Fintech sector is catalysing India's growth story among unbanked population

India is a great example of how to bring about financial inclusion. The robust mobile and internet connectivity has helped the country in a big way to expand the network. The country's Fintech (Financial Technology) sector has grown rapidly since internet services spread a decade ago. India has the fastest fintech growth with an acceptance rate of 87 per cent compared to 64 per cent globally. However, despite increased internet usage and tremendous growth, 190 million Indians are still unbanked. Secure, technology-based banking services are needed nationwide. Fintech startups offer comfort, personalization, transparency, accessibility and ease of use.

Jitendra Dhaka, Founder & CEO, BankSathi, said that the IFC report claims fintech can close the USD 400 billion MSME lending gap. Fintech's awareness-raising in tier 3 and below cities has accelerated digitisation. 

The Jan Dhan Yojana allows FinTech businesses to create digital solutions for India's massive consumer base and enroll roughly 450 million beneficiaries in new bank accounts for financial services like remittances, credit, insurance, and pensions."

"Rural residents have mobile phones but lack affordable and reliable internet access. The enormous unbanked population across wide geographies, low skills, unfamiliarity with technology, limited credit, high loan default rates, and lack of financial literacy exacerbate the situation," Dhaka said.

Banksathi is a fintech platform that helps financial advisors start selling financial products online and build their digital presence. It was founded to facilitate financial product distribution to increase the penetration of financial products from bank accounts and credit cards to insurance. It gives advisors a place to keep track of their customers, leads, sales, etc. The platform is free for both advisors and customers. Its goal is to help people take control of their finances and come up with simple rules for maintaining financial security.

Research shows that only 10 per cent of the Indian population is aware of fintech products at the moment. Banksathi is trying to change the Indian Fintech business model by having its advisors sell fintech products and spread the word about them. IRDAI Insurance licence also allowed Banksathi to start offering a more diverse portfolio of financial products to customers through more than 5 lakh financial advisors.

Cyber security risks discourage rural people from joining the digital economy. Despite the government's efforts, the system has many flaws and more has to be done. DBT beneficiaries rarely know what to do when their payments are refused. Corruption, poor rural banking infrastructure, and accountability are further issues.

Jitendra Dhaka noted that inclusion in the financial system is a priority in the long run. There is no silver bullet when it comes to achieving inclusive growth. 

"In the process of designing policies for inclusive growth, regulators, legislators, industry organisations and service providers need to concentrate on developing a model for the sustainable delivery of services. It is essential that we connect with the last miles, which have been acknowledged mostly post covid," he said.