“Cashless India”: Digital Transformation, FinTech, and Financial Inclusion

Abstract

This research article studies the digital transformation in the financial services sector of India under the government’s policy “Cashless India”. It uses a qualitative research approach based on a document analysis and draws on 22 interviews with experts in the banking and financial sector, FinTech companies, and researchers and academics who have been following the related topics and offering courses on banking, business management and the FinTech industry. Research findings show seven key factors stimulating the digital transformation in India. They are: 1) Project “Jan Dhan Yojana” which is a scheme opening bank accounts for the poor; 2) AADHAAR or databases storing people’s identification numbers and biometric data which link with the bank accounts; 3) UPI platform for digital transactions; 4) internet penetration; 5) mobile phone penetration; 6) monetization, and 7) Covid-19. These factors have inspired a wider adoption of transactions using digital platforms, especially in metropolitan cities. In addition, they encourage the development of digital lending services. This has led to FinTech companies becoming crucial actors in the industry and has promoted India into one of the world’s FinTech leaders. However, financial inclusion remains a paint point for India to overcome. This is due to a combination of population size, highly diverse cultures and languages, and economic inequality between rural and urban residency. This presents challenges to access financial and digital knowledge and skills. Some Indian social structures have also barred women from owning mobile phones, and smartphones, and accessing the internet, which shows a lower status than men, leading to unequal financial services based on gender bias.