Who are the biggest beneficiaries of India’s digitization campaign in Covid?


When Prime Minister Narendra Modi announced the JAM trinity in 2014, the idea was to integrate cellphones with Aadhaar and bank accounts. The introduction of UPI and wallets advanced the cause of government digital penetration. Since then, the government has launched BharatQR and e-Rupee. While many Indians have yet to embrace digital banking, young Indians are certainly taking a liking to it.

Digital brokerage firms have more assets and customers than traditional businesses. First-time borrowers are the engine of the personal loan market. Watch this special report.

The Covid-19 pandemic has proven to be a tipping point for digitization and wider penetration of finance.

Young investors or new investors with a do-it-yourself mindset have flooded the digital world for active business and financial planning. The idea was to seek additional sources of income beyond traditional instruments.

And the reason for going online was quite simple. They signed up in droves due to the simplicity of online trading platforms, fixed fee structures and a faster account opening process.

The surprising element here is that the increase in the number of active traders has largely come from Tier 2 and -3 cities, with a large majority of first-time investors.

In fact, the top five digital-only brokers – Zerodha, Upstox, Angel One, 5paisa, and Groww – have captured more than half of the industry’s active client base, which means a dramatic shift in the hierarchy of domestic brokers.

Zerodha, Upstox, Angel One, 5paisa and Groww had captured a market share of over 53% until the end of July of this year, with a cumulative total of 12.6 million active customers. This figure stood at 17% at the end of fiscal 2019.

And these digital brokers have actually marked their authority in the segment, with the share of the top five traditional brokers rising to 22%, from 33% in the same period of fiscal 2019.

It seems like the golden age of digital payments has finally dawned in India. While digital payments were also alive in the pre-Covid-19 era, it was the pandemic that gave them the much-needed boost as more and more people chose to shop. in the relative safety of their homes.

Let’s talk about some facts and figures. Did you know that over 300 million Indian smartphone users are now using digital payments? A number, isn’t it?

India’s leading fintech platform PhonePe recently published a study on the evolution of digital payments in India over the past five years and the results have been surprising.

By now you must have realized the level of emergence of the digital world in India. Now here are some fun facts that will give you the breadth of digital penetration.

Fun facts in the PhonePe report

The amount of money that travels digitally to India is greater than the GDP of 21 countries

13,456 digital payments at Victory Bazaar in Kakinada during containment, or 200 transactions per day!

14,142 payments at a dairy in Delhi NCR during the lockdown, or 211 transactions per day!

Almost all trends suggest that the younger generation is entering the financial industry digitally. But it’s not just for investing and trading. In fact, they are also the driving force behind the personal loan market.

The CRIF High Mark credit bureau published a study titled “How India Lends”. The interesting assessment here is that young people under 25 are the driving force behind the personal loan market, taking advantage of low-value, short-term loans. And they take these loans to buy bicycles or consumer durables.

But there is always a flip side. Many companies aggressively exploit social media influencers to increase their customer base and engage in abusive practices to achieve the goal. So comes the role of government to maintain a dignified digital balance and provide a level playing field for all actors.

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