In Live Mint, Varad Pande and Nirat Bhatnagar explain why digital financial services should be tailored to the habits of the underserved. While financial service firms in India are beginning to explore digitizing their services and products for the BoP, two key dilemmas – user-experience and user-interface – are limiting innovation.
India is going through a “golden age” of financial inclusion. The government and the private sector have been equal players in this with key initiatives such as Aadhaar, the licensing of new institutions (payment banks and small finance banks), and the emergence of a vibrant fintech sector. The Unified Payments Interface (UPI) has been launched and promises to herald a new age of frictionless payments across devices and interfaces.
Now that the rails have been laid, the conversation is moving towards the creation of digital financial services that cater to the needs of the millions of underserved—the so called base-of-the-pyramid (BoP)—and bringing the benefits of the formal economy to them. Traditional banks, microfinance institutions (MFIs) and fintech companies are all taking steps that express their intent to target this segment.
However, there remain two dilemmas or “fuzzy choices” that are holding back innovation in this space. Firstly, the the user-experience (UX) dilemma, and secondly, the user-interface (UI) dilemma.