Role technology can play Ver 1810

Can technology drive financial inclusion in the post Covid19 world?

The Covid 19 pandemic has brought forth unprecedented challenges and has put most of us in uncharted territory. With the world in the throes of a health and economic crisis, technology is playing a crucial role in helping us manage our daily lives. Is India ready for true financial inclusion? And how can technology facilitate this? Grameen Foundation India, together with Piyush Singh’s FinTech for Inclusion, a not-for-profit initiative, decided to organize a webinar to analyze these issues.

Most microfinance professionals agree that only when poor people join mainstream financial systems, can they get access to credit, set savings goals, invest, buy assets, and also take insurance to protect themselves financially. Sunil Kulkarni, Chief Business Mentor at Oxigen, pointed out that while the Jan Dhan accounts were widely successful, there were not enough ATMs for everyone to use their accounts effectively. This disrupted the last mile in many ways. Digital payments are important also because there is no need to keep cash under the mattress.

In the last decade, India has taken many strides towards financial inclusion. When the World Bank released the first Global Findex Database in 2011, it was seen that only 40% of adult Indians had a bank account. (This increased to almost 80% by April 2018.)

At present, 90% of India’s 1.3 billion people have a unique Aadhaar identity, and 330 million new Jan Dhan bank accounts have been opened. Mobile phone penetration is expected to reach 90% by 2020 and the use of digital payments has been rising significantly since the 2016 demonetization of high-denomination currency notes. But the journey to financial inclusion is still a long one.

Prabhat Labh, CEO at Grameen Foundation India, makes a case for last-mile agent networks, like Grameen Mittras that Grameen Foundation has promoted to drive inclusion. However, ensuring the viability of these models remains a key challenge.

Ashish Anand, Co-Founder & CEO at Whrrl, putting the spotlight on agriculture and SMEs, says “70% landowners are small and medium farmers and only 20% SMEs today get credit from the formal credit sector. Technology as a resource is available, but the adoption hasn’t taken place.”

Digital payment tools and services are confined mainly to urban areas. The rural hinterland continues to suffer because of the low penetration of smartphones, lack of trust in new technologies and socio-cultural barriers. Mukesh Bubna, Founder at Monexo FinTech, believes that education will drive financial inclusion. Small finance banks have a lot of scope to tap the rural markets. Businesses that can talk to their customers in their vernacular language will be able to build successful networks.

The COVID-19 pandemic has fueled awareness of health insurance. The health crisis is leading to a behavioural change that is making Indians more receptive to insurance.  Anand Kumar Bajaj, Managing Director & CEO at PayNearby, feels that “insurance can’t be sold, it must be mandated, like an injection. We all need to gift insurance to our loved ones”.

The lockdown brought most businesses to a standstill for months and millions of informal-economy workers lost their jobs. PayNearby’s Anand Bajaj feels the government should refund the TDS or tax deducted at source to small & medium enterprises to ease their liquidity pressure. Better regulations can emerge if the regulators interact with the practitioners.

Prabhat Labh says we need to create a culture of “giving”. Not-for-profit organizations will have to create innovative business models to bridge the last mile and reach those who are the most vulnerable to life shocks.

Grameen India’s COVID-19 response aims to provide unconditional cash transfer to the poorest of the poor families in Bihar and Maharashtra’s Vidharba region. Grameen has built a mobile application for end-to-end process management—from beneficiary identification to enrollment to cash transfer and monitoring.

This webinar was held in April 2020. The panelists were Anil Bhardwaj Vedram, Co-Founder and CCO at Payswift, Dr Anar Rupji XXXX, Sunil Kulkarni, Chief Business Mentor at Oxigen, Prabhat Labh CEO Grameen Foundation India, Anand Kumar Bajaj, Managing Director & CEO at PayNearby, Mukesh Bubna, Founder at Monexo FinTech, Ashish Anand, Co-Founder & CEO at Whrrl.