Road to India@100: Fintech to power digital economy

Greater prosperity, broader opportunity and exponential dynamism are guaranteed for any society aspiring to progress from middle income to higher income. As we look towards 2047, colonial hangovers are a distant memory and our sights are firmly set on progress for all sections of society. Technology is emerging as a key lever in achieving India’s ambitions to become a higher-income country within 100 years of Independence. We’re seeing its power in facilitating inclusion, governance, privacy and ease of transactions with the rapid adoption of innovations like the Unified Payments Interface (UPI), Aadhaar Enabled Payment System (AePS), and the Account Aggregator (AA) framework. But even as our inventiveness accelerates—governed by principles of transparency, access, and usability—like any sunrise sector, fintech too is constrained in impact not by ability or intent, but by behaviour and mindset. For generational and society-scale economic impact in the next 25 years, we need to do the following things:

Increase financial literacy: The vision for India@100 calls for social progress and shared prosperity. An expanding digital payments economy has democratised access to financial products, but a lack of understanding of the basic concepts surrounding money can hold us back from realising its true potential. While 77 per cent of the population is now literate, only 27 per cent are financially literate. This means that three-fourths of India doesn’t understand concepts that are central to wealth and GDP creation, such as compounding. This is largely similar across genders, regions and even education levels. Addressing this requires us to create an ecosystem that builds knowledge and prudence, and which provides us with tools for the right financial behaviour.

Create an ecosystem that encourages and supports wealth creation: The honourable Prime Minister recently said: “Start-ups are going to be the backbone of New India... Let us innovate for India, innovate from India.” We need to become a nation of job creators and this ecosystem-wide effort can promote an understanding of entrepreneurship and capitalism, encourage and support entrepreneurs, and strengthen the frameworks that enable Indian start-ups to operate in a frictionless manner.

Fintech and GDP expansion: Over 50 per cent of the market capitalisation of India-listed companies is related to financial services. It’s the engine of the Indian economy and we all have a responsibility towards contributing to the above goals. Fintechs in collaboration with existing institutions can lead this journey enabling the country to achieve its goals for India@100. These goals include:

Improving knowledge: There is massive headroom for the growth of financial services. Most importantly, the government has done a remarkable job of financial inclusion and innovation. Now, the focus should be on encouraging the right financial actions. We see many fintech companies emerge, but we need to collectively educate customers to get them on board and help them understand the right behaviour in a language that they are familiar with.

Bridging trust: Customers will not be on board until they trust fintech firms. Here we can look to legacy banks and financial institutions and understand their operating principles, which have made them owners of customer trust for generations. Without building trust, fintechs will remain an interface rather than grow into an institution.

Accelerating innovation: Fintechs have an enormous opportunity to reimagine the idea of financial services offerings. This means using tech to offer personalised services, narrowly targeted offerings depending on customer risk profile, and an experience that makes financial services as simple as checking Facebook. We need to take advantage of common digital frameworks and infrastructure to accelerate innovation.

Widening credit access: Credit penetration in most living expenditure categories is less than 5 per cent for households. Micro, small and medium enterprises (MSMEs) also lack access to formal credit with more than 60 per cent relying on costly informal sources of credit. Credit is a leading indicator of growth. As a fintech, one of the biggest contributions we can make to the economy is to help more Indians get access to credit, remove the stigma against taking or talking about credit, and incentivise the responsible use of credit. Without a strong credit ecosystem, we will not have a strong economic ecosystem.

Building together: All of the interventions above require a collective effort. Fintechs, banks, and regulators need to work together to support the country in GDP expansion. There is massive headroom for growth and for everyone to grow together if we keep the customer’s interest as our primary goal.

The progress of the past few years has demonstrated how fintech as a sector can expand opportunities for digital banking and grow the market for new products and services. This growth can only be sustained when fintechs work collaboratively with the banking sector, which has earned decades of trust and plays a key role in maintaining economic stability, safety and security. After all, both the fintech and banking sectors are united in the mission for a more prosperous India@100, and by working together we can achieve our national goals, which is to enable financial progress for every citizen, well before India reaches its centenary.

The writer is Founder of CRED