CXOToday has engaged in an exclusive interview with Sachin castelino, Chief Strategy & Transformation Officer, In Solutions Global LTD
- How can digital currencies contribute to improving financial inclusion in India, particularly for underbanked and underserved populations.
As a new vehicle for monetary policy, CBDC (Central Bank Digital Currency) can lay the foundation for driving financial inclusion by providing greater accessibility to financial services improving financial inclusion in India. Not only can the financial transactions be tracked, they can become more transparent and lead to an accountable financial system. CBDC can also encourage financial literacy and can empower individuals to make informed financial decisions and improve their financial well-being.
Since digital currencies can offer lower transaction costs compared to traditional banking services, they can easily be a cheaper alternative to cash and cards, particularly for individuals who may not have access to traditional banking services. It can help bridge the gap between the underbanked and underserved populations in India and traditional banking systems. By increasing accessibility, reducing costs, and promoting financial literacy, digital currencies can contribute to greater financial inclusion in India, especially in remote areas.
- What are the potential risks associated with the adoption of digital currencies in India’s financial system, and how can they be mitigated?
New technology stack always have a learning curve for the users and it takes time to build trust within the ecosystem. Cyber security postures are always something we need to keep in mind. Plus, fraudulent actors are always a potential risk. These can be mitigated through education, clear and comprehensive KYC and AML regulations, and the implementation of robust security measures across all stakeholders.
- How can digital currencies be integrated with existing financial infrastructure and payment systems in India?
In order to integrate the digital currency with the financial infrastructure, they need to be interoperable and interact with existing payment systems, such as the Unified Payment Interface (UPI) to enable seamless integration. Also, if digital currencies are to become an alternative to cash, they need to be widely accepted by merchants to enable their use in daily transactions. In addition, the general public needs to be educated about the benefits and risks of digital currencies to increase their adoption. Empowering people with financial knowledge and decision-making skills will increase the adoption of CBDC and accelerate the evolution of payment methods.
- How can the use of digital currencies be incentivized among consumers and merchants in India?
The adoption of CBDC in India can be incentivized among consumers and merchants by building trust and awareness. The government must create a supporting environment, especially in rural areas where the penetration of digital payments can be challenging. Be it banks, NBFCs, Government-owned PSUs, or the Judiciary- every player in the system needs to work towards building trust and confidence among users to make the implementation more efficient and widely acceptable. Moreover, educating consumers and merchants about the benefits of digital currencies can incentivize their adoption. This can be achieved through awareness campaigns and educational programs that highlight the potential benefits of digital currencies, such as lower transaction fees, faster processing times, and increased security.
- What are some of the potential benefits and drawbacks of using digital currencies in India’s remittance market?
Firstly, digital currencies can deliver instant and swift transactions and have lower transaction costs as compared to traditional banking. Due to their unparalleled convenience and seamlessness, they offer a much better customer experience. Also, digital currencies can provide increased security compared to traditional remittance methods, such as wire transfers or money orders. Transactions on the blockchain are less susceptible to fraud since they are secure and tamper-proof.
On the other hand, digital currencies can be technically complex to use and require a high level of technical knowledge. Lack of awareness can pose a challenge for users who may not be familiar with blockchain technology.
- How do you see the role of digital currencies evolving in India’s financial system in the coming years?
As CBDCs is gaining momemtum and getting accepted and regulated in India, their adoption is likely to increase. Digital currencies can become more integrated with existing payment systems in India, making it easier for consumers and merchants to use them for transactions. The adoption of CBDC in India may also drive innovation in payment systems, leading to the development of new payment technologies that are faster, cheaper, and more secure. Additionally, it has the potential to promote inclusivity by providing greater accessibility to financial services to India’s population. Going forward, digital currencies can be used for a variety of purposes beyond payments, such as identity verification and asset transfer.
- How can In-Solutions Global help support the adoption and integration of digital currencies into India’s financial ecosystem?
With its rich domain experience and clientele, ISG can work with the regulators and the ecosystem players to develop user-friendly digital currency platforms and integrate digital currency into their existing systems. This will boost the acceptance and adoption of digital currencies among traditional financial customers.
- What is your future for expanding the use of digital currencies in India’s financial inclusion efforts?
RBI has expressed interest in exploring the use of digital currencies to promote financial inclusion, reduce the cost of financial transactions, and increase efficiency in the financial system. Moreover, India has a high level of smartphone penetration and a growing digital economy, which makes it a potentially favorable market for digital currencies. ISG believes in the vision of the regulators and will align its technologies with digital currency platforms to potentially provide greater access to financial services.
Acceptance and success of digital currencies depend on the collaborative working of all the stakeholders. This is a very exciting space to be in.
