Amit Nigam is a post- graduate in Management along with quality education from Phillip B Corsby USA and six sigma black belt certified. With 22+ years of rich experience, he worked at top management in Telecom, FMCG and Fintech companies like Airtel, Aditya Birla group. He worked as a founding member of Spice Money. He has a proven track record of turning Greenfield projects into profit making companies. He is an experienced leader with skills in leading direct reports as well as cross functional teams, justifying new product development investments, determining and documenting new product requirements, developing sales forecast and product pricing, and launching new products to the marketplace. He has proven ability to manage key account relationships and large -scale projects.
Out of all the industries, FinTech is probably the most critical industry that defines the economy’s future. The industry combines two segments, i.e., finance and technology. Whether it is an online payment through PayPal or National/International stock trading through an app like Zerodha, we all have used FinTech solutions in one way or another. As one of the end goals of this industry is to ensure 100% financial inclusion, the popular narrative is all about the impact of FinTech on the development of Rural India, not the other way around. We cannot discount the fact that FinTech’s success too is dependent on Rural India’s shift to a digital economy.
India’s rural population accounts for 65% of the country’s total population. Post introduction of UPI in 2016, India achieved a benchmark of 1 billion transactions in 2019 and 5.95 billion transactions in May 2022. These numbers are impressive but are driven mainly by the urban population. What if the rest of the population, i.e., 65%, registers 100% participation? Despite making up a sizable fraction, people in rural and semi-rural areas lag far behind in participating in modern progress in all aspects of life.
Interestingly, the Covid pandemic demonstrated rural India’s incredible endurance in the face of adversity. It also highlighted how urban progress is inextricably linked to rural capabilities. We must acknowledge that achieving the $5 trillion economy mark and realising the vision of an ‘Aatmanirbhar Bharat’ will not be attainable without the involvement of rural India.
The Continued Growth of Rural India is a Prerequisite for FinTech’s Success
Let us try understanding the impact of Rural India participation through Pradhan Mantri Jan Dhan Yojna (PMJDY). Its financial inclusion initiative of the Government of India aims to create affordable access to various financial services like credits, insurance, bank accounts, etc. The scheme accelerated the rapid inclusion of women in rural India. By 2019, 58% of women were Jan Dhan account holders. In addition, PMJDY account holders have received 31.67 crore RuPay debit cards as of Oct 2021. Steep growth in personal savings was also reported since the opening of accounts. This data indicate the potential and bulk returns that any FinTech service provider stands to gain from the ‘unbanked’ population of the country.
Till now, the success of the FinTech industry is primarily defined by the urban population that is digitally literate and financially secure. But a further extension of this success can only come with the increased participation of the rural population that not only has limited access to digital services but also struggles with a constant source of income.
FinTech is Pushing Rural India Inclusion Through Empowerment
FinTech businesses are developing new technologies tailored to the rural market’s needs and sensibilities. These include solutions that do not require an internet connection or a smartphone and combine FinTech with agriculture, education, and healthcare in small towns.
Many start-ups in this space are now focusing on individuals in rural and distant locations. Through a unique “Agent Model”,they provide them with unrivalled digital financial services. Under this model, local shops are being transformed into digital financial services hubs for people living in remote areas. The shop owners provide many services to their customers, like simple cash withdrawal services that can be used with Aadhaar and money transfer services that can be used with just the customer’s mobile number and account number without having to visit their bank. Citizens can opt for an easy insurance policy, apply for a loan, check and book agriculture products and equipment by visiting their local shop.
Earlier, employment opportunities were related to agriculture activities only. However, with the increasing trend of digitalisation and modernisation, the people residing in rural areas are experiencing an exposure to new industries and employment opportunities as well, thanks to new-age FinTech solutions. FinTech solutions are creating opportunities for rural people through various tech solutions/services.
The Road Ahead
GOIs’ initiatives like Rural Extension Branches (REB) mandate all private banks to open one such REB for every three branches it opens in urban locations. This certainly is a step in the right direction to capitalise on the growth potential of the rural market.
The FinTech industry has been working towards an all-inclusive growth from the beginning, even though it takes a lot of effort & time. Given that most people still have no access to the services that FinTech provides, the rate at which it is growing is pretty commendable.
The country’s rural population has contributed significantly to the overall economic development for the most prolonged period yet remains excluded from the majority of modern, digital and financial progress. Due to their sheer size, it can be concluded that even the true success of the FinTech revolution is directly proportional to the inclusion of the rural economy. Meanwhile, rural growth continues to remain one of the key focuses for the Indian government for 2022, and financial inclusion will be at the core of all the development plans for the future.