Union Budget 2022-23: Promoting Digitalisation -; Financial Inclusion

4 Feb 2022 , 12:05 PM

The Union Budget 2022-2023 announced on February 1 by Finance Minister Nirmala Sitharaman was much awaited. India has gradually started recovering from the havoc caused by the second wave of Covid-19 pandemic and it’s time to promote expeditious growth in the right directions. The Union Budget this year focussed on digitalisation and financial inclusion more than ever, which will provide the much-needed boost to the digital economy.

The Union Budget has laid focus on promoting fintech and technology-based developments in the country which will play a major role in enhancing the digital ecosystem. The fintech sector has successfully proved its potential by playing a key role in transforming and digitising the banking space. The sector, in turn has received appropriate consideration and initiatives in recent times from the Government which has led to its massive rise. The financial technology space has become the most important aspect to promote digital literacy and digital infrastructure.

The introduction of 75 digital banking systems in 75 districts by scheduled commercial banks will empower the population digitally in a consumer-friendly manner, supporting inter-operability and financial inclusion. Fintech has immense potential to strengthen the under reserved sections and to reach every nook and corner of the country. This will enable many consumers to experience digital banking for the first time at their convenience.

Digital banking, lending, collections, and payments have effectively contributed to increasing financial inclusion and have been the key concentration areas for the country. Digital debt collections is another key step towards digitisation. When customers are empowered by digital experiences specific to their needs, the debt collection process becomes seamless and pain-free. A digitalised debt collections approach can aid in facilitating financial inclusion by providing intelligent personalised experiences with options to resolve debt on their terms. Debt collections has traditionally been a labour-intensive task and has always fallen short of expectations. However, with advancement in technologies like Artificial Intelligence and Machine Learning, the debt collections space can evolve tremendously. Such technologies can assist in reaching out to customers through contextual nudges in their preferred language, easing up the debt collections process. The neo-collections platform provided by Creditas Solutions to banks and financial institutions, which eases the debt collections process digitally has proven to increase customer engagement by 4x, improving collections rate by 15%-35% across different buckets and portfolios.

Further, it has been announced in the budget that online bills and e-payments will be launched to reduce delay in payments, in order to promote use of economic and user-friendly payment platforms, which will eventually help in scaling collections as well. The demand for tech driven collections is only going to see an upward trajectory with the emerging need for financial inclusion.

Mass adoption of digital channels is needed to create a fully digitised country and to ramp up the disruption caused by the pandemic. Technological inclusion at every step is necessary to uplift the digital economy. The Government has realised the significance of the fintech sector well before and it was expected that new initiatives would be launched to amplify its benefits and drive financial inclusion further.

The author of this article is Mr. Anshuman Panwar, Co-Founder, Creditas Solutions  

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com