Availability of high-speed internet in rural areas will present huge opportunities and help improve the penetration of financial services in the country, IDFC First Bank Managing Director and CEO V Vaidyanathan said on Wednesday.
“I think 5G is going to be a really big deal as and when things stabilise and people start using it. The fact is that internet (coverage) in the rural areas is only 25 per cent. So can you think about it when internet in rural areas touch something like 90 per cent?
“How vast parts of rural areas can get penetrated and what opportunities will be there, it is just unbelievable,” Vaidyanathan said while delivering his keynote address at the two-day Global Fintech Fest 2020.
Speaking on the topic ‘Fintechs: Where Need Meets Opportunity’, he said even as India has provided biometric IDs, it has not taken internet to much of the bottom of the pyramid, even in urban areas.
All financial inclusion metrics are at a low level in the country, including credit to GDP, mutual fund to GDP and insurance penetration to GDP ratios.
Fintech firms can play a crucial role in bridging this gap, he said at the virtual event, organised by the Internet and Mobile Association of India (IAMAI), NPCI and other industry players.
Lauding the Unified Payments Interface (UPI) enabled digital transaction culture in India, he said it is an “extra-ordinary achievement of our country”.
He also stressed on micro-transactions where the fintech players can play a big role.
“Micro-transactions…that’s where the big game is…in terms of bringing people into financial inclusion. I am not talking about bank accounts, of course it is there, but I am talking in terms of mutual funds, insurance and advisory etc…”
“We provide wealth management services to all the rich people, but for a poor person even a scooter is wealth, Rs 50,00 is wealth. In our eyes Rs 50,000 is not wealth, so the thing is we are not talking about wealth management for the poor,” Vaidyanathan said.
He also talked about innovation in products, which is another area where fintech players can contribute.
“Almost all banks have now started providing all services on phone…but the underlying product has not really changed…
“… a personal loan has to be a three year loan only and if you pre-pay, you have to pay 3-4 per cent as pre-payment charge. That has not changed, just moved out to the mobile. So there is a big opportunity for fintechs to re-imagine the products,” he noted.
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