Digital Financial Literacy -A Call for a Better Tomorrow
Updated: Sep 22, 2020
As for the Indian census, any person aged 7 and above who can read and write with understanding in any language is treated as a literate. Is it enough to bestow a happy, dignified, contended, and financially secure future to an individual? Today on the occasion of International Literacy Day, it is sad to discover that around 25% of the Indian population is still illiterate. To become self-aware, one must possess the requisite knowledge of many spheres. Of many other things, digital financial literacy is one such aspect that every individual must specialise in. While India boasts the world’s second-fastest-growing mobile market, Digital literacy is almost non-existent among more than 90% of India’s population.
Over time, the economy has moved from commodity money, paper money to virtual money like bitcoin. With the development of technology-driven fin products, citizens must have higher levels of financial sophistication to make use of fintech products and avoid fraud and costly mistakes.
One will be surprised to realise that the coronavirus has accomplished what India's biggest monetary shock demonetisation could not achieve 4 years ago. Yes, the feat is in terms of the use of digital payments, which is soaring at its all-time high. Amidst, the Covid-19 induced pandemic, the need for contactless payments has seamlessly integrated into our lives.
Digital financial products have a better edge over traditional cash-based products on many grounds. They are safe, easy, efficient, fast, and inexpensive. Witnessing the progress made by the fintech companies in recent times, it would certainly not be wrong to state that these digital financial products are here to stay for long.
Every change is initially resisted and so is digital financial technology. What comes out as a prospective and effective solution is the promotion of Digital Financial Literacy. Digital financial literacy(DFL) is crucial because there is no escape, the future of financial transactions lies in digital financial products.
Digital financial literacy (DFL) can be defined as having the knowledge, acquired skills, and necessary habits to effectively use digital financial transactions. In other words, digital financial literacy is a combination of all three paradigms: digital, finances, and literacy.
DFL is a multidimensional concept. It is based on four broad pillars:
(a) Knowledge of available digital financial products.
(b) Awareness regarding the financial risk associated with each product.
(c) Knowledge about risk control measures.
(d) Awareness about consumer rights and redressal procedures in case of financial fraud.
However, the roadmap to DFL in India faces prime hurdles like inadequate infrastructure for training the end-user, aversion to the adoption of Digital Financial Technology, and inadequate grievance redressal mechanism.
Owning a smartphone does not necessarily amount to being digitally literate. The majority of the people in India do not use it more than to make a call or text. The government's support of digital financial literacy is outrightly supportive of digital financial literacy campaigns. It is evident from reforms like making NEFT and RTGS free from January 2020, promoting the use of UPI transfers, increasing accessible financial touchpoints, etc. The perfect way to go about it is to start at the grass root level i.e. from the school level. Financial literacy sessions including digital financial literacy should be made compulsory at the school level.
The pressing priority at present is to aggressively train the end-user on the nuances of digital finance that will empower people to adopt technology with ease and bring all under the ambit of digital banking. It requires collaboration and sincere efforts of various stakeholders like government, NGOs, individuals, fintech companies, banks, etc in spreading digital financial literacy. We need to innovate and create tools to spread awareness to the public at large and remove the looming resistance to digital payment technology particularly from their minds of the underprivileged sections of the society. Training sessions and workshops should be conducted where the trainees were familiarised with common digital flagship products like RuPay IMPS, BHIM UPI, enumerating their value benefits, features, and security standards.
It's time for the tech-savvy youth to come forward and act as a voluntary change agent in making India a digitally financial literate country where every Indian has access to e- bouquet of repayment options that are safe, secure, convenient, quick, and affordable. Today, on the occasion of Literacy Day, let’s pledge to spread the arms of digital financial literacy countrywide and make its benefits available to the last mile customer.
By Anjali Lalchandani