Digital technology has transformed India’s financial services, making banking and investment easier for millions, especially in smaller towns and rural areas. While these systems have helped expand financial inclusion, challenges remain in ensuring smooth and reliable access, particularly for economically vulnerable communities.
Nithin Kamath, founder and CEO of Zerodha, highlighted both the achievements and the limitations of these systems.
He said, “The entire Indian financial services industry has been a massive beneficiary of the ease of digital onboarding via Aadhaar e-Sign, eKYC, etc.” He added that these tools have been a key reason why people in Tier 2 and Tier 3 cities, who had little prior interaction with formal financial services, are now part of the system.
Digitisation has helped reduce fraud, leakages, and inefficiencies, making financial services more accessible and secure for ordinary citizens.
TECHNOLOGY COMES WITH LIMITS
Kamath pointed out that no technology is perfect. “While many of us take the benefits of these digital systems for granted, I was surprised by the extent of challenges with OTP verification and the physical/biometric side of these systems.”
Problems such as OTP delays or biometric device failures are common, particularly in areas with poor mobile connectivity. These issues often impact the most vulnerable the hardest, slowing access to benefits and services.
He also highlighted the regulatory framework, noting, “SEBI has strict regulations that mandate brokers to offer services via multiple modes, not just a single interface like an app.”
BALANCING BENEFITS AND RISKS
According to Kamath, even minor disruptions in rural areas can have unintended consequences, especially when multiple national programmes aim to boost financial inclusion. “The trick is to balance out the benefits and potential harms, especially in rural parts of India where most Indians who are economically vulnerable reside.”
In other words, India’s digital financial systems have achieved remarkable progress, but careful planning and resilient design are key to keeping them inclusive. With thoughtful implementation, technology can continue to empower citizens while reducing disruptions, especially for those who need these services the most.
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