Emerging Technology And Fintech Success Story: How Rural India Is the Key The recent pace of digital innovation has the potential to bridge the gap and accelerate rural development
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The rural-urban economic divide is one of the most fundamental elements that shape overall economic disparity. The extent to which digital financial products and services have reached the two very distant sectors of society varies in several ways. Apart from the lack of infrastructure, the low digital financial literacy is another reason for the limited reach of basic financial services in rural India. Despite contributing significantly to the expansion of the Indian economy, rural workers are excluded from the benefits of the country's digital, contemporary, and financial progress.
Though the recent pace of digital innovation has the potential to bridge this gap and accelerate rural development. It is critical to make sure that rural areas are not left behind when next-generation digital services will be introduced into the market. Hence, the need for financial inclusion calls for necessary and immediate actions to make the rural population a part of digital India.
Why digital inroads need to be made in rural india
It was difficult to envisage money transactions being that easy, quick and frictionless until UPI entered, and inaugurated India's digital payments arena. NPCI first introduced UPI in 2016, and since then it has grown in popularity among modern Indians, with the pandemic hastening its adoption. In 2019, it surpassed 1 billion transactions, and 3.55 billion transactions worth INR 6.39 trillion were recorded in August 2021 alone.
While the above data present a positive image of India's digital transformation, it is still incomplete. Why? Because a majority of digital transactions in India take place in cities. With only 28 per cent of rural Indians owning Internet-enabled smartphones and a poor level of digital literacy, India's rural heartland is missing out on the country's fintech revolution. Despite accounting for 65 per cent of India's population, rural residents remain financially weak.
Consequently, though it takes a lot of effort, the fintech industry has been working towards all-inclusive growth since its inception. By providing the basic yet latest technological tools for a livelihood to people who are backward in any manner, especially digitally backward, the fintech industry is delivering solutions to modern-day financial and digital problems faced by the rural population.
A journey towards complete financial inclusion
For 100 per cent financial inclusion, the key is to include the "rural unbanked" population of India. Consumers have started using mobile wallets or contactless digital payments in the aftermath of the pandemic. With the evolution of fintech, digital payment services are now available in semi-urban and rural India, which were previously unavailable, resulting in a more inclusive financial sector.
The fintech industry has introduced a new working model, to be called "the agent model" whereby, local shop owners are enabled to become a banker in their areas. The local shops are being converted into a digital financial services hub for the people residing in remote areas and the local shop owners furnish their customers with easy-to-use cash withdrawal services, which can easily be used with the help of Aadhaar, money transfer services, which can be used with the help of just the customer's mobile and account number without visiting their bank. Instant prepaid recharges of various billers from a single point, travel and stay bookings in the blink of an eye, insurance services, investment products and a number of other digital payment services are making the lives of people living in rural areas easier.
To encourage people to use more and more digital services, fintech organisations are offering services that are simple to understand and operate. Services in the local language/s can also motivate rural customers to use digitally backed banking and financial services without any hesitance.
The Way Forward
A large percentage of the rural population is still sleeping under the sky with no opportunities, digital financial literacy, or access to the country's technical advancements. As a result, to wrap every human in the blanket of digitalisation, appropriate resources must be provided to each individual, to begin with.
It is not enough to generate ideas and services. The key is to understand the needs, capabilities, and literacy level of people suffering from digital financial backwardness to provide them with relevant solutions to their problems. Digitally challenged people's access to financial services could be improved by establishing more flexible, convenient, and easily accessible tools. Credit can be made more accessible, unrestrictive, and hassle-free.
How soon India can achieve 100 per cent financial inclusion depends on how quickly it can improve economic and digital literacy among rural communities while also making fintech infrastructure more accessible and inexpensive.