Technology is changing finance in developing countries. The Pandemic turbocharged it. With a staggering 650 million Internet users, India has been one of the biggest winners of digitization and by some degree!
Just a decade ago, India’s millions of small business owners used only cash to transact. Now they use phones. This has been nothing short of a financial revolution, as Mobile payments, powered by a technology called the UPI, have more than doubled to a staggering $1 trillion in 2021 from the year before!
Similar accounts of financial transformations across the globe have taken decades! So how did India’s cash heavy economy manage to turn, in the matter of years, to a more inclusive digital economy from the bottom up?
The Indian digital payments story is one of success when it comes to financial inclusion and immense growth. It’s been so successful, Google had suggested our own Federal Reserve adopt something similar - so we’ll hear a lot more about FedNow in 2023, something that will be our version of UPI. Although UPI has brought financial inclusion to India, it also opens the door for an extra level of control of the government, which has a whole new set of risks for an institution with access to, in the future, 1.2B peoples biometric information.
This has been really fun to learn about the Indian story of Financial inclusion and we hope to see initiatives like this grow around the world to reduce friction in transacting! Until next time, stay curious!