As the adoption of digital payments grows across the country, there is a need to further improve digital and financial literacy, said Karanraj Chaudri, Advisor, Social Impact Investments at United Nations Development Programme (UNDP) for India and South-Asia.
He noted that the Government of India (GoI) has undertaken various measures including developments such as cash transfers by the government through Pradhan Mantri Jan Dhan Yojna (PMDY) accounts for COVID relief which may nudge higher levels of engagement with formal bank accounts.
"However, the challenge now is to ensure regular use of these accounts, by helping account holders bridge gaps in financial and digital literacy," Chaudri said.
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Noting that Indians are gradually accepting digital payment as a major way of payment, he said: "As the financial services sector in India becomes increasingly competitive to offer financial products to under-served populations, there is a need to further improve financial and digital literacy outcomes to not only ensure the uptake of these services but also to help new consumers make the best use of these services as per their needs," he said."
Chaudri was of the there is an opportunity for more innovation to create payment solutions and products that are suited to the BoP segment, many of whom are first time users.
"Digital India initiative has also enabled the availability of smartphones and internet in remote rural areas of India. Pixabay
"This includes domestic migrants that are heavily dependent upon transparent and affordable channels for remittances. Some business models in the fintech/payments space appear to have struggled because their services do not meet the needs of the largely under-served vernacular market," he said.
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According to the SDG Investor Map for India 'Agent Network Management' (ANM) services can allow a human interface to onboard, assist in transactions, and handhold the transition to digital channels for financial transactions.
These agents play a pivotal role in extending financial services in under-served regions with limited banking infrastructure and also handhold customers with low digital and financial literacy to conduct financial transactions, he said.
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"Digital India initiative has also enabled the availability of smartphones and internet in remote rural areas of India. This can help in strengthening the scalability of digital platforms that service remote areas," Chaudri said. (IANS)