Millions of Indians hope for a better future, with well-paying jobs and a decent standard of living. To meet their passions, the country needs broad-based economic growth and public services that are more efficient and of course—delivered quickly. Technology and ddigitisationcan play a significant role in raising output, adeptness, and innovation. Ironically, India’s expertise in informatics is a defining component of its international brand, but so far, large fragments of the country remain unscathed by its power.
However, India’s current Prime Minister, Narendra Modi, to empower his country people, has taken a few steps and among them, Digital India happens to a major landmark. It encompasses every aspect of digitization, including a gradual shift towards digital finance.
A recent report titled “Digital Finance for all: Powering Inclusive Growth in Emerging Economies”, published by McKinsey and Company, estimated that adoption of digital finance would boost the gross domestic product (GDP) of all emerging economies by as much as $3.7 trillion by the year 2025, a 6 percent increase as opposed to a business-as-usual scenario. “India could see a boost of $700 billion, an 11.8 percent increase by 2025. This additional GDP could create up to 95 million new jobs across all sectors, 21 million of them in India” the report said.
What is digital finance?
Digital finance refers to financial services carried out through various digital means such as mobile and the internet. Using this particular mode of transaction entails less use of cash and utility of traditional bank branches. Computers, mobile phones, or cards used over point-of-sale (POS) devices that connect individuals and businesses to a digitised national payments substructure, enabling seamless transactions across all parties.
It is believed that this model of utility would become a boon for all and eventually boost economies.
The report further stated that employment opportunities would be created for millions owing to technology and even entrepreneurs can leverage the power of the same.
Why should a technology-driven society be embraced?
Needless to say that the penetration of technology and digitisation in every aspect of life has multiple benefits. It is not only digital finance but also the idea of a ‘cashless society’ that has its welfares.
It has been proven that pervasive digital technology can help produce a “nation of microentrepreneurs”. Technologies like The Internet, mobile phones and the cloud can make it possible for all sorts of small service providers—food preparers, plumbers, caregivers, and drivers, as well as financial advisors and planners, accountants, and other freelance professionals—to find customers and offer services in an online marketplace.
Disruptive technologies also involve business models which can undermine certain advantages for the incumbents. All major corporate organisations are fast embracing digitisation and technology including their human resources (HR) practices as well. Different types of analytics such as big data analytics, predictive analytics and workforce analytics are being implemented by HR professionals to be able to keep pace with growing technology and even boosting employee experience processes.
While HR is just one domain bbenefitingfrom digital finance, overall businesses can reap further benefits from the same. Digital payments make an electronic record of sales and expenses, thereby enabling companies to expand their tracking and inquiry of cash flow, streamline management of suppliers, and enhance their understanding of customers and operations. An example is iZettle, a payment processor operating in Latin American and European countries. Through a smartphone app, it permits small businesses to process digital payments, track and estimate their sales data, and maintain regular surveillance over cost-effectiveness, raising their productivity and even profitability. Digital records for expenditure and revenue also allow businesses to validate their credit quality to lenders.
Similarly, if we try and shift focus on the growing Indian economy, it goes without saying that digital finance will have its positive impact on the long run. Whether it is about giving rise to more fintech and digital wallet companies and generating tremendous employment opportunities or taking baby steps towards a ‘cashless economy’ – digital finance has already started encroaching our lives.
Whether it is small businesses, individual entrepreneurs, startups or large corporate organisations or peoples’ daily lives—digital finance is not only here to stay for long but also transform lives of people for the better.
Sources: Indian Express, McKinsey and Company