Fintech innovation for financial inclusion: can India make it?
Authors: Sandhu Kamaljeet , Dayanandan Ajit , Kuntluru Sudershan 
Published: December 2023

Purpose
The purpose of this study is to examine the key research question, which is whether fintech innovation for financial inclusion has been successful in India? As fintech has been popular in many countries, there is very little understanding on how successful it has performed in India for financial inclusion. This research attempts to ravel important factors that may or may not have a direct or indirect impact on fintech innovation for financial inclusion, thereby dissecting the empirical data to reveal important information for the reader.

Design/methodology/approach
This study covers a comprehensive literature review, from which key variables are discovered, then develops hypotheses to be examined, followed by proposing a research model. The survey data examines important research instruments for fintech inclusion in India, identifying and measuring factors, leading to partial least squares (PLS) model testing. Finally, the key findings are reported.

Findings
The findings reveal that fintech innovation from variables such as users experience and motivation for digital payments drives usefulness and ease of use leading to financial inclusion. The security, trust, transparency and customer support when built into the fintech innovation for digital payments influences perceived ease of use (PEOU) and usefulness that mediates to uplift financial inclusion directly. Whereas perceived usefulness (PU) anchoring happens to be a precursor for the financial inclusion. On the contrary, cultural values for fintech innovation through PEOU and usefulness had no impact whatsoever on financial inclusion, thus demystifying cultural influences as non-influential factor.

Research limitations/implications
Research limitations are that the study was conducted in India, and may not be generalised in other countries; however, it can be modified to fit future research. Survey data captured was from a particular region of South India, which may differ from the rest of the country. The sample size and research period were adequate; however, larger data sets would be more meaningful for longitudinal studies. As India is the second most populous country in the world, a comparison with other similar countries of the same size and geographical location will be useful for future research.

Practical implications
This research reveals that financial inclusion is much more complex than previously known and that the penetration of fintech has the capacity to go deeper and include a large number of people into the mainstream financial system and ameliorate the inequities in urban-rural gender and caste. The user’s experience, culture and motivations positively influenced the usefulness and ease of use for driving the financial inclusion of digital payments. Further security, trust, transparency and customer support can facilitate the use of central bank digital currency (CBDC) as a tool for financial inclusion.

Social implications
Fintech innovation for financial inclusion is based on the successful acceptance of the digital payment system by people in the society. This research has identified that for any fintech innovation, it is essential that society needs to benefit from it. Encouraging a larger population to switch to digital payments offer challenges and opportunities. While the opportunities are enormous research suggests that early adopters of new technology go through different phases of testing, in which a society can completely accept an innovation or can completely reject an innovation if the two mediating factors such as PU and ease of use do not perform as predicted, thus having a higher failure rate. On the other side, if such an innovation as fintech becomes successful it has the capacity to bring billions of people into mainstream financial inclusion, a success story that can greatly benefit the Indian society and which can be replicated among other countries in the world.

Originality/value
To the best of the authors’ knowledge, this study is the first attempt in an effort to understand the influential factors from the point of view of users for the adoption of CBDC for financial inclusion. The main contribution of this paper is to examine the role of CBDC as an instrument to foster financial inclusion in India, which has not been attempted so far. The originality also lies to the heart of the research is dissecting and making meaningful sense of the empirical data, developing and measuring research instruments and hypotheses and finally adopting a PLS model to answer the key research question, which is whether fintech innovation for financial inclusion can be successful for India?