By Mr. Kamaljeet Rastogi
India’s journey toward financial inclusion has been remarkable, the determined and collaborative efforts by the government, financial institutions, and fintechs have transformed the financial landscape by bringing millions of underbanked individuals into the formal financial ecosystem. The government initiatives, particularly the Pradhan Mantri Jan Dhan Yojana (PMJDY) laid a crucial foundation, resulting in the opening of over 50 crore bank accounts. Of these, 56% are held by women, and a substantial 67% have been established in rural and semi-urban areas. Other factors like technological advancements, higher internet penetration, the rise of fintechs, shifts in banking models, and inclusive policies collectively contributed to a more accessible and inclusive financial ecosystem for diverse segments of the population.
Financial Inclusion: Where are we today?
In recent years, financial inclusion has taken significant strides, thanks to collaborative initiatives undertaken by fintechs in association with banks and various state governments. By joining forces with various state governments, fintechs have empowered Self-Help Group (SHG) women as Bank Sakhi, expanding the reach of financial services in remote areas, especially among women. These bank Sakhis have been equipped with the latest tools like Micro-ATM devices/POS devices and smartphones to conduct secure digital transactions for their customers. Since the launch of the program, over 100,000 women have been trained, and they are now actively serving rural citizens in more than 20 states.
Fintechs have also identified, hired, and trained Business correspondents (BC) agents to help rural citizens with banking services like account opening, Aadhaar Enabled Payments System (AePS) transactions, money transfers, loan disbursement, insurance, and other value-added services. Furthermore, local shopkeepers and small merchants are also trained to offer banking and value-added services along with their existing businesses to enhance financial accessibility in underserved areas. With a network of banking agents, AEPS transactions in rural India grew by 45% in FY22, according to a report by NPCI.
Trends Shaping The Future Of Financial Inclusion
In the dynamic landscape of banking, the financial inclusion landscape is steering towards a future defined by innovation and evolving consumer needs. In this article, we will cover the key trends that will influence the future of financial inclusion, paving the way for more accessible and personalized services for the citizens of Bharat.
Personalized Financial Services:
In rural regions, where economic activities often revolve around agriculture and livestock, personalized banking services such as Kisan Credit Cards or tractor loans for agricultural needs and cattle loans or insurance for livestock investments are essential. This approach will not only improve the availability of financial services but also recognize the distinct challenges and opportunities present in rural communities. Providing customized financial solutions allows banks and financial institutions to play a significant role in improving the economic welfare of these areas and reaching previously unexplored regions.
One-stop banking experience:
A light technology platform with behaviour analytics and AI capabilities designed to offer customized products to customers based on their preferences. Be it opening a savings account or applying for loans or insurance, the one-stop-shop model aims to simplify the customer experience and provide a comprehensive solution to their financial needs. It ensures quick and hassle-free account setup, making it more likely for individuals to embrace financial services. Furthermore, it smoothens complicated processes like the loan application and makes it simpler with minimal paperwork and quick approvals. This not only attracts potential borrowers but also facilitates financial inclusion by making credit more readily available and at the same it will support the broader goals of financial inclusion.
Enhanced Security To Protect Transactions
In the digital era, it is crucial to invest in advanced technologies that will secure financial data and play a key role in upholding customers’ trust. Innovations like Geofencing stand out as a robust anti-fraud solution, ensuring transactions occur within designated areas for compliance with geographic regulations. At the same time integration of voice confirmation in micro-ATMs and multi-finger authentication will add an extra layer of security to transactions. Voice confirmation aids visually impaired and literacy-challenged users. Furthermore, to prevent financial fraud, the integration of Anti-Money Laundering (AML) and Fraud Risk Management (FRM) platforms is gradually becoming the norm in the banking space. These platforms specialize in fraud prevention through high-risk merchant screening, location validation, blacklist checks, and more. This integration helps financial institutions proactively manage risks and combat financial crimes and fraud.
By embracing these technological advancements, financial institutions can demonstrate their commitment to reinforcing security measures and staying ahead in the ongoing battle against financial crimes and fraud.
The Road Ahead
The future of financial inclusion seems exciting and promising with the adoption of these trends. These advancements will not only transform the financial inclusion landscape but will enhance security, accessibility, and trust amongst end consumers. As these innovations become more widely adopted, coupled with strategic policies and collaborative efforts, the vision of a financially inclusive India appears gradually achievable.
