Digital financial inclusion: Next frontiers—challenges and opportunities

Date:

Trending

Over the past decade, technology (FinTech) has transformed the delivery of various financial services and products and quickened the pace of financial inclusion.

- Advertisement -

On this front, FinTechs are paving the road for digital financial inclusion, making lives better for families, communities, and businesses all around the world. To expand digital financial inclusion, banks and financial institutions must continue to innovate and simplify access to their services.

Besides, the government has also launched many initiatives for enabling digital infrastructure at grass-root levels, with its financial inclusion schemes such as Pradhan Mantri Jan Dhan Yojana (PMJDY), Atal Pension Yojana (APY), Pradhan Mantri Mudra Yojana (PMMY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Sukanya Samriddhi Yojana.

- Advertisement -

The path toward Digital Financial Inclusion:

While the progress has been remarkable, large-scale percolation across class and economic barriers is still required for people of all classes to apply their digital literacy skills to take advantage of digital financial features.

Financial institutions should reconsider their innovation initiatives. New technologies must be designed to provide smooth access to critical financial services to the general public. Financial institutions require products and services for digital financial inclusion, including smart financial advice and education for under banked people to improve their banking skills.

Lack of financial literacy and awareness of financial cybercrimes has caused general mistrust among the rural population as it consequently leads to reduced digital penetration.

Also, the cost of running a sustainable last-mile delivery model, predominantly in rural areas and last-mile level service delivery, is very high. Multiple efforts by government and business agencies trying to reach the same location for financial inclusion, social inclusion, or healthcare inclusion are driving higher costs.

Despite the challenges, digital financial inclusion is the need of the hour as it helps in developing a culture of savings among semi-urban and rural populations by bringing the low-income spectrum within the banking and insurance framework.

Furthermore, for banking services, digital transformation enables an expansion of access through the use of digital channels and customer information, as well as the redesign of products and process value chains to offer new products and serve customers more competently. In this context, the emerging market digital financial transformation presents opportunities.

  • Low levels of formal financial services Innovations such as mobile money can create a strong foothold in emerging markets where there is an urgent need and no obligatory service to displace. Batting on the mobile money ecosystem, innovators in emerging markets have jumped over conventional financial infrastructures to offer a range of financial services planned to sustainably service dispersed or low-income populations.
  • Operating a bank branch is costly, whether in the emerging or developed market and then switching over to digital channels helps tap a larger volume at lower costs across markets. Among low-income communities, particularly, digital channels are perceived as must-have features rather than add-on benefits, and they enable the working of financial services to lower-income consumers. So, the need for complete digital transformation from front-end customer channels, through the credit and payments engines, to servicing and processing is greater in emerging markets where financial access is a goal compared to wealthier markets.
  • Flying under the radar of the global tech/venture capital community, local innovators get to create their forte and serve their markets while the giants are busy tapping the wealthier market. For banks, this can also create opportunities if they can take the lead in introducing unique local value propositions.
  • Where general-purpose financial infrastructure is lacking, the networks and infrastructure of incumbent banks retain significant value. Banks can leverage their position of already having payments, identity, and trust assets in place as new infrastructure comes online. Banks can leverage their capital, customer bases, and brands to expand rapidly in partnership with FinTechs that can help fill lags in banks’ channels, product sets, and processing capabilities.

Summing up

Digital financial inclusion is still a pressing issue in the country. The country’s overall engagement in digital finance will pave the road for economic growth in line with global trends. As a young country, digital financial inclusion is critical to ensuring that the benefits of digitalization are distributed equally. It is the most efficient means of achieving inclusive development. Financial inclusion will eventually allow people to dream and live their lives on their terms. It will give millions of Indians across the country renewed optimism.

THE SNAPSHOTS

Sign up to get quick snaps of everyday happening, directly in your inbox.

We don’t spam! Read our privacy policy for more info.

- Advertisement -

Support our independent journalism PayPal (Outside India) For PayU (For Indian Readers).

Rohit Arora
Rohit Arorahttp://biz2credit.com
Rohit Arora, CEO and co-founder of Biz2Credit & Biz2X

More Latest Stories

More Articles

PDF and eSignature Solution Provider Foxit Promotes Andrew Travis to Chief Revenue Officer

Foxit, Fremont, CA-based leading PDF and eSignature solution provider, on Tuesday announced that it has promoted Andrew Travis to Chief Revenue Officer (CRO). In his...

Exploring Headless CMS: Key Benefits and Practical Applications for Modern Businesses

In the fast-paced digital world, content management systems (CMS) are essential for delivering cohesive user experiences across multiple channels. However, traditional CMS platforms, which combine content management and presentation, often fail to adapt to today’s flexible, multichannel environment. As companies spread their digital presence across...

Onlygood AI CEO Rajeev Sinha on Future of AI-Driven ESG Data and Supply Chain Transparency

Speaking to TechGraph, Rajeev Sinha, CEO & Co-founder of Onlygood.ai, shares insights on how...

Vishal Puri On Spalba’s Tech-Driven Approach To Venue Booking & Planning

Speaking to TechGraph, Vishal Puri, Co-Founder of Spalba, explains how its platform uses technologies...

Choosing the Right Tax Consultant: A Guide for Businesses and Individuals

For both individuals and businesses, tax planning and compliance are crucial aspects of financial...

