Key challenges to digital financial services in emerging economies: the Indian context

Abstract

Purpose Digital financial services (DFS) have substantial prospect to offer a number of reasonable, appropriate and secure banking services to the underprivileged in developing countries through pioneering technologies such as mobile phone based solutions, digital platforms and electronic money models. DFS allow unbanked people to obtain access to financial services through digital technologies. However, DFS face tough challenges of adoption. Realising this, the purpose of this paper is to identify such challenges and develop a framework. Design/methodology/approach The authors developed a framework of challenges by utilising interpretive structural modelling (ISM) and fuzzy MICMAC approach. The authors explored 18 such unique set of challenges culled from the literature and further gathered data from two sets of expert professionals. In the first phase, the authors gathered data from 29 professionals followed by 18 professionals in the second phase. All were pursuing Executive MBA programme from a metropolitan city in South India. The implementation of ISM and fuzzy MICMAC provided a precise set of driving, linkage and dependent variables that were used to derive a framework. Findings ISM model is split in eight different levels. The bottom level consists of a key driving challenge V11 (i.e. high cost and low return related problem), whereas the topmost level consists of two highly dependent challenges namely V1 (i.e. risk of using digital services) and V14 (i.e. lack of trust). The prescribed ISM model shows the involvement of “high cost and low return related problem (V11)”, which triggers further challenges of DFS. Originality/value None of the existing research has explored key challenges to DFS in detail nor formulated a framework for such challenges. To the best of the authors’ knowledge, this is the first paper on DFS that attempts to collate its challenges and incorporate them in a hierarchical model using ISM and further divide them into four categories of factors using fuzzy MICMAC analysis.

The Nexus between Digital Finance and Economic Development: Evidence from China

“…For traditional financial sectors such as banks, digital finance is promising to lower costs by reducing queues in banks, minimizing paperwork and documentation, and requiring fewer branches and physical outlets [30]. For the financial and monetary supervision departments, digital finance is instrumental to reducing the quantity of physical cash in circulation and helps to curb high inflation in developing and poverty-stricken countries [31]. With regard to enterprises and individuals, digital finance has enriched the channels of financing and credits, simplified transaction procedures, and promoted the availability and convenience of financial services [32,33].…”

Coordination between hospitals and insurers in developing economies: an interpretive structural modeling approach

“…1 3 4 5 6 7 8 9 10 11 6 V F7 3 4 5 7 8 9 1 2 3 4 5 6 7 8 9 10 4 5 7 8 9 I F8 3 4 5 7 8 9 1 2 3 4 5 6 7 8 9 10 4 5 7 8 9 I F9 3 4 5 7 8 9 11 2 3 4 5 6 7 8 9 10 11 4 5 7 8 9 11 I F10 1 3 4 5 7 8 9 10 11 6 10 IV F11 3 5 9 11 5 6 9 10 11 9 11 II determining the power of relationship (Rana et al, 2019). The steps followed in FMICMAC analysis are discussed under the following subsections.…”

Comparing Digital Finance in the UK, US, India and Nigeria

“…Using survey data for 1,003 merchants, they find that the low rate of adoption of digital payment systems do not appear to be the result of supply-side barriers, but are caused by demand-side factors or taxes. Rana et al (2019) show that the main challenges to digital financial services in India are the high cost and low return problem, the risk of using digital services, and lack of trust.…”

“…Also, Nigeria has higher debit card usage than India while India has higher credit card usage than Nigeria. This paper contributes to the digital finance literature (see, Ozili, 2018, Hasan et al, 2020Ketterer, 2017;Ligon et al, 2019;Rana et al, 2019). It builds on the work of several authors that investigate the proliferation of digital financial services in the financial sector (Karlan et al, 2016;Bachas et al, 2018;Staschen et al, 2018).…”