In recent years, Fintech has emerged as a powerful pillar offering rural communities transformative opportunities by providing improved access to financial services including loans, assistance with personal finance and digital bank accounts. According to a 2022 report, Around 62 per cent of the Indians in rural areas have access to fintech services, helping rural India to get on the digitisation track. Today, through mobile apps and various online platforms, people living in remote areas can access banking services, conduct transactions and also receive financial education.
Access of Loans
The revolutionization of loan applications and the approval process is one of the significant impacts fintech has in rural communities. Earlier accessing credit in remote areas was a difficult task. It often leads to extensive paperwork and long waiting periods but with the emergence of fintech, this entire process has now been streamlined, making credit more accessible through advanced algorithms and alternative credit scoring methods.
Shams Tabrej, Founder and CEO of EzeePay, underscores the transformative potential of fintech in rural lending, and affirms, “Fintech has the potential to revolutionize the entire lending scenario in rural communities.”
“By using data analytics and innovative credit scoring models, people with limited credit histories can now access much-needed funds for various purposes. Also, Peer-to-peer lending platforms have gained prominence, facilitating direct borrowing and lending within communities. This fosters financial inclusion and support systems; people from rural areas can not engage in direct financial transactions without the need for traditional banking intermediaries,” he adds.
Personal Finance
Fintech doesn’t just stop at loans; it extends a helping hand to people in rural communities who are looking for help in personal finance. Through mobile banking apps and other online platforms, people have found a convenient way to pay, access numerous budgeting tools and also effectively manage finances.
Emphasizing the importance of financial awareness in rural areas, Tabrej says, “The awareness of financial knowledge is highly important for people living in rural areas as the access to traditional financial institutions is limited there. The advent of fintech has helped people access personalised financial guidance, empowering them to make informed decisions about savings, investments, and overall financial planning. A recent report claims that Fintech now commands a 47 per cent market share in the personal finance sector in 2023 which has increased by 13 per cent since 2018.”
Fintech platforms provide a user-friendly interface which makes it easy for people to steer through and understand their financial situation without anyone’s assistance, he adds.
Digital Bank Accounts
Digital bank accounts have helped people access banking services without the need for physical branches. By encouraging financial inclusion through USSD (Unstructured Supplementary Service Data), agency banking, and AEPS (Aadhaar Enabled Payment System) the entire banking system has revolutionalised rural India. Blockchain technology is another key factor which enhances transaction transparency. This not only reduces fraud risks but also builds trust within communities that may have been sceptical of digital financial services.
“Digital bank accounts are a cornerstone of financial inclusion in rural communities. These accounts empower individuals with the tools to manage their money conveniently, reducing the barriers imposed by geographical distances. Additionally, services like Paytm, PhonePe, and Google Pay have made payment go smooth and digital. According to the data analysed by the SBI research team, semi-urban areas account for 35 per cent of UPI transactions, while rural areas account for 25 per cent of transactions,” Tabrej sums up saying.
