The Role of Fintech Companies in Strengthening Online Banking and Payment in Rural India

The Indian FinTech market is among the fastest growing and ranks third in the world among FinTech markets with an expected market size of $150 billion by 2025. FinTech companies certainly have the potential to reshape the landscape of financial services and financial inclusion in India in fundamental ways. FinTech companies have played a major role in improving access to range of financial services such as AePS, Aadhar Pay, Remittances and Recharges for the masses. It democratized digital payments and expanded access to digital payments and online banking.

Gandhi once said: “The soul of India lives in its villages.”. In fact, villages are estimated to be where nearly three quarters of our population reside. There is no doubt that the FinTech Industry makes its way over the bumpy roads of rural Bharat. Right from demonetization, India realized the need to adapt to technology and use digital payments. As the whole country embarked on the path of digitalization, rural India remained in the background due to the lack of adequate presence of commercial banks, with only 5% of the 600,000 villages having commercial banking presence in 2019. Infrastructure costs, low usage due to lack of awareness, irregular availability of electricity, theft and vandalism are some of the major deterrents for physical bank branches and ATM operators in the areas. rural. These challenges continue to slow the provision of basic banking facilities to this segment of the population. Slowly, with appropriate resources and efforts from different FinTech companies, rural people have also become familiar with the use of digital payment and banking methods.

The financial security that accompanies financial inclusion is one of the most important aspects required for a well-functioning country. Over the years, technology has played a vital role in facilitating financial solutions and making them accessible to everyone, even in the most remote areas. In general, these companies are create a simpler, smarter and safer banking model for its customers by simplifying finance through technology. FinTech companies have relaxed services such as online payments, money transfer, Aadhar Pay, mobile recharges, bill payments, and hotel and ticket reservations, among others, and made them accessible even through mobile phones for people living in remote areas. Businesses today recognize the unique challenge of offering financial services to this segment and therefore rely on a network of entrepreneurs in SURU (semi-urban and rural) areas to provide assisted financial services.

The use of financial services has increased significantly since the penetration of FinTech platforms in rural areas. Even our Honorable Prime Minister Mr. Narendra Modi has always emphasized on boosting digital services in India to go towards Atmanirbhar Bharat. Furthermore, the Indian government as well as RBI have taken several measures to ensure the safety and security of digital payments in the country. The RBI also observed “Financial Literacy Week” in February 2022, to deliver financial education messages to the public across the country. Very recently, Finance Minister Nirmala Sitharaman said that the future of finance in India is going to be ruled by digitalization. In July 2022 alone, 6.2 billion transactions worth Rs 10.6 trillion were made.

Fintech in India has entered a whole new era with the exceptional rise in the adoption rate of FinTech in the country. The promising and hopeful FinTech sector in India is already home to more than 20 FinTech unicorns and is poised to launch the game of financial solutions and providers in the coming years. It is ideally the “Amritkaal of Fintech”.



The opinions expressed above are those of the author.