If the last 18 months were a norm, many of us would be hard-pressed to find one better than the resilience of human will. The pandemic posed almost insurmountable challenges for humanity and the country at large. Despite the many challenges, Indians have time and again attested to the fact that our ability to overcome the biggest hurdles is unbelievable and so does our ability to innovate and adapt.
At the heart of this innovation and adaptability is the undercurrent of digitization. Today it pervades every aspect of our lives. The old dynamism of physical transactions continues to dwindle, and new digital habits, which were viewed with great skepticism until recently, are readily adopted.
Name any aspect of one’s life and that is likely to change after the pandemic. From buying patterns, banking practices to work dynamics, they were inadvertently changed. Here, the credit goes to the customer for adapting himself to a new digital way of life. While several adaptations were necessitated by the two key mantras of the lockdown, people are not expected to return to the way things were before Covid-19. Even if the virus threat is completely over, and one expects it to be so, the pace of digitization will not be reversed, slowed or halted. Our new reality, the new normal stand changed forever.
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Impact
Digital integration has taken a leap in the past decade due to cheap smart phones and increased access to the Internet. No wonder India is projected to become one of the largest ecosystem for internet users. A report released by a data analytics and brand consulting firm states that India is likely to be home to 900 million users by 2025. More interestingly, internet penetration is growing at a faster rate in rural India than in urban India.
For the Micro, Small and Medium Enterprises (MSMEs) across the country, this is good news. Clearly, rural areas are at a critical point which will help small firms to unlock more value in their businesses.
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The development around MSMEs is closely related to the amount of unbanked people in India. The Pradhan Mantri Jan-Dhan Yojana, promoted by the continuous financial inclusion campaigns of the Reserve Bank of India, achieved tremendous success. In 2017, at least 80% of the population had bank accounts. However, having a bank account does not necessarily translate into meaningful inclusion. RBI data shows that there has been little improvement in terms of account usage, financial literacy and savings habits, and institutional borrowing. According to a private bank survey, with digitization of 5 percent of MSMEs, increased use of technology in the coming decade will help in greater geographic reach and better efficiency of businesses, apart from enhancing India’s competitiveness in global markets.
a digital economy
To address the lack of financial access and literacy, a draft policy, USENET or Industry Supporting Enterprises Network, aims to provide more than 62 million nano and micro enterprises, basically grocery and mom-and-pop stores, as a support system. To empower with. Promote ease of doing business. This will be done through digitization and formalization of their businesses. This will help them integrate their operations – from billing to ordering, from managing employees to conducting business online, and from tax filing to increasing customer loyalty – on a single device.
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However, an accelerated digitization—be it adoption of digital payments, card-based as well as UPI, along with a new framework for easy access to credit—will help them get loans and subsidies, ensure compliance with regulations and Will accelerate assimilation with digital payments. Forum.
It is the kirana stores and small shops that are the key to unlocking India’s immense economic potential in the next 10-15 years. Connecting them to the mainframe of the banking architecture will not only improve the bottom line of banks but will also accelerate economic growth. Digital banking has the potential to penetrate deep into the non-banking sectors of India and connect these hinterlands with the opportunities arising in cities and towns. The mapping of Digital India begins with a banking network that creates new employment opportunities and business prospects.
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Digitization in Education
Digitization has helped other classes to change their old paradigms. For example, the education sector has embraced digital opportunities seamlessly. Teachers adapted classes to be delivered virtually, and students take online academic courses and professional degrees.
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From 2020 onwards, Indian universities, which were previously restricted from offering more than 20 percent of online courses, were allowed to offer their courses online to broaden the reach and scope of vocational education. Compared to 2016, when India’s online education market was $247 million, this year it is estimated to be $1.96 billion. The user base has grown, and how. While only 1.6 million people were educating themselves online in 2016, that number has grown to 9.6 million.
As the scope of online education deepens, costs on this sub-head will drop significantly over the next decade, and more graduates will drop out following only the digital curriculum. This will be the new benchmark. In addition, it will help in re-skilling the workforce and its rapid transformation.
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Digitization and Management Finance
Meanwhile, the world of finance is scaling new heights in an online avatar. Change is happening at a tremendous pace, thanks to millennials who have entered the stock markets in large numbers and are taking benchmark indices to new heights. For proof that the Indian experiment with digitization is indeed underway, consider the fact that over one crore demat accounts were opened between April 2020 and January this year.
Investors’ effort with the markets is driven by a digital process that removes the clutter of cumbersome physical documentation. Gone are the days of running into a photocopy shop and managing tons of certification documents. With the account aggregator framework, Neo-Banking is making inroads, and financial decisions will be made with just a few clicks and taps over the next 10-15 years.
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Lastly, but not least, consider the ever-increasing expansion of e-commerce. As of 2020, at least 67% of online consumer demand stems from Tier 2 cities. The deep penetration of the Internet shattered the urban-rural divide. With this e-commerce growth has emerged the cashless credit business model. The most prominent in this category is the buy-now-pay-later (BNPL) model. It works on a short-term, micro-credit model that facilitates purchases by asking customers to address their cash crunch and pay little or no interest.
This model of buying small- and big-ticket items at the point of sale has been a hit with consumers, especially Millennials, as it allows them to manage their monthly expenses. With credit card penetration barely 3 percent or one of the lowest in the world, BNPL players will be fast on their feet in capturing the markets.
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ground level
If there was one big lesson to be learned from the pandemic, it is that digitization is the new evolutionary frontier for businesses. Its transformative power can illuminate blind spots, remove obstacles and logistical hurdles in its wake. With it, the most remote locations can (and will be) mapped onto the digital landscape, and their progress and development will be monitored in real time. Sure, it may sound utopian, but the impact of digitization is going to be huge, which will change the future of our country.
(It appeared in the print version as “Click to Play”)
(views are personal)
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Nitish Asthana is the President and Chief Operating Officer of Pine Labs
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