Over the last decade, India has tackled barriers like undocumented citizen identities and minimal access to formal banking and new technologies with a series of innovative programs and digital services. This article will explore India’s digital transformation.
Digital Identification and Financial Inclusion
Efforts to digitize India first took off in 2009 with the launch of a digital identity system called Aadhaar. Aadhaar aimed to provide every citizen with a digital identity. Aadhaar obtained IDs through a biometric-authenticated 12 digit number that created them according to applicant’s iris and fingerprint scans. Aadhaar has provided over 600 million voluntary applicants with UID’s (unique identifications) since its launch. The success of Aadhaar gave even the most rural populations the ability to identify themselves and avoid the hassle of ineffective systems.
Although the majority of citizens obtained digital IDs, a portion of the population still lacked access to digital banking services. Limited access excluded citizens from participating in formal banking that could improve their lives. With the demand for digital banking services increasing, India embarked on its next phase of digital innovation.
In 2014, with added backing from the Modi government, India created the Jan Dhan financial inclusion program. Jhan Dhan sought to get as many Aadhaar identity holders to participate in digital banking as possible. Within the first day of the program’s launch, Aadhaar identifications set up 10 million paperless bank accounts. The program also promised account holders accident insurance for up to 100,000 rupees (or $1,500) and an overdraft capacity of 5,000 rupees ($80).
Empowered with digital identification and banking, citizens could digitally access government services with more ease. The increase in mobile banking also created new layers for India’s digital transformation.
Demonetization and BHIM
By 2017, Aadhaar identification had become a required function for formal banking, SIM connections and income tax returns. With the majority of the population using digital services, the need for India to demonetize became more apparent. India’s total demonetization seemed daunting, but it appears to have worked well for the country. India’s decision to demonetize was so abrupt, the demand for services like Aadhaar and Jan Dhan, among others, increased rapidly. With the replacement of its old currency and the demand for digital services rising so quickly, India’s digital transformation took its next steps.
To help with the transition of demonetization, India’s Prime Minister launched BHIM (Baharat Interface For Money) in 2016. The app serves as a digital payment platform in tandem with the country’s UPI interface. BHIM also works with a 2G network, meaning that people even the most rural parts of India can access this service. This network allows UPI account holders to send and receive instant payments from non-UPI holders, which cushioned the shock of demonetization for more of the population.
The app also offers a wealth of diverse services for users and businesses. Currently, it allows users to shop/pay for services online, transfer money to family and friends, receive customer payments with no additional cost and check transaction history and account balance at any time.
Three years after its launch, BHIM collaborated with over 100 banks nationwide and in early 2018 people downloaded the app 21.65 million times for Android phones and over a million for Apple. Data that RBI and the National Corporation of India collected also demonstrated that out of 145 million UPI transactions that year, BHIM carried out 9.1 million of them.
Although India requires more work, it has dedicated itself to improvements through innovative technology and creative solutions over the last decade. As it continues its efforts, the country’s citizens should have increased access to banking services.
– Ashlyn Jensen