Digital Finance – South India Leads in Multi-Service Financial Adoption
Digital Finance – Households in southern India are using a wider range of digital financial services than those in other parts of the country, with adoption of multiple services crossing 70 per cent, according to a new study released on Wednesday. The findings also show that access to financial products alone does not guarantee regular usage or better financial outcomes.
Study Maps Household Financial Behaviour
The report, prepared by PwC India and Dvara Research Foundation, examined how households engage with banking, credit, savings, insurance and digital financial platforms. It was based on a survey of 4,000 households across 18 districts in seven Indian states.
The study found that financial service providers may achieve better results by combining digital platforms with in-person assistance. This blended approach, often described as a phygital model, was found to improve both customer enrolment and long-term engagement.
Digital Platforms Need Human Support
Digital-only systems can help institutions bring more people into the formal financial network, but the report said such channels often fail to ensure meaningful and sustained use. Physical support, including assistance from trusted individuals or local service points, can strengthen confidence and encourage households to continue using financial services.
The study also noted that informal borrowing and formal finance do not always work as separate systems. Many households that use both sources appear to maintain stronger engagement with formal financial products, suggesting that informal arrangements may continue to support household financial needs.
Eastern States Face Advice and Credit Risks
In eastern India, access to financial guidance remained a major concern. About 37 per cent of households surveyed said they had never looked for financial advice, while 23 per cent said they sought help but did not receive it.
The report also pointed to concentration risks in informal borrowing. Nearly 78 per cent of informal loans in the region came from only one source, leaving many borrowers dependent on a limited network for emergency credit.
Western Region Shows Credit Activation Gap
The western region recorded high acceptance of digital financial services, with adoption exceeding 95 per cent. However, the report identified a significant gap between access and actual credit use.
Around 65 per cent of formal credit users said they had faced loan rejection at some stage. Newer customers in the region had relatively high access scores but lower usage levels, indicating that availability of services was not always translating into regular financial activity.
South Relies on Community Networks
Southern households were more likely to seek financial advice from people outside formal institutions. Third-party providers accounted for 44 per cent of advice received, while social networks contributed 40 per cent.
Formal financial providers represented only 13 per cent of the advice received in the region. The findings indicate that community connections and local intermediaries continue to play an important role in financial decision-making, even in areas with strong digital adoption.
Northern India Faces Access Constraints
The northern region showed the lowest acceptance of digital financial services, at 75.67 per cent. Rural infrastructure and limited nearby access points were among the factors affecting participation.
About 40 per cent of households said they did not have physical financial access within walking distance. The report also found that newer users in the region had lower trust levels, while the movement from basic access to active engagement remained weak.
Focus Shifts From Access to Financial Health
The report said opening accounts and completing digital onboarding should now be viewed as the starting point rather than the final measure of financial inclusion. It called on financial service providers to develop credit, savings and insurance products that reflect irregular household incomes.
Vivek Belgavi, Partner and Leader, Financial Services Advisory at PwC India, said the sector had made substantial progress in expanding access. He added that the next stage should focus on financial health, resilience, meaningful use and long-term customer outcomes.