Households in India’s southern region have embraced multi-service digital financial services the most, with adoption rates exceeding 70%. A report by PwC India and Dvara Research Foundation highlights significant regional disparities in access, trust, and usage metrics, emphasizing the need for tailored products that cater to fluctuating incomes. The study underscores the effectiveness of a “phygital” model, combining digital platforms with physical touchpoints to drive enrollment and sustained engagement.
Digital-only strategies have been successful in attracting enrollments, but they often struggle to translate access into meaningful outcomes. In contrast, approaches incorporating human touchpoints have proven crucial in maintaining engagement and fostering trust among users. The report emphasizes the complementary nature of informal finance alongside formal sources, noting that households leveraging both tend to exhibit deeper engagement with formal financial services.
Regional analyses from the report reveal distinct trends across India. In the East, a significant portion of households have not sought financial advice, while reliance on a single source for informal loans poses concentration risks. The West demonstrates high acceptance of digital financial services, yet a considerable percentage of formal credit users face denials, indicating an activation gap. Conversely, the South exhibits a network-driven approach, with a substantial portion of financial advice originating from third-party providers and social networks rather than formal institutions.
In the North, challenges such as self-exclusion and inadequate rural infrastructure hinder financial inclusion efforts. Despite high access scores among new customers, their usage rates remain low, pointing to trust issues and conversion challenges. The report highlights that while digital onboarding and account openings are essential, they are no longer sufficient. Financial service providers are urged to revamp credit, savings, and insurance products to align with irregular cash flows, integrate digital platforms with trusted human interactions, and evaluate success based on resilience and tangible outcomes.
