Economic Survey 2023: India outpaces world in fintech adoption, driving financial inclusion

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India has outgrown the global average in terms of digital adoption, giving a fillip to the ongoing financial inclusion efforts, showed the Economic Survey 2023.

Quoting the latest Global FinTech Adoption Index, it said that while the world average stands at 64 percent, India has achieved 87 percent fintech adoption.

This jump is enabled by emerging technologies and innovative solutions, democratising access, and spurring personalisation of products, the Survey said.

“With a strong foundation provided by the Jan Dhan-Aadhaar-Mobile (JAM) trinity, UPI, and other regulatory frameworks, the pandemic has aided acceleration in digital adoption and provided a fillip to digital financial services solutions by banks, NBFCs, insurers as well as fintech,” said the Survey.

The Survey noted that the pandemic provided an opportunity for fintech companies to reach the underserved and provide cost-effective financial services to those at the bottom of the pyramid.

Earlier, venture capital firm Chiratae Ventures and Ernst & Young said in a report released on August 9 said that India’s financial technology sector is expected to reach $1 trillion in assets under management (AUM) and $200 billion in revenue by 2030 as companies offer segment-specific solutions, fintech adoption gains momentum and greater penetration of the Unified Payments Interface (UPI).

Also read: India's fintech assets likely to grow to $1 trillion by 2030

“The market has seen high valuations on the back of large untapped market opportunities…and historical fintech growth has been driven by an organic and collaborative ecosystem while being supported by key government initiatives,” said the report.

However, Sharat Chandra, Co-Founder, of India Blockchain Forum, an industrial body, said that the economic survey expects CBDCs to boost digital financial services. Collaboration between fintech and banks will be the key to ensuring the adoption of use cases built on top of CBDC, Chandra said.

Start ups should be accorded priority sector status by the government. “Fintechs should be allowed to partner with Digital Banking Units DBUs to accelerate the adoption of digital payments and financial services,” Chandra said.

According to the Economic Survey, on average, between 2019 and 2022, growth in UPI-based transactions in value and volume terms has been 121 per cent and 115 per cent respectively. In Dec 2022, UPI touched its highest-ever mark with 782 crore transactions worth Rs.12.8 lakh crore.

The survey further highlighted that in FY19, UPI accounted for 17 per cent of the country's total 3,100 crore digital transactions. The next fiscal year saw UPI’s share rise to more than 27 per cent as it processed 1,250 crore transactions out of 4,600 crore digital transactions. In FY22, UPI accounted for 52 per cent of the total 8,840 crore financial digital transactions, the survey said.