(Commonwealth_India) The Unified Payments Interface (UPI) has rapidly become the most favored method of conducting financial transactions in rural and semi-urban India, according to a recent report by EY and the Confederation of Indian Industry (CII). CII’s Annual Technology Summit in New Delhi unveiled the report, titled ‘Financial Inclusion through Technology and Literacy in India: Strategies for Sustainable Growth’. The findings are based on a survey that gathered responses from 1,033 individuals, providing valuable insights into the financial behaviours and preferences of people in non-urban regions.
One of the key highlights of the report is the growing prominence of UPI as the primary mode of financial transaction. The survey revealed that 38% of respondents from rural and semi-urban areas preferred UPI over other options, reflecting a shift toward digital payments in these regions. Interestingly, younger individuals, especially those between the ages of 18 and 35, were more inclined to adopt UPI, indicating a strong generational push toward digital finance. However, despite the rise of digital payments, 19% of respondents still relied entirely on cash for their transactions, while 11% of people expressed no preference for UPI at all.
In addition to the increasing popularity of UPI, the report highlighted the strong savings culture prevalent among these communities. A staggering 96% of respondents indicated their willingness to save and invest, presenting a valuable opportunity for financial institutions to offer tailored investment products and solutions. Furthermore, more than half of the participants (55%) expressed an interest in learning more about financial management, encompassing areas such as savings, budgeting, loans, and insurance. This growing appetite for financial literacy suggests that there is significant potential to empower rural and semi-urban populations by providing them with the right tools and knowledge to make informed financial decisions.
Although there is clear evidence of increasing digital payment adoption, the survey also pointed out that traditional banking practices continue to hold significant trust among rural and semi-urban populations. A large majority—86%—of account holders in these regions still prefer visiting physical bank branches for their banking needs, illustrating the continued importance of face-to-face interaction. When it comes to borrowing, 60% of those surveyed used formal banking channels to obtain loans, indicating that while digital payments are gaining ground, traditional banking institutions remain the primary source of financial services.
Saurabh Chandra, Senior Partner and Financial Services Consulting Head at EY India, emphasised that financial inclusion should be at the heart of India’s growth strategy as the country moves towards becoming a $5 trillion economy. He stated that the findings from the report suggest that rural and semi-urban India presents fertile ground for the introduction of innovative savings and investment solutions. These communities clearly show a desire to learn about financial management, and by leveraging technology and financial literacy initiatives, we could empower millions of individuals to take charge of their financial futures.
The report also highlighted the gender gap in terms of financial literacy and digital access. While 69% of women in rural and semi-urban areas are using digital banking services, only 44% transact regularly. While women are adopting digital platforms, they may not fully engage with them or may still face barriers to regular use. Furthermore, there is a notable lack of awareness regarding government financial inclusion schemes. The survey found that 18% of women were unaware of key initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Atal Pension Yojana (APY), indicating a need for targeted outreach to ensure that these programs reach underserved populations.
Vijay Rai, Chairman of the CII Delhi Panel on Emerging Technologies & IT/ITES, emphasized the transformative role of technology and financial literacy in shaping India’s financial landscape. While the shift toward digital payments is undeniable, Rai pointed out that there is a critical need to focus on empowering underbanked communities by equipping them with the right tools and knowledge to thrive in an increasingly digital economy.
The report advocates for short-term initiatives aimed at gaining a deeper understanding of unbanked segments and improving their access to financial tools through targeted technology and literacy programs. For long-term impact, the report suggests building a tech-driven financial ecosystem that leverages emerging technologies such as artificial intelligence (AI) and automation. This would enable the delivery of personalized, secure, and efficient financial services to individuals across rural and semi-urban India, making financial inclusion more sustainable.
Ultimately, the report calls for a collaborative effort among financial institutions, policymakers, and technology providers to drive financial inclusion. By working together, these stakeholders can foster sustainable economic growth, expand access to financial services, and bridge the existing gaps in financial literacy across India’s rural and semi-urban populations. With the right strategies in place, there is immense potential for technology and financial education to revolutionize the way people in these areas manage their finances, paving the way for a more inclusive and prosperous future.
