Lack of digital literacy and skepticism towards digital financial services are the two main challenges we face in rural parts of the country, said Sanjeev Kumar, co-founder and CEO of Spice Money in an interview with BW Businessworld. Edited excerpts:
Tell us about your company’s plans to create a great phygital app for rural India.
At Spice Money, we are building a financial marketplace model offering savings, credit and insurance services beyond basic banking and payment services, as well as a travel marketplace offering holistic travel solutions. These services will be widely distributed using the super app Spice Money and will bundle services in agriculture, insurance, credit, e-commerce and health.
Our goal is to build India’s largest platform-as-a-service network with the best last-mile connectivity, revolutionizing the way Bharat banks operate through our Open Network Assisted Digital Delivery (ONADD).
Why is digitalization important in rural areas, in your opinion?
The use of digital technology in rural and semi-rural India has seen an increase in the face of Covid-19, with rural communities taking advantage of digital tools to become financially independent.
Fintech players introduce innovative technologies adapted to the needs of the rural population. Achieving India’s financial inclusion goals will only be possible if rural residents perform well in financial and digital literacy, in addition to making fintech infrastructure more accessible and affordable.
In your opinion, which sector is most in need of a digital boost in rural areas, with regard to commercial activities?
Rural India has been underserved when it comes to financial services. Access to financial services through digital channels is an area that needs special attention in order to realize the Indian dream of financial inclusion. However, lack of digital literacy and skepticism towards digital financial services are the two main challenges we face in rural parts of the country.
Awareness of digital solutions and its benefits is the key to overcoming these challenges.
Our goal has been to alleviate these concerns of rural residents and bring them financial inclusion as well as financial independence. With the help of our assisted model and local Adhikaris, we are able to build trust among rural citizens by helping them understand each step, making them comfortable with digital processes and encouraging them to embrace technology.
Do you have any plans for micro, small and medium enterprises (MSMEs) in rural areas?
MSMEs are one of the strongest pillars of India’s economic growth. There are over 63 million MSMEs in India employing nearly 100 million people residing in remote areas.
Strategic partnerships between government and fintech players, especially those focused on rural areas, can help address these challenges. Furthermore, it is crucial to set up training programs for the MSME sector to bridge the existing gap. Some countries have already introduced policies encouraging small businesses to use online platforms and we should also take the necessary steps to speed up the process.
Early results may be limited, but they will help increase the sector’s long-term growth potential. We work on credit and investment products for medium-sized enterprises (MSMEs) in rural areas. Although we are in the pilot phase, we see many opportunities for us to expand our role here.
What major changes have you witnessed in the post-Covid-19 pandemic, as far as rural fintechs are concerned?
The financial services industry has learned a lot from the Covid-19 pandemic. This event certainly served as a catalyst for greater adoption of digitalization in financial services.
We have seen an increase in adoption when it comes to technology in financial services, with various rural fintech companies helping to develop customized solutions for people living in rural areas.
After initially providing solutions related to basic financial services, rural fintechs are gradually developing solutions for agriculture, insurance, credit and travel bookings and focusing on scaling these solutions in times to come for the well-being of people.
Even before the pandemic, the government had pushed to provide digital services to rural areas by offering cost-effective smartphones and internet services across the country.
After Covid-19, that resolve has only grown stronger and now partnering with rural fintech companies will help achieve the twin goals of digital and financial inclusion in less time than expected.
How can rural India be one of the main drivers of the country’s growth after Covid-19?
Nearly 65% of our population lives in the rural areas of our country. If we are to achieve the $5 trillion goal in the coming years, the country’s rural population must also be involved. MSMEs are the backbone of our economy and most businesses operating in rural areas are MSMEs as they require less capital to start.
Many new schemes and programs have been launched by the government for the benefit of MSMEs, such as the Credit Linked Capital Subsidy Scheme (CLCSS) and the Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE) to ensure sufficient access to credit.
Apart from this, agriculture is one of the major sources of income in rural India and also contributes significantly to our economy. The government needs to ensure that the grants and credit it sends to people in these areas reach them on time.
This is where a partnership with rural fintech companies and banks can be made to ensure that the money is transferred smoothly to the bank accounts of the intended beneficiaries.
What are the main opportunities that Spice Money offers to rural communities?
Through our successful journey of building and offering tailor-made solutions for the rural population, we have revolutionized the way Bharat does its banking. Our relentless efforts to drive financial inclusion have driven us to become a holistic technology solutions provider for Bharat through our technology expertise and strong presence in the Indian hinterlands.
Innovation being a key element for us, we want to go beyond simple payments and offer other products and services such as insurance, access to credit, etc., keeping in mind the needs rural entrepreneurs.
At Spice Money, we understand the importance of serving rural people with solutions tailored to them, as opposed to forcing adaptation of existing urban solutions.
As our Adhikaris are the backbone of our digital units across our country, we offer no onboarding investment to our nanopreneurs and also provide them with financial training so that they can better serve their rural communities.
We align with the vision of our central government’s Jan Dhan-Aadhaar-Mobile (JAM) trinity program by helping to include more people in the formal financial system with services offered at home.
What challenges do rural people face when it comes to doing fair business?
Access to credit and lack of knowledge are the main challenges rural people face when it comes to starting and running their own business. The depopulation of rural areas as people migrate to urban centers in search of a better quality of life and more opportunities.
With increased government intervention and the help of new technologies introduced by fintech companies, this scenario is changing and now people are returning to rural areas as new opportunities arise. Another key aspect is the need for training among the rural population to equip them with the right set of skills for a better understanding of the business scenario.
What can we expect from Spice Money in 2022?
Spice Money has established a vast assisted digital ecosystem that penetrates 95% of rural PINs, spanning 700 districts and 5,000 blocks, serving over 10 million households, and is on track to continue supporting economic development in rural areas of the country in 2022 .
Currently we are developing solutions to meet the needs of agriculture, insurance and credit to name a few and intend to develop these solutions for the well-being of people living in the rural areas.
Last year, the RBI introduced the Financial Inclusion Index to capture the extent of financial inclusion in India. The index includes three parameters, namely access to financial services, use of services and quality of services.
We can humbly say that the products and services we offer largely contribute to the 3 parameters of the Financial Inclusion Index and allow us to foster deeper financial inclusion in the hinterlands of the country.