Setting the context correctly for financial sector in India amidst several digital transformation initiatives

The recent decades have witnessed significant transformations and innovations in the financial sector in India. These changes have improved every aspect of the industry as a whole, trickling all the way down to the way customers interact with their finances. 

Digital payments have become the staple in the way people carry out their day-to-day transactions. This, accompanied by an ever increasing digital population and growing internet presence across regions has created an ecosystem where both brands and consumers have taken numerous aspects of finance and banking online. And this is going to be the futuristic outlook. 

In India, Unified Payments Interface (UPI) has emerged as the country’s proprietary method of payment. It has revolutionized the way Indians make transactions, allowing them to do so with just a single scan and the tap of a button. This ease of making payments has made UPI the go to method for people to send and receive money to one another. More importantly, it has promoted greater financial inclusion by allowing people entry into this ecosystem with just a smartphone and an internet connection as a prerequisite. 

Another significant transformation seen in the industry is the adoption of digital banking. People today deposit their money and carry out saving schemes online. Moreover, traditional banks have embraced digital channels to provide a range of services that can be accessed via the internet. Such companies have been doing this as an effort to provide greater convenience to customers while enhancing their own operational efficiency. 

All of this has been supplemented by the Indian government who has spearheaded many initiatives to help grow the finance sector. Some of these include the Pradhan Mantri Jan Dhan Yojana and the biometric identification system, Aadhar. These have assisted in laying the foundation for a finance ecosystem that is more digitized in nature. 

In addition to this, the Indian government has put forward regulatory frameworks such as the Reserve Bank of India’s (RBI) guidelines for digital payments and the Securities and Exchange Board of India’s (SEBI) regulations for fintech companies. These frameworks have provided a conducive environment for growth and consumer protection. 

As the financial sector continues to evolve as a consequence of technological advancements, banking companies must also find ways to solve the challenges that exist as well as the ones that may come to exist in the future. The utmost priority for institutions must be the inclusion of more and more customers into the financial ecosystem. This will be achieved by improving the accessibility of online financial services across regions that have been untapped, such as rural and marginalized areas. Initiatives that provide training and education about financial literacy can help bridge the gap between different groups of people and ensure a wider understanding, adoption, and recommendation of digital services. 

The finance sector continues to hold immense potential, all of which can be drawn out with the help of evolving technology. The scope of these developments will depend upon regulatory frameworks, market dynamics, and changing consumer behaviours/ preferences, amongst other new factors that may come into play. 

The article has been written by Praveen Paulose, MD & CEO, Celusion Technologies