Financial Inclusion: The Role of Fintech and Digital Financial Services in India

Abstract

The cashless transaction system is achieving its growth day by day, as soon as the market becomes globalized and the development of the banking sector more and more the people moves from cash to a cashless system. The cashless system is not just a necessity but also a need of today’s order. Over the past few years, efforts to drive financial inclusion in India have delivered mixed results. Access to bank accounts has increased dramatically, driven by a strong policy and regulatory push. However, the usage of these accounts and the uptake of formal financial services beyond savings accounts has remained exceptionally difficult. The recent initiatives by the Government around demonetization and the move to cashless transactions will further drive innovation and new entrants into the Industry. The amendments to the banking act clearly demonstrate the Government, RBI and Banking institutions intent to ensure stable growth of the economy by ensuring a healthy BFSI. Building Trust within the industry will be paramount to India’s further growth. Newer technologies pose different challenges to the banks and regulators, with security being a key concern. With cyber-frauds on the rise, the regulators and the bankers would have to come together to ensure control mechanisms are in place. A strong push from the Government of India has given the non-banking population easy access to financial products. Payment organizations have demonstrated the advantages of mobile-led solutions and the traditional banking organizations are now trying to make inroads into rural India by launching innovative mobile-based banking solutions. With support from the government, large technology companies are using new ways of reaching out to the rural masses and educate them about the various financial products, thus ensuring that their hard-earned income is rightly invested.

Keywords: Financial Transactions, Digital Apps, Rural Population

JEL Classification: G