Can Local Heroes Bridge Digital Divide & Unlock Rural Finance? Dilip Modi, Founder & CEO of Spice Money

By Gloria Methri

Rural financial inclusion faces challenges such as digital literacy, infrastructure gaps, and low trust in digital platforms. A localised, community-driven approach, supported by trained agents, is crucial to overcoming these barriers and ensuring sustainable financial services in underserved areas.

Rural financial inclusion remains challenging, with issues ranging from tech literacy to infrastructure gaps. What specific gaps in the FinTech landscape have proven the hardest to address in rural markets this year?

Rural financial inclusion faces several challenges, and this year, some gaps have become more pronounced. One of the biggest hurdles continues to be digital literacy—a large proportion of rural populations are still unfamiliar with basic technology, making it difficult to drive the adoption of digital financial services. At Spice Money, we are actively addressing this challenge by leveraging our 14 lakh Adhikaris, who serve as local ambassadors, educating communities about the benefits of digital transactions. Through our Spice Money Academy, Adhikaris are trained in digital finance, compliance, and technology, enabling them to guide users in managing their finances.

In addition to digital literacy, low-tech infrastructure remains a significant barrier. In many rural areas, inconsistent network connectivity and inadequate power supply complicate the delivery of reliable services. However, our platform is built with a stable, scalable tech infrastructure that ensures seamless transactions even in low-data environments. Moreover, trust in digital platforms continues to be a challenge, as rural customers are more comfortable with face-to-face interactions. Spice Money’s Adhikaris, trusted local community members, help bridge this gap by offering personalised support and building trust through their community presence. Our network, which spans over 2.4 lakh villages and 6,471 blocks, plays a crucial role in overcoming these barriers and enhancing financial inclusion.

New regulations on digital payments and data privacy have reshaped the industry in 2024. How are FinTechs balancing these regulatory requirements with their need for flexibility and innovation?

The regulatory environment in 2024, particularly around digital payments and data privacy, has brought about significant changes in how FinTechs operate. While these regulations are crucial for ensuring consumer protection, they also pose challenges in maintaining the flexibility and innovation that the sector thrives on. At Spice Money, we take a proactive approach to ensure compliance with regulations while continuing to innovate.

For instance, we recently leveraged our Prepaid Payment Instrument (PPI) license, which now offers interoperability under RBI’s guidance. This allows us to offer secure, cashless payment solutions to our Adhikaris and their customers, especially those without active or accessible bank accounts. We also continuously improve our data security measures to meet new privacy norms, ensuring that our platform remains secure and compliant.

Adoption of digital payments can be inconsistent in rural areas despite the broader national push. What practical steps do you think the industry needs to take to encourage lasting behavioural change around digital payments?

The adoption of digital payments in rural India remains inconsistent, primarily due to a lack of trust, digital literacy, and inadequate infrastructure. To address this, FinTechs must focus on educating rural consumers about the benefits of digital payments, highlighting security and convenience. Practical steps include training programs for both end-users and agents, who can act as intermediaries to guide customers. It is crucial to make the user experience simple and intuitive, ensuring that even those with limited digital literacy can comfortably navigate the system. Additionally, reliable agent networks play a key role in building trust in rural areas. Agents can demonstrate the value of digital payments through on-the-ground demonstrations, especially in day-to-day activities like bill payments, money transfers, and government scheme disbursements.

We are focused on expanding our credit offerings, with over 107,000 loans already disbursed, to further support rural entrepreneurship. With our Prepaid Payment Instrument (PPI) license, we are creating a seamless digital ecosystem that empowers rural communities by facilitating easy and secure transactions through UPI-enabled wallets. Our commitment is to make these communities financially self-reliant and economically resilient by providing them with the tools to access credit, savings, and other financial services.

Agent networks are a vital part of the last-mile FinTech infrastructure in India. What do you see as the biggest challenges these agents face today, and how can the FinTech industry better support them?

Agent networks are the backbone of last-mile delivery for FinTech services, especially in rural India, but agents face several challenges. One of the biggest challenges is low compensation and lack of financial incentives that make it difficult for agents to sustain their businesses. Another challenge is technological barriers—agents may face issues with device reliability, internet connectivity, or outdated systems, which directly impact their ability to serve customers efficiently. Additionally, capacity building is crucial, as agents sometimes lack proper training in financial products or customer service, leading to inefficiencies in service delivery.

To support these agents, FinTech companies need to focus on enhanced compensation models that reward performance, training programs that empower agents with both technical and financial knowledge, and the development of robust tech solutions that enable smooth service delivery in rural environments. Additionally, FinTechs must establish clear communication channels for agents to voice concerns and receive prompt support, creating a more collaborative environment.

For FinTechs focused on inclusion, growth metrics can sometimes overshadow real impact. What should the industry be doing to measure and communicate actual impact, particularly in underserved regions?

While growth metrics like the number of users and transaction volumes are essential, they often do not tell the full story of real impact in underserved regions. For FinTechs focused on inclusion, it’s vital to define success not just by numbers but by the qualitative benefits we provide to underserved communities. We emphasise the economic empowerment of rural families, looking at factors like income generation, savings behaviour, and financial resilience. Measuring financial literacy and digital adoption rates is equally important to assess long-term behaviour change. Moreover, case studies and testimonials from the ground—showcasing how digital financial services have transformed lives—should be an integral part of our communication. It is about going beyond transaction-based metrics and focusing on holistic outcomes such as increased financial independence, job creation, and improved access to government schemes.

FinTechs should also leverage impact-driven analytics and customer feedback loops to refine services and truly measure the social impact they are making in these underserved regions.

Financial inclusion has been a stated priority for years, yet progress is mixed. Do you believe the FinTech industry is genuinely moving the needle for rural and underserved communities, or are we still scratching the surface?

While the FinTech industry has made commendable strides toward financial inclusion, the reality is that we are still scratching the surface in terms of true impact. The adoption rates and market penetration in rural India have certainly improved, but challenges like low digital literacy, inadequate infrastructure, and lack of trust in digital platforms continue to persist.

What sets this approach apart is its hyper-local focus on underserved rural and semi-urban regions, supported by a network of trusted community members across 95% of India’s pin codes. These individuals offer personalized support, build relationships, and foster trust to drive adoption.

Moreover, our business model is scalable and inclusive, empowering local entrepreneurs, or “nanopreneurs,” by allowing them to operate without any upfront investment. Through our zero-investment model and subscription-based services, we are able to provide Adhikaris with an additional stream of income, which further enhances the sustainability of rural entrepreneurship.