How can India drive financial inclusion through technology and literacy

The survey revealed that UPI is the most preferred transaction mode for nearly 38% of individuals in rural and semi-urban India. Respondents aged between 18 and 35 had a higher preference for UPI, whereas 19% of respondents preferred cash only, and 11% did not prefer UPI as a mode of payment. Digital financial inclusion is vital to ensuring that more people, especially in rural areas, can access cost-effective financial services.

Interestingly, 96% of respondents demonstrated a strong interest to save and invest, creating opportunities for financial institutions to offer tailored investment products. 55% expressed an interest in learning about financial management, including savings, budgeting, insurance, and taking loans, emphasizing the need for targeted financial literacy programs. Semi-urban regions also showed the highest awareness of most financial inclusion schemes, particularly Pradhan Mantri Jan Dhan Yojana (PMJDY), which ranks first at 84%, followed by Atal Pension Yojana (APY) at 74%. This indicates stronger outreach and penetration. However, awareness among women is notably low, with 18% of women unaware of any financial inclusion schemes.

While 69% of women use digital banking, only 44% transact regularly, highlighting the need for improved digital literacy and access for women. Ensuring financial inclusion for women is crucial, as it can empower them to participate more actively in economic activities, improving their financial security and independence.

Despite growing adoption of smartphones and mobile banking, 86% of account holders in rural and semi-urban India still prefer visiting bank branches. This reflects the continuing trust in traditional banking methods, even as digital financial services grow. Among those who do secure loans, 60% rely on formal banking services.

The report further establishes that higher financial literacy enables individuals to understand and effectively utilize financial solutions. Credit behavior was found to be restrictive due to a lack of knowledge, documentation, and collateral, highlighting gaps in financial literacy and access to formal credit. The popularity of schemes such as PMJDY is presented as an example of successful ecosystem participation, supported by a robust mobile infrastructure.

The report outlines short- and long-term recommendations to achieve higher financial inclusion. The short-term focus needs to be on understanding the unbanked and under-banked segments and enabling them with technology and financial literacy initiatives. The long-term approach emphasizes that a tech-driven financial ecosystem is key for lasting inclusion. This ecosystem should leverage AI and advanced automation to provide personalized, accessible, and secure financial services. By clearly outlining each participant's role in this system and motivating their involvement through gamification and measurable goals, a sustainable, inclusive banking model can be built.

In conclusion, advancing financial inclusion in India through digital financial services, financial literacy programs, and inclusive banking schemes is critical to ensuring sustainable growth. By leveraging the power of financial technology, India can continue its trajectory toward becoming a global leader in financial inclusion while fostering greater economic opportunities for all citizens.