Digital literacy making way for India’s financial inclusion

By Milan Dolansky, Chief Digital Officer, Home Credit India

Digitalisation in India is no longer a luxury existing as an add-on feature to functions like banking, shopping, traveling and others. It has now percolated to almost all walks of life, transforming businesses and governments to become a new way of life. Be it paying a vegetable vendor through a United Payment Interface (UPI) or filing taxes online, New India is adapting to a digital lifestyle at a rapid pace. The country currently has over 45 per cent of its population online. This is well reflected in the 53.9 ratings of the Reserve Bank of India’s Financial Inclusion Index for March 2021. This indicates that over half of the country’s 1.3 billion population is online and has ease of access, usage of online services, and receives quality services. This large-scale digital onboarding has naturally put increased focus on doing business online, bellying the importance of digital literacy in New India’s digital financial inclusion.

Successive attempts by the government through programs like Digital India programme, have empowered a large part of the population with basic digital literacy skills. However, there now exists a need to channelise this acquired literacy into economic activities for the whole population to come under the ambit of digital financial inclusion. It would enable them to become a part of the larger digital economy. Imagine a second-generation cloth trader in a metropolitan selling his wares to consumers in different parts of the country. He is now able to securely receive digital payments and display his wares virtually due to this working knowledge of the internet. His business is now empowered to transcend borders. This is a feat that has been achieved only by his generation through the application of his digital knowledge. The impact has been an expansion of his business outreach and an increased number of orders. The usage of his digital literacy created a bridge for his inclusion in the new digital finance system. This degree of inclusion is now the need of the hour for the whole of India to advance its economy and lifestyle. It can cumulatively help them utilise and operate with banks, NBFCs and other financial institutions digitally.

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Currently, digitised banking has reached over 420 million people in India, making space for digital financial inclusion. This is playing a large hand in bringing socio-economic behavioural changes towards digital finance. It is allowing India’s rural and semi-rural population to be open to using digital gateways securely. Due to this inclusion, the country’s digital payment value is expected to grow more than double to $135.2 billion by 2023, according to an ASSOCHAM – PwC, 2019 study. While this growth has been commendable, it still needs to see large-scale percolation across class and economic barriers for people across classes to use their digital literacy skills to use such digital finance features.

Technology is acting as a chronicler in India’s digital inclusion revolution by offering easy-to-use mobile applications, multiple regional language modes, speed, and offering safe and secure transactions to the masses. It is aiding digital financial inclusion across the country with the use of digital payment gateways like RuPay, BHIM, and other mobile payment solutions. A fine example of how digital inclusion through digital literacy is enriching the Indian economy across classes is the adoption of digital payment by over 15 million pop and mom stores or kirana stores across India.

The digital transformation of India has rubbed off on the NBFC sector too. The digital literacy skills of the population are enabling NBFCs to leverage technology for process automation to enhance customer connect. New-generation NBFCs are leveraging partnership networks across the value chain of lead generation, client onboarding, underwriting, credit/loan disbursement, and collection more than ever before. Lenders may now assess individual consumer insights and create alternative credit rating models using artificial intelligence (AI), machine learning (ML), and big data.

While India to a great extent has covered digital literacy grounds, digital financial inclusion remains the need of the hour for the country. Cumulative participation of the whole country in digital finance will pave the way for economic growth in tandem with global numbers. As a young nation, digital financial inclusion is the key to ensuring egalitarian percolation of digitalisation’s benefits. It is the most effective step towards inclusive development. Eventually, financial inclusiveness will give the freedom to dream and live on one’s own terms. It will provide wind to the hopes of millions of Indians across the country.