Life Insurance Death Benefit Payouts: What Your Family Needs to Know

It is important to know more about life insurance policies and their operational modalities....

The Rise of Conversational AI: What It Means for Tech and SaaS Businesses

Back in the time, when AI was not as prominent, businesses used to struggle...

Union Budget 2025: Real Estate Experts See SWAMIH 2.0, ₹15,000 Cr State Support to Ease Housing Bottlenecks

The real estate sector views the Union Budget 2025-26 as a step toward addressing...

INTERVIEW: ADDA’s Krishanu Mukherjee on Transforming Gated Communities

In an interview with TechGraph, Krishanu Mukherjee, AVP of Growth at ADDA.io, explained how its platform’s deep understanding of local compliance and hyper-local needs...

Union Budget 2025-26 Reactions: EV Makers Welcome Tax Relief and Infrastructure Investments

India’s electric vehicle industry has welcomed the Union Budget 2025-26, citing exemptions on capital...

Healthcare Reactions to Budget 2025-26: Experts Back Investments in Cancer Care & AI but Call for Broader Mental Health Policies

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has drawn mixed reactions...

Budget 2025: Tax Reforms, Infrastructure Financing, and NBFC Support Top Budget Wishlist

As Budget 2025 approaches, experts from the NBFC, finance, and business sectors are voicing...

TradeFT Review: Comprehensive Platform Overview 2025

The financial markets are abuzz with some pretty exciting developments as 2025 gets underway,...

Income Tax Slabs Revised in Budget 2025-26: Experts Applaud Relief for Salaried Class, VDA Taxation Still a Concern

With income tax exemption raised to ₹12.75 lakh and revisions in tax slabs, the Union Budget 2025-26 brings notable relief to taxpayers. Experts suggest...

Union Budget 2025-26: MSME Leaders Back Investment Limit Hike, Call E-Shram Expansion Crucial

The MSME sector has responded positively to the Union Budget 2025-26, with experts highlighting the impact of increased investment and turnover limits. Industry leaders believe the government’s decision will enable small businesses to expand operations, contribute more to manufacturing and exports, and boost overall...

From GCC & AI to DeepTech Investments: How Tech Experts React to the Union Budget 2025

Finance Minister Nirmala Sitharaman’s Union Budget 2025-26 has drawn mixed reactions from technology industry...

Union Budget 2025-26 Reactions: Education Sector Applauds AI, Skilling Initiatives but Flags Funding Gaps

India’s education sector leaders have responded to the Union Budget 2025-26 with optimism and...

Union Budget 2025 LIVE: FM Sitharaman Announces Reforms in Finance Sector; Increases FDI Limit to 100%

Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2025-26 in Parliament today,...

Union Budget LIVE: Finance Minsiter Nirmala Sitharaman Tables India’s Budget for 2025-26

LIVE Union Budget Coverage: The Union Budget 2025, set to be presented by Finance...

AI in Skill Development: What Budget 2025 Should Do to Close the Workforce Skills Gap

India, with its vast pool of young talent, faces a significant challenge: a widening...

Union Budget 2025 Expectations: Hospitality Sector Urges Budget Support for Tourism Growth and Workforce Development

With the Union Budget 2025 on the horizon, hospitality sector leaders are calling for...

From GST Reform to Supply Chain Stability: What the F&B and Restaurant Sector Expects from Budget 2025?

With Budget 2025 approaching, the restaurant and F&B sector is outlining its expectations for...

BUDGET 2025: Sustainability Sector Hopes for Strong Budget Support to Drive Clean Energy and Circular Economy

As the Union Budget 2025 draws near, expectations are building in the sustainable and...

Gaming Industry Eyes Budget 2025 for Relief on GST and Boosted AVGC Support

With the Union Budget just days away, the gaming sector is growing hopeful that...

Budget 2025: Tax Reforms, Infrastructure Financing, and NBFC Support Top Budget Wishlist

As Budget 2025 approaches, experts from the NBFC, finance, and business sectors are voicing...

Union Budget 2025: India’s AI Budget Allocation Stirs Mixed Reactions

India’s Finance Minister Nirmala Sitharaman's announcement of a ₹500 crore fund for a Centre...

Union Budget 2025: Investors, Startups React to Govt’s Push for Fund of Funds, FSS Scheme and Deeptech

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on Saturday, has drawn...

Union Budget 2025: Kisan Credit Card Loan Limit Increased to ₹5 Lakh Under Modified Interest Subvention Scheme

Finance Minister Nirmala Sitharaman, in her Union Budget 2025-26 speech, announced an increase in...

Union Budget 2025: IIT Student Strength Doubles, ₹500 Crore AI Education Center Announced

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2025-26 in Parliament today, outlined...

TradeFT Review: Comprehensive Platform Overview 2025

The financial markets are abuzz with some pretty exciting developments as 2025 gets underway,...

BUDGET 2025: Sustainability Sector Hopes for Strong Budget Support to Drive Clean Energy and Circular Economy

As the Union Budget 2025 draws near, expectations are building in the sustainable and...

Solar, Renewable Sector Expects Tax Breaks, Subsidies for BESS & Solar Financing Reform From Budget 2025

As Union Budget 2025 approaches, renewable energy leaders are urging Finance Minister Nirmala Sitharaman...

Gaming Industry Eyes Budget 2025 for Relief on GST and Boosted AVGC Support

With the Union Budget just days away, the gaming sector is growing hopeful that...