Financial wellness apps could bridge the gap between India’s rich and poor

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Photo by Bagus Hernawan on Unsplash

India’s retail banking sector is moving to fully embrace developing digital financial wellness apps as a means of interacting with their customers, a new data revealed in a Backbase commissioned study conducted by Forrester Consulting published this week.

This move by the sector could contribute to increasing the rates of India’s digital literacy and bring money management, budgeting, and savings tools to new consumers, addressing the imbalance of financial progress across India’s wealth divide.

Of the Indian retail-banking business decision-makers interviewed as part of the report, 96% said their financial institution was ‘planning to’, or ‘actively expanding’ its financial wellness and money management tools, and 50% said it was of ‘critical priority’, revealing India is on the cusp of a big change.

“Digital money management via a mobile device is the great leveler, as everyone can now have access to financial tools such as spending analysis, budgeting, and assistance with saving goals, wherever and whenever they want. This could have huge implications for helping to improve the financial decision-making of those most in need,” said Iman Ghodosi, Regional Vice President for Backbase Asia Pacific.

It’s no secret that India is digitizing rapidly. An average smartphone user currently consumes more than 8GB of data per month, which exceeds the average in more digitally advanced countries such as China and South Korea. India’s economy has also been a hotbed of financial services innovation over recent years. Numerous fintech startup businesses have formed, spanning the banking and financial markets industry.

“The urgency, focus, and action we see in the report are as a result of the number of major players building apps in this space,” adds Mr Ghodosi, who sees the next six months as an inflection point in the space. “India’s highly digitised population is ready and waiting – people want a high level of customer focus and flexibility for financial services. They want access to their personal finances anytime, anywhere, through any channel, and tools on how to manage their money.”

New financial care and protection capabilities

One of the most interesting findings uncovered by the report was the ambition by India’s retail banking sector to offer more care and protection to their customers through such apps. Through advancements in AI and data analytics from the spending habits and financial decision-making of app users, banks can now assist their customers in new ways. This technology will open up financial literacy, lead to better decision-making, and avoid debt and exploitation for many poorer Indians, who didn’t have access to these types of tools previously.

“Our study shows that advancements in financial wellness and digital money management tools are overwhelmingly a force for good in India and that any customer with a smartphone will benefit, no matter their standing in India’s wealth divide,” Ghodosi said.

“The data points to financial wellness apps being a primary interface between banks and their customers as we move into the future. As a market leader in engagement banking platforms enabling the disruptors of the banking industry and incumbents alike, Backbase is primed to address this real need.”