Emerging insights from digital solutions in financial inclusion

In a rapidly digitizing country, Digital Financial Services (DFS) hold the promise of bringing financial inclusion to the last mile. Through the use of DFS, vulnerable and marginalized groups can reduce the risk and cost of using cash, and increase their access to a suite of financial services that would have been otherwise unavailable, or difficult to obtain, such as credit, savings, insurance, and pension. This paper provides an overview of the policy environment regulating digital finance in India as well as presents high-level statistics on the level of digitization across population segments in the country. It then moves on to describe the digital readiness, current usage of digital financial services, and specific issues and solutions for three vulnerable and marginalized groups with high digitization potential: women, micro-entrepreneurs, and domestic migrants. This is complemented by insights drawn from LEAD at Krea University’s primary research on these topics. Finally, the paper provides recommendations to accelerate the penetration of digital financial services among vulnerable groups. These include monitoring the implementation of recently introduced policies on data privacy, grievance redressal, and KYC simplification. It is also recommended to develop customized digital financial services that address the unique needs and profiles of vulnerable groups, such as those specifically analysed in this paper.