This Report Suggests that The Real India Finds Digital Financial Services to be Overly Complex

India has made tremendous progress in building infrastructure and regulatory frameworks that encourage digital innovation in financial services, but adoption and usage of new offerings have been slow to take hold and scale.

Omidyar Network today released “Currency of Trust: Consumer Behaviors and Attitudes Toward Digital Financial Services in India,” and the report focuses on understanding the current context and behaviors of a diverse sample of Indian consumers regarding their digital consumption and readiness for digital financial services on key issues, such as ease of use, trust, and social collaboration.
The report findings are derived from consumers across 30 communities in Nagaland, Bihar, Maharashtra, Karnataka, and Telangana, covering a mix of rural, semi-urban, and urban areas.

Among the most relevant behavioral insights surfaced by these deep interactions with Indian consumers are:

Even though Smartphone adoption is expected to reach a projected 54 percent of the Indian market in the next three years, a large portion of surveyed consumers—especially those in rural areas—indicated they are comfortable with keeping their basic feature phones.
This is primarily due to the greater resilience and longer battery life of lower-end phones, but also because internet access is not seen as a priority for these consumers. This means digital financial services providers will need to cater to both technologies in their offerings in order to broaden their customer base.

1) Adoption of mobile apps is driven by data efficiency and usage within consumers’ social networks: The survey found that Indian consumers are frugal when it comes to data usage and look for creative ways to save data, such as constantly alternating between 2G and 3G depending on the function in use or pooling resources to set up shared Wi-Fi hot spots.

Consumer adoption is also influenced by the number of individuals in their social network who use the same app. This means digital financial services apps need to be lean in data usage and leverage pervasive platforms, such as Whatsapp or UCBrowser.

2) Consumers are willing to leapfrog traditional financial services and adopt digital if they find convenience, relevance, and alignment with socio-cultural norms: Despite the low comfort level and lack of familiarity with digital financial services, through prototyping sessions, many surveyed consumers expressed a willingness to start using such apps if the technology addresses unmet needs, offers convenience, and doesn’t challenge sociocultural norms.
To shift consumers from existing informal cash–based financial solutions to formal digital financial products, solutions need to capture their full relationship and experience with money, such as allowing consumers to create partitions or “virtual jars” within an account, and offer them tools that can help with cash flow management of micro- and small businesses or household expenditures.

3) Current digital financial offerings are seen as overly complex even by savvy consumers: Surveyed consumers consider those who use financial service apps to have a specialized skill and cite difficulty grasping financial jargon in on product offerings and legal terms and conditions. According to the research, consumers’ lack of trust in their own abilities is one of the biggest hurdles today for adoption of digital financial services. Lowering the stakes for consumers to experiment with digital offerings is a must for providers. Prototyping sessions revealed that simple actions such as removing jargon and complex user interfaces, communicating in local languages, offering easy proof of transaction and grievance redressal, and using bank correspondents to onboard customers, can go a long way in building consumers’ confidence to transact digitally.