Principal Investigators: Misha Sharma and Shreya Chatterjee
Research Team: Misha Sharma and Shreya Chatterjee
LEAD Centre: Centre for Microfinance (CMF)
Focus Area: Digital Financial Services
Project Geography: Tamil Nadu and Rajasthan
Partner: CFI Accion
Status: On-going


India is at the cusp of a digital financial revolution. From payment banks to ‘India Stack’ to demonetization, policy makers and financial service providers are energetically pursuing digitization of financial services. Yet, for certain segments in lower income household groups, going digital presents a series of challenges, given that:

•     Only 17 percent of women and 27 percent of men use smartphones in India.
•     Only 9 percent of those with lower education levels are online, compared with 38 percent of those with higher education levels, per a Pew Research Center survey.
•     Forty-five percent of urban Indians and 51 percent of rural Indians have lower levels of digital literacy, according to the Financial Inclusion Insights Survey 2015, which defines digital literacy in terms of knowledge, skills, and behaviours used with a broad range of digital devices such as smartphones and laptops.

In this context, for financial service providers presenting entirely digital products like mobile wallets, online loans and mobile banking applications, it is an arduous task to usher users from cash-based to digital modes. Given the several pros and cons of deploying human touch in digital financial services, it is important for service providers to tread cautiously and arrive at an optimal mix of human-centric and technology-enabled digital financial solutions. This study, initiated as part of the CFI Fellows Program, will examine the various human touch points available in the context of digital financial inclusion in India by looking at two broad questions:

•     What are the different human touch points of digital financial services available in India for the poor and how are these leveraged by consumers and financial service providers?
•     What are the key challenges and opportunities for financial service providers in building effective human touch that is both sustainable and successful in transitioning the lower end customers from manual to digital modes of transaction?

Methodology and Research Design

This study will thoroughly explore the supply context within which the digital finance delivery mechanisms in India operate.

•     The study will conduct a top-down assessment of the supply side, through interviews and field surveys with top management officials at financial entities, branch managers who deploy last mile agents, and last mile agents themselves.
•     To capture a representative sample, the study will examine a range of financial service providers of savings, credit, and payments products to primarily lower income households as well as the diverse channels of last mile agents they use (see figure).
•     The study design also aims to account for the diversity of factors affecting financial service providers’ decision-making. For example, while in microfinance institutions in India, typically, all loan disbursals and repayments are in cash, payment banks are mandated to function on technology-powered platforms. This variation in the level of technology is bound to have implications for the approaches taken towards last mile agents and human touch points.

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