Interview with Ezeepay Financial Expert and Founder Shams Tabrej
Can fintech companies make rural India digital savvy?
With digitalization spreading its wings all over the country, everyone is transforming from using digital cash to investing in stocks or cryptocurrency. Financial inclusion broadens our financial system’s base and achieves banking parity between urban and rural clients. In rural and Tier-3 and Tier-4 areas, digital transactions are being hampered by a lack of familiarity with technology, a lack of comprehension of smartphone functions, and a weak network.
When the number of physical transactions decreased due to mounting Covid-19 worries, digital payments in India increased aggressively during the shutdown. Rural clients continue to be predominantly unbanked. Rural clients have adapted to Assisted Payments for their banking and financial requirements since it can easily be done during non-banking hours and is close to their home or job. Around 62% of the population lives in rural areas, and around 44% of the fintech companies led to digital lending startups. If the number of fintech companies keeps on increasing, then the possibility of making rural India digital savvy is positive.
What challenges do you face in educating rural Indians about the Fintech concept?
Even though India has become more digitalized, it will still be difficult. The rural Indian population occupies more than 60% of the population, and educating them regarding the fintech concept is a task.
Lack of indulgence is the first problem. Until recently, customers have been unable to trust these technological techniques, and they have steadfastly adhered to only conservative procedures.
Lack of adoption is the second issue we face. It is difficult for all types of firms to implement fintech, affecting their productivity, and it is challenging for an economy dominated by MSMEs, such as India’s. Going digital with payments might be difficult. Discovery and distribution of content. There are around 600 fintech companies in India alone, and that does not include the Fintech behemoths. Making a name for oneself amid the herd is a difficult task.
Thirdly, lack of awareness. More than 70% of India’s population lives in rural, while most urban residents use these digital payment services, and this industry needs to raise awareness in rural India.
How did you manage to reach rural areas amid the pandemic situation?
The unexpected Covid 19 virus has made all the members sit in their respective houses and make sure no one travels to different regions or areas. Because of this, the whole nation has been forced to start doing all the activities and work from home. The whole nation has become digitalized from students attending classes to the managers guiding their employees through the laptop screens. It has been a great wonder that online platforms exist through which we can get in touch with each other. Otherwise, we would have waited for months or years to see our close one’s faces.
Reaching the rural areas can be difficult as they aren’t that used to modern technology and are busy with work. But it was possible as there are online meeting platforms that can be set up. We picked out one person from every village that we were targeting to help us set up a meeting with the villagers. They used to connect their laptops through a projector conducting s=a zoom meeting where we used to give them education regarding the fintech companies and how everyone should shift from traditional to digital.
How much has banking improved due to the fintech initiatives in India?
Financial technology, or “fintech,” quickly transforms traditional financial services using technology-enabled products and services, making them faster, simpler, cheaper, and more accessible. Fintech enables people to take control of their financial decisions, resulting in far higher financial literacy than ever before. In a nutshell, fintech blends traditional financial services with cutting-edge digital technology and Big Data solutions to simplify banking consumers’ lives.
There has been a rapid change in consumer behavior since 2017 observed by the Digital Banking Consumer Survey. They have started depositing more into the banking institution in the form of banking institutions and are less dependent on the local money lenders. Now more and more people are becoming customers of different banks in hoping got get different and better financial services. Fintech also helps the banks to reach their reach as anyone can avail the service of the respective banks at home, making digitalized banking the future. It’s a proper race. The banks adapted to this technology have a competitive edge over the others.
How was the budget for the fintech industry? Do you think it will help you attain all your goals?
In the budget 2022 announcement, the Finance Minister of India shared that the government will be setting up 75 digital banking units in 75 districts with the help of scheduled commercial banks (SCBs). This new and organised banking system will also include 1.5 lakh post offices of India in the core banking system. It will enable financial inclusion and make online transactions accessible through net banking, ATMs, and mobile banking to provide online transfer of funds between post office accounts and bank accounts.
The RBI-approved digital rupee was also another revelation at the budget announcement. This ‘One Nation, One Registration’ idea will be a foundation for a structured economy.
All in all, it is a well thought budget thta would take care of the fintech ideas and help us achieve our short and long-term goals.
What is the government’s role in expanding the fintech startups?
Among all the fantastic initiatives by the Modi government, the attempt to make the whole country digital-friendly is the best. With the pandemic sitting in our lives for two years now, the government thinks it is more than essential to take the digital route and avoid physical transactions as much as possible. To pace the Fintech sector, the government has several initiatives. First is the Pradhan Mantri Jan DhanYojana (PMJDY), which aims at increasing financial inclusion. This is done by helping the new bank account holders transfer direct benefits and accessibility to various financial services applications. This has enabled Fintech startups to build technology products to penetrate the large consumer base in India.
The License for Payments Banks also supports financial inclusion in India by setting up payments banks and increasing access to payments/remittance services. RBI has shared that it will increase the end of the day transaction limit for banks to Rs. 2 lakh to expand digital payments banks in India.
Lastly, the government has set up a world-class Fintech hub at the International Financial Services Centre (IFSC), GIFT City in Gandhinagar, Gujarat, to make India a global Fintech hub.
What is the contribution of micro-ATMs in familiarising the rural consumers with banking?
The rural population always remains apprehensive of using technology and it is a hassle for them to understand it, Micro ATMs (MATM) come way too handy for them. It is a card swiping machine with which the user can swipe the card and get the money instantly.
Apart from being easy to use, these ATMs are cost-effective and portable. RBI shared in a report that micro-ATM, increased online transactions by 200% in the pandemic era. All the small and big shops in rural areas have the micro-ATMs installed. Around 4.94 lakh micro-ATMs were set up by the banks towards the August 2021 end and it was reported to be 60.9% more than the previous year.
Therefore, by reaching the rural population, micro-ATMs have done a wonderful job in educating the rural population about banking services and online transaction facilities.
From 2020 to 2022, how much growth has the fintech industry witnessed in India?
India has been walking the digital road massively in the past two years. And, it comes to us with great happiness that we are right on track, if not more than expected. In the straining pandemic and lockdown moment, where we were already fighting against all odds, the fintech industry has managed to emerge well. Many companies in the fintech space have invested a lot in the past two years and managed to get India in the third position worldwide, and the US and China remain in the top 2.
Presently, India has more than ten startups or new-age technology companies in the fintech space with more than $1 billion.