The Digital Credit Dividend in Bharat – Opportunities Opening Up In Semi-Urban & Rural India
Perhaps, India’s economy can now be divided into a pre and post-demonetization phase.Post that fateful evening of 8 th November 2016, a sudden shift towards the digital world took off with the central government’s emphasis on digitizing India. The internet has not only changed our lives but also the way our markets and economies work.
India has 481 million internet users, which makes it the country with second highest internet users. From just 5 lac internet users in 2000 to 46 crore internet users in 2017,India has witnessed a paradigm shift. However, despite having the second highest number of internet users, much remains to be done when it comes to the internet penetration. 70% of India’s population resides in rural and semi-urban areas. The IAMAI estimates that while the internet penetration in urban India is as high as 65%, in rural India it is still only just over 20%. It is only as the wonders of the internet reach out and touch the rural and semi-urban areas the true potential that the internet revolution can truly explode.
The government has moved to digitize payments and several other basic and utilitarian financial transactions under their flagship Digital India movement following demonetization. The move is slowly gathering momentum as internet penetration amongst the rural and semi-urban areas picks up across the country. However, there is still a large chunk of the population that doesn’t have access to the internet or who do have access to the internet but are unable to use the Internet-based financial services due to lack of knowledge or lower literacy rate. And this is where the maximum room for expansion for the savvy Indian NBFC or Cooperative Bank lies. And there is a ready template for them to follow!
The world became a global village post the advent of the internet. Doing business or gathering information has never been this easy and simple. In wake of this boom,businesses have turned to the World Wide Web to broaden their horizons and the financial sector too has stayed with this trend. Today, all the major banks are operating online providing enhanced ease and comfort of banking to their customers. The clients don’t need to stand in those long queues at the bank counters to withdraw or deposit their money. The various mobile-based apps let you not only transfer funds but one can also sign up for loans or credit products through these apps. Borrowing money has never been this easy from financial institutions. The major players in the markets like HDFC, ICICI, AXIS etc are ruling the roost in offering credit and financial products through their online banking. While some visionary players like RBL have started making an impact, what is needed is for the other ambitious NBFCs or Cooperative banks to tread the same path and hook more rural and semi-urban consumers onto the online medium. As long as they address the unique needs of these consumers, they will benefit.
The business case for looking at the rural and semi-urban sector and is not all altruistic though -there are other solid benefits. While all the major players are offering such ease and comfort of banking activities, the definition of customer loyalty too has evolved over time. Gone are the days when people used to stick to their banks just because they shared a cordial relationship with their bank’s manager. These days loyalty is driven by service. The customer demands superior service and with a plethora of options
available, the customer is never short of alternatives. A great mobile experience, a better rate, better design, or even more convenience are all reasons for the consumer to shift. Competition is high and financial institutions keep eyeing their competitors’ customers. In the quest to tap the urban population, many financial institutions have perhaps overlooked the potential of the rural and semi-urban markets. These markets are full of people who have money but no guidance, opportunity, and options. The rural population also comprises a large proportion of agrarian-dependent professions and these are people who require credit regularly but they don’t have many options at hand.There are opportunities for growth that suggest themselves right away. Surveys have shown less than 30% of the internet users are women -providing them more opportunities to go digital will widen the customer base significantly. Bank, NBFCs, and cooperative credit societies need to focus their attention on these untapped markets for business.
Tapping this particular market will not only give the financial institutions increased business but will also boost India’s economy. There is an investment to be made to educate the rural and semi-urban consumer and make him (or her) aware of the options available. They will join the digital bandwagon readily -like every other consumer, they want access to additional funds, they desire great service, and they are willing to pay for it. Bharat could well be the next big opportunity for India’s banks, NBFCs, and credit societies -and the chosen path for this growth could well be digital.
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