India runs ahead with 87% fintech adoption rate: Economic Survey 2023
India has taken a lead in fintech inclusion, with an adoption rate of 87% – significantly higher than the world average of 64%, according to the Economic Survey 2022-23 tabled in Parliament on Tuesday.
The rise in the use of digital financial services was accelerated by the pandemic along with a strong foundation of the Jan-Dhan, Aadhaar and Mobile (JAM) trinity, UPI (unified payments interface) and other regulatory frameworks, which further complemented solutions provided by banks , NBFCs, insurance companies as well as fintech.
“The pandemic provided the opportunity for fintech companies to reach the underserved and provide cost-effective financial services to those at the bottom of the pyramid. While the technological solutions globally are dampening the reverberations of the pandemic, India took the lead…” it said.
According to the survey, the introduction of CBDC (central bank digital currency) will also significantly increase digital financial services, in addition to digitizing documents that played a key role in providing further impetus to these services.
Great potential for fintech
The survey emphasizes various government initiatives and a favorable ecosystem, and highlights the great potential for fintech in the country. India has been ranked third in digital payments only after the US and China, which means it has an untapped market.
“These untapped opportunities, along with the favorable ecosystem, create a huge growth potential for fintech in India,” it said.
The survey also touched on setting up and operationalizing India’s first International Financial Center (IFSC) in GIFT City as the nerve center for all fintech activities.
“FY23 is a watershed year for IFSC. It marks a decade of India’s maiden IFSC. The vision plan beyond 2022 revolves around elevating GIFT-IFSC to a virtuous self-sustaining trajectory towards becoming the nerve center of new-age global financial services and activities,” the financial said the survey
“This drive to integrate our economy with the global financial ecosystem has been rich in lessons that are systematically capitalized on to design ground-breaking statutory and regulatory frameworks to lift the center into a higher trajectory of financial innovation and dynamism,” it added.
Neobanking platforms
Furthermore, the survey put the spotlight on new banking platforms and increased global investment in the segment.
The growth of these institutions is spurred by the need for on-demand and more easily accessible financial solutions from a young and increasingly digitally savvy demographic. According to the survey, neobanks have eased accessibility and provided access to financial services to MSME and sub-bank customers and areas, it says.
The government has also, through various initiatives, given a boost to digital banking solutions. About 75 Digital Banking Units (DBUs) across 75 districts announced in the Union Budget 2022-23 to take banking solutions to every nook and cranny of the country have been launched.