young Indians are certainly taking a liking to it.

Digital brokerages have more assets and customers than traditional companies. First-time borrowers are driving the personal loan market. Watch this special report.

The Covid-19 pandemic has proved to be a tipping point for digitisation and broader penetration of finance.

Young or first-time investors with a do-it-yourself mindset flooded the digital world for active trading and financial planning. The idea was to look for additional sources of income beyond traditional instruments.

And the reason to go online was quite simple. They signed up in droves because of the simplicity of online trading platforms, flat-fee structures, and a quicker account opening process.

The surprising element here is that the increase in the number of active traders has largely come from Tier-2 and -3 cities, with a vast majority being first-time investors.

In fact, the top-five digital-only brokers – Zerodha, Upstox, Angel One, 5paisa and Groww – have cornered more than half of the industry’s active client base, signifying a seismic shift in the pecking order among domestic brokerages.

Zerodha, Upstox, Angel One, 5paisa, and Groww had cornered a market share of over 53 per cent until the end of July this year, with a cumulative tally of 12.6 million active clients. This figure stood at 17 per cent at the end of FY19.

And these digital brokers have actually put a stamp of their authority in the segment, with the share of top-five traditional brokers sliding to 22 per cent, from 33 per cent during the same period of FY19.

It seems the golden age of digital payments has finally dawned in India. Although digital payments were alive and kicking in the pre Covid-19 era too, it was the pandemic which gave them the much needed push, as more and more people chose to shop from the relative safety of their homes.

Let's talk about some facts and numbers. Do you know that more than 300 million Indian smartphone users now use digital payments? Quite a number, isn't it?

Leading Indian fintech platform PhonePe recently released a study on the evolution of digital payments in India over the past five years and the results were surprising.

By now, you must have realised the level of the emergence of the digital world in India. Now, here are some fun facts that will give you the extent of digital penetration.

Fun Facts in the PhonePe report

Amount of money that travels digitally in India is more than the GDP of 21 countries

13,456 digital payments at Victory Bazaar in Kakinada during lockdown, or 200 transactions a day!

14,142 payments at a dairy shop in Delhi NCR during lockdown, or 211 transactions a day!

Almost all the trends suggest that the younger generation is entering the financial sector through the digital mode. But it's not just for investment and trading. They are, in fact, also driving the personal loan market.

Credit bureau CRIF High Mark has come out with a study titled 'How India Lends'. The interesting assessment here is that youngsters below 25 years of age are driving the personal loan market, availing of short-term low value credit. And they are taking these loans for purchasing bikes or consumer durables.

But there is always a flip side. Many firms are aggressively tapping social media influencers to add to their customer base and get involved in malpractices to achieve the target. So, there comes the role of the government to maintain a dignified digital balance and provide a level playing field for all players.