rural fintech: how rural fintech is driving financial inclusiveness


According to the 2011 census, the rural population, which accounts for nearly 70% of India’s population, consists of approximately 800 million people who reside in 600,000 villages across the topographical expanse of the country. For this population, agriculture has been the main occupation for centuries and it is only in recent decades that these areas have experienced some occupational diversification due to the growing importance of other non-agricultural activities.

Due to the lack of jobs and livelihood options in these areas, a significant portion of the population also travels to urban centers, as migrant workers. The 2011 census data calculated that the total number of internal migrants representing inter and intra-state movements was 450 million, an increase of 45% since the 2001 census. The Economic Survey of India 2017 has estimated the interstate migrant population at 60 million and the average annual flow of interstate migrants was calculated at 9 million between 2011 and 2016.

With the onset of the pandemic and subsequent lockdown, India experienced a wave of reverse migration, and the divide between rural and urban areas became more evident than ever. It became clear that the need of the hour was to create opportunities for growth and development in the rural sector, to exploit the potential of a population that is predominantly young, dynamic, eager to learn and more than willing to work.

Development in these centers would not only mean more jobs and less migration, but would also mean better access to essential services, such as banking, finance and travel. For example, much of the rural population remains underbanked, with only 20% of ATMs available in these centers. Rural citizens had to travel miles to make a travel reservation or for a simple cash withdrawal from a bank account. As technology has advanced, the benefits have been reaped primarily by urban centers, while most rural centers have been locked in time, widening the rural-urban chasm.

Technology is no longer a tool used to solve limited business problems. The technology itself is now a business. And it is in this chasm of the rural-urban divide that technology is making a noticeable difference. Purpose-driven companies whose goal is to include citizens residing in rural PINs in a fast-paced game have emerged and are using technology to create effective products and solutions, bringing services and essential financial products for rural citizens. Armed with the latest technologies and keen to foster inclusive development, these fintech players are paving the way for the citizens of Bharat to have better access to essential financial services, earn their way to better sustainable livelihoods and start to live a slightly easier life.

Rural fintech players complement state initiatives and are at the forefront of revolutionizing the lives and livelihoods of Bharat citizens.Rural fintech players complement state initiatives and are at the forefront of revolutionizing the lives and livelihoods of the citizens of Bharat. They promote the spirit of nanopreneurship (nanopreneur: owner of a micro-enterprise) in people, without distinction of gender or social references, while helping them to train in finance and digital technology. Nanopreneurs, in turn, help provide essential services such as cash deposits, withdrawals, and money transfers with the help of Aadhaar or UPI to members of their communities.

In these communities, where smartphone penetration is not synonymous with digital literacy and digital literacy, nanopreneurs are essential human intermediaries between the ordinary rural citizen and technology platforms. Instead of having to migrate to remote hinterland towns, these nanopreneurs are running their own businesses sustainably, with a newfound respect as shadow bankers to their communities.

According to a report by Statista, in 2020 the smartphone penetration rate in India was 54%. A Deloitte report estimated that the rural smartphone market would grow at a CAGR of 6%. When juxtaposed with the 5% literacy growth rate over a six-year period, it can be summed up that India in general, and rural India in particular, could see a smartphone in every hand. However, this does not necessarily imply the use of the device. In reality, the average rural citizen is still struggling with digital financial literacy and not comfortable with apps on a smartphone. This is where assisted rural fintech comes in. With nanopreneurs as intermediaries, human assistance is available to the citizens of Bharat, and help is at hand, too close.

Until a year ago, most citizens of Bharat spent countless amounts of resources, including time, on mundane jobs that their urban counterparts were used to finishing in a jiffy. While someone in a city would book a bus or train on an app, from several options, select the best available deal and complete the booking with a few clicks, the rural counterpart would travel for hours to book a bus ticket/ train. , travel again in case of cancellation and, most often, pay an intermediary for confirmation. With the recent takeover of technology, the rural citizen can now easily obtain these basics, and there are many new options for their livelihoods, which help them earn a sustainable income. So with the help of rural-focused technology players, rural citizens and the rural sector itself, which is experiencing inclusive growth, is slowly moving up Maslow’s pyramid and is on the right track. to exploit its true potential.

Sanjeev Kumar is co-founder and CEO of Spice Money

(The one-stop destination for MSMEs, ET RISE provides news, views and analysis on GST, exports, finance, policy and small business management.)

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