Financial inclusion has concerned both the government and economic development leaders. Although several policies and legislation have been implemented, they have only served to inspire historically under-banked communities to seek formal financial institutions.
In India, digitisation has taken a U-turn by being more inclusive to individuals. The Centre has proactively attempted to integrate the population into the broader financial system. A majority of the population has access to open a bank account, and a portion of them even know how to conduct cashless transactions using UPI. This is a positive trend in recent years, resulting in increased confidence in digital platforms.
WIDER FINANCIAL INCLUSION NEEDED
The year 2020 has been teething troubles for every individual across the world. In our country, low-income and underserved people struggle to cope with the catastrophic collapse of the Covid-19. The challenge of creating a financially inclusive system has never been more challenging or more significant.
If anyone in the pandemic recovery phase from the backward population wants to start or invest in a small business today, they can use microfinance and NBFC Loans. However, the drawback is a quiet structure with only a few basic requirements, and there is also a lack of access to loans that are not conventional. It is essential to structure financial services that are of interest to the underserved, which remains a challenge.
Identifying people’s financial needs is the first step toward financial inclusion. Having access to a transaction account, which enables people to store money and send and receive payments, is the first step toward broader financial inclusion. A transaction account is a type of account that connects you to other financial services.
Introducing Jan DhanAadhaarMobile by the government has positively affected the banking sector and financial inclusion in India. There has been a significant change in targeted and reliable payments since the introduction of JAM services. It has also aided in eliminating duplicate entries and the reduction of dependency on cash payments and has helped create a trust factor with the customers.
Although the cost of maintaining active accounts like transactions and transportation outweighs the benefits, which is one of the critical reasons for the low use of banking and payment services in rural areas. Also the accessibility to the nearest banking point in rural and peri-urban areas.
Innovative consumer interaction techniques are needed to increase the use of savings products to create safety nets.
To ensure inclusive economic development, significant investments in physical and social infrastructure and need-based goods, financial literacy, and creative delivery mechanisms are needed. Furthermore, financial institutions must place a greater emphasis on customized services to have an efficient tool.
ROLE OF FINTECH FIRMS
Eliminating multiple levels of governance by partnering with fintech firms that will assist consumers, exploit digital technology, and develop a better distribution infrastructure based on mobile technology that provides quality, protection, affordability, and accessibility can be an excellent platform to deliver financial services.
This will aid in a reorganisation by tailoring products according to the needs of consumers by understanding their general economic behaviour that will accelerate the inclusive development progress.
Financial inclusion is a long-term objective and a radical movement that will continue to grow. Furthermore, there is no one-size-fits-all approach for achieving inclusive development. With a healthy mix of banks and fintech firms, hopefully, every Indian citizen will have access to required financial services to bridge the gap with the needs unmet in the ten years.
(This article has been authored by Sasidhar N Thumuluri, CEO & MD of Sub-K. Views expressed are personal)
Source : From the Web