Updated on: Friday, November 19, 2021, 05:48 PM IST

Fintech has come to aid of unbanked in rural India, transformed ecosystem

The mode of payment in India has leapfrogged from cash (offline) to alternative modes (online) of payments showcasing exorbitant growth in the urban Indiay/ Representational Image | File photo

The mode of payment in India has leapfrogged from cash (offline) to alternative modes (online) of payments showcasing exorbitant growth in the urban Indiay/ Representational Image | File photo


The banking industry is imitating their revolutionary history of often being the first to use new technology. To ride the wave of transformation, banks have always looked up to technology and have always experienced meteoric rise.

With the call to digitize India, the seventh largest economy in the world, the banks and financial institutions have all geared up to initiate the changes required for the “Digital India”.

Right from shopping, learning, financial transactions all have gone through a digital transformation. Educational Institutions, shops, restaurants, banks and fintech institutions have become successful on computers and electronic devices. Considering the leverage of high mobile density, the UPI (Unified Payment Interface) enables users to link their bank accounts with their mobile phone numbers, to make or receive hassle free payments without any card.

All kinds of transactions are powered by and achievable via “India Stack”- a unique digital infrastructure, which enables presence-less, paper-less and cash-less service delivery possible. The mode of payment in India has leapfrogged from cash (offline) to alternative modes (online) of payments showcasing exorbitant growth in the urban India.

Rural India provides huge scope for fintech

The rural India, with over 5000 Tier IV towns and 6,38,000 plus villages yet to savor digitization. India has large untapped market for financial services technology.

The hindrances faced by traditional financial institutions to streamline the hinterland were low penetration. To fill the gap and cater to the needs of financial inclusion of unbanked villages, the fintech startups armed with sophisticated and Cloud technology and customer data are working vigorously.

Fintech startups provide banking and financial services under one roof, which makes banking and other value-added services accessible to people of rural area. A shift to online commerce from offline has rapidly adopted technology in everyday living.

The change in mode of payments from hard cash to other alternative modes such as UPI, internet banking, banking cards offered by various banks and fintech firms along with various value-added services like bills payment, recharge, insurance, prepaid recharges etc. have turned out to be a boon.

The successful implementation of Aadhar has carved the way to the launch of AePS (Aadhar Enabled Payment System). It is a safe and secure mode of making micro payment validated by bio-metric authentication on each and every transaction, without any card or PIN. It allows interoperable transactions.

These fintech companies offer a wide range to customers with their value-added services such as Aadhar pay, domestic money transfer, cash withdrawals via AePS, micro ATM, bank account opening, cash collections, insurance are a few to name. This contact-less, paperless and cashless service can be availed by fintech customers.

Few fintech are passionate about acquiring and catering to new customers at very low costs. These low cost alternatives are capable of taking the financial products to the pulse of the nation, resulting in financial empowerment of the nation as a whole.

Some fintech have revolutionized their products so that they bring the bank to the doorstep of the consumer. Their constant hankering for the development of the rural people keeps them on their toes and thus come up with various solutions to solve hindrances for the consumer.

The doorstep deliveries of various financial services are observed as a milestone for digital inclusion of rural citizens, especially the underserved, people with various types of disabilities, senior citizens, illiterate, and technology shy and medically unfit for movement.

Challenges to fintech digital services

Providing doorstep digital service to the people of the hinterland has its own difficulties with trust being the first challenge. Rural India, a conventional cash-driven economy, had trust issues with the digital work of fintech companies. Entrusting a fintech which has no physical presence with their hard-earned money, was a challenge for people living in rural areas. However, such obstacles proved to be the challenge that a few fintech firms were willing to take up. They came up with a new business model – employing people from among prospective consumers. Such initiatives created job opportunities for the locals, and succeeded in establishing personal connections with a strong trust. The fintech representative was now a known face from among the consumers very own community and region. Such local fintech agents help customers from the outback where vernaculars change every few miles.

These fintech startups have ted up with local gramin banks, agents and retail store to provide financial services creating opportunities for the local people. The retail store or the kirana store provides online cash transactions via AePS or micro ATM or PoS and provide cash deposits and withdrawal services, validated by biometric authentications such as IRIS detection and figure print scan.

The services of fintech proved to be importance during the pandemic. Abiding to the rules of COVID distancing, etc, fintech services came to rescue of the local populace. The pandemic has also played an integral part in pushing the market towards digitalization.

With Digital Bharat, a new era of digitalization is on the forefront.

(Shams Tabrej is Founder and CEO, Ezeepay)

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Published on: Friday, November 19, 2021, 05:49 PM IST