Brief

IT-enabled Financial Inclusion

(From Left) Dewang Neralla, Director, Atom Technologies, Julie Stahl Peachey, Regional Director - Asia, Grameen Foundation (chief-guest for the conference) and Anand Rangachary, MD, Frost & Sullivan, South Asia & Middle East.

Financial Inclusion (FI) is the process of providing banking services and financial access at an affordable cost to the vast sections of financially disadvantaged and marginal income group of people. It has gained immense attention across the globe due to its social as well as commercial importance. Savings, remittances, insurance and loans are said to be its four pillars.

The FI quotient of a country is recognized as an important parameter to gauge the country’s overall economic and social development. India has emerged as one of the fastest growing economies, the challenge is to spread and sustain the growth rate in different sectors and different sections of the society. There is a huge disparity between the financial services accessible and provided to different sections in our country. Only 40% of the population has an access to financial services in the country. The remaining is financially excluded from the formal sources of finance.

Frost & Sullivan’s Information and Communication Technologies Practice, South Asia and Middle East in its MindXchange event, “Charting a Roadmap for IT-enabled Financial Inclusion”, presented its view on the current FI quotient of India.

According to Anand Rangachary, MD, Frost & Sullivan, South Asia and Middle East, “Our motivation to host this MindXchange resulted from our consulting engagements with large Public Sector Banks where we realized that almost all banks struggled to implement their ideas in reaching out to the financially disadvantaged. Even though there was good understanding about the financial requirements of this section, lack of sustainable technology has proved to be a huge dampener.”

In order to reach out to the financially disadvantaged, IT will play a pivotal role. Technology can be a greater enabler and has the ability to a provide single-point solution. One of the important parameters for the success of this initiative is “Cost of Delivery of Service”. It is imperative that if financial institutions have to be self-sufficient they need the help of technology to keep the “Cost per transaction” under permissible and profitable limits. The onus lies both on Technology Service Providers and Financial Institutions to work out a profitable formula, which will address this national cause. Higher penetration of financial services within India will help us be prosperous for a very long time.