Revolutionising Financial Inclusion: The Role Of Mobile Technology, Digital Wallets And Micro-lending Platforms In India

In recent years, fintech firms have leveraged mobile technology, digital wallets, and micro-lending platforms to address financial inclusion challenges, particularly in areas with limited access to traditional banking. This transformation is not just technological but a socio-economic revolution, bringing essential financial services to unbanked and underbanked populations across India.

Mobile Technology: The Catalyst For Change

The Telecom Regulatory Authority of India (Trai) notes that there are over 1.2 billion mobile subscribers in India and clearly mobile technology has been the most significant instrument for financial inclusion. The rapid increase of affordable smartphones and the expansion of mobile networks in rural areas has allowed fintech companies to deliver basic financial services including mobile banking, payments and remittances. For example, the Unified Payments Interface (UPI) had processed transactions worth Rs 20 lakh crore in August 2024 clearly showing the acceptance of financial services using mobile phones.

“At SahiBandhu, we leverage cutting-edge mobile technology to bridge the financial inclusion gap in underserved areas, where people often fall into debt traps due to local money lenders operating in the gold loan space. Our aggregator platform ensures that everyone, regardless of location, can access credit through banks, fostering economic growth and stability from the comfort of their homes,” Amit Gupta, Chief Technology Officer, SahiBandhu, explained how mobile technology helps customers in rural areas to access financial services directly from their mobile phones.

Digital Wallets: Empowering The Unbanked

Digital wallets have emerged as a powerful tool to drive financial inclusion, especially among populations with little or no access to formal banking systems. Platforms like Paytm, PhonePe, and Google Pay are revolutionising how individuals pay, save, and manage their finances. The number of digital wallet users is projected to reach 300 million by 2025, up from 200 million in 2020. Paytm alone boasts over 350 million registered users and handles more than 1.2 billion transactions every month, offering a secure, convenient, and cost-effective alternative to traditional banking systems.

NPST, a leading digital banking and payments technology provider, is playing a key role in enhancing financial inclusion. "Bridging the gap between banks and fintechs is essential for driving the growth of digital payments. At NPST, we have launched the NPST UPI Circle, which allows primary UPI account holders to add family and friends as secondary users, even if they don’t have a bank account. This helps banks serve customers who might otherwise be overlooked, particularly in unbanked and underbanked segments," noted Deepak Chand Thakur, CEO and Co-founder, NPST.

Further improving access to cash, NPST has created a hyperlocal network of cash withdrawal points through its TimePay Cash initiative. "Customers can now withdraw cash simply by scanning a QR code at local Kirana stores, significantly enhancing convenience and accessibility, especially in areas where banks are distant," Thakur added.

Micro-lending Platforms: Fueling Economic Growth

Micro-lending is one of the significant areas of financial technology to provide credit to needy borrowers and small traders in India who do not have bank credit facilities. According to the Microfinance Institutions Network (MFIN), the Indian microfinance sector had a gross loan portfolio of Rs 4,33,697 crore as of March 2024, serving 7.8 crore unique borrowers through 14.9 crore loan accounts.

Platforms like BharatPe and KreditBee have disbursed over Rs 15,000 crore in loans to small businesses and individuals, by mobile apps. These are fast, simple, and available loans, thus making them suitable for those who are declined by commercial banks due to their strict credit requirements.

Roshan Shah, Co-Founder and CEO, VoloFin, noted the importance of micro-lending for small and medium enterprises (MSMEs). “At VoloFin, we leverage mobile technology and digital wallets to extend financial services to regions with limited access to traditional banking. Micro-lending platforms help bridge the financing gap for MSMEs, offering collateral-free solutions that meet their unique needs. These innovations are driving financial inclusion, ensuring that businesses in underserved areas can access the support they need to thrive.”

Socio-economic Impact: Empowering The Underserved

The socio-economic impact of these fintech innovations is profound. Access to mobile technology and digital financial services has boosted financial inclusion by 20 per cent in rural areas, according to a study by the Reserve Bank of India (RBI). The adoption of digital wallets and micro-lending platforms has also led to a 25 pe cent increase in revenues for small businesses, empowering local economies.

Moreover, fintech firms are playing a pivotal role in bridging gender gaps in financial access. "Fintech firms are not only making financial services more accessible but are also empowering women, particularly in rural areas. By providing faster approvals and disbursement of loans, and offering digital payment solutions, fintech firms are creating new opportunities for female entrepreneurs and helping to close the gender gap in financial access," highlights Pramod Kathuria, Founder and CEO, Easiloan.

Fintech firms are seen as agents of change as they use mobile technology, digital wallets, and micro-lending platforms to increase the access of financial services in India. Through offering services that are within reach, cheap and efficient, they are not only enabling the ‘unbanked’ population to access financial services but also serving as key players in the promotion of commerce and enhancement of lives of those living in rural and other hard-to-reach areas. As these technologies evolve, their potential to boost financial inclusion and socio-economic development in India will continue to grow.