India’s digital landscape is changing faster than we can imagine, and it could mean huge improvements in financial access for many. As we speak, three key factors are converging to create a new, more robust digital ecosystem in India, permanently changing the way we do business.
The proliferation of smartphones, a government initiative and a new payments interface are changing the market, driving the rise of mobile wallets and garnering attention from major brands like Apple. For those among the approximately 233 million unbanked in India, this could be a huge step toward full financial inclusion — allowing them to save, borrow, build credit, make payments, purchase insurance and build better lives.
The first component of this digital ecosystem is smartphone proliferation. In February, India passed the U.S. to become the second-largest smartphone market in the world (behind China). There are more than 1 billion mobile phone connections in the country, and 250 million of those are smartphones. Smartphone sales continue to rise, making up a larger percentage of total phone sales. Suddenly, a very intelligent device is getting into the hands of many Indians, which is bound to change the way we reach people, even across once-insurmountable distances.
The second is the Aadhaar profile, a 12-digit unique identification number available to all Indians. As impressive and useful as smartphones are for connecting people to the internet and formal financial services, that connectivity means nothing without first having identification. Started in 2009 by the Unique Identification Authority of India (UIDAI), the government agency has issued more than 1 billion Aadhaar numbers so far, which amounts to more than 80 percent of the population.
This sweeping new program gives many Indians something they’ve never had before: government-issued, formal identification. This is no small matter — MasterCard CEO Ajay Banga recently said that “not having an identity is effectively like being in prison. Everybody is going around with their hair on fire about the Internet